Maintaining the Continuity of Supply
 |
King Henderson, CPM, MBA, began working at the University of California at Riverside in 1978 as a buyer and is now director of materiel management, a department that includes purchasing and equipment management. He is himself an alumnus of the university, enrolling after serving five tours of duty aboard the nuclear submarine Stonewall Jackson, where he served as an electronics technician and reactor operator. |
Morgan Jones: Purchasing is something of a political role, situated between the university departments and the suppliers, isn’t it?
King Henderson: Our role is to make sure that the equipment, supply, and service needs of the campus are met. We use various purchasing tools to do that, whether they are one-time purchase orders or blanket orders over a long period of time. Sometimes we use contracts the state of California has let, and we also have contracts that the larger University of California system has gone out and competitively bid.
Although our responsibility is to the campus-and, in essence, to the taxpayers-we also have to maintain good faith with suppliers and make sure they’re not being abused so we can preserve the continuity of supply. It sometimes happens that when people make mistakes, it’s easy to blame the supplier. They may say the product didn’t arrive on time when, in fact, the order wasn’t placed in time.
When a department calls us with a complaint against a supplier, we want to get all the facts to make sure we can deal with the supplier in a way that’s in the department’s best interest. But sometimes we find details showing things should have been done differently at the departmental level. Or we may get a call from a supplier who feels they’re being dealt with unfairly. Again, we would ascertain the facts and talk to the other party. Sometimes it’s miscommunication, sometimes it’s misperception, and sometimes either the department or the supplier hasn’t done its job.
If you’re a supplier working with a department, particularly if it’s associated with a construction project, there’s a timeline, as you know. Furniture, particularly from a major supplier, will typically have a lengthy lead time. Sometimes what happens is that a department drags its feet in selecting a color or fabric and then tries to blame the supplier for not making timely deliveries. It’s a communication issue and in this type of situation purchasing tries to support the supplier-and support ourselves in the process-by talking with the department about how items should be specified and ordered.
To maintain the continuity of supply, purchasing has a responsibility to make sure no one is abusing suppliers-it’s good business and we don’t want to find ourselves in an emergency situation where we can’t count on a supplier because the school alienated them.
MJ: What departments make up the Materiel Management Department at UC Riverside? What are some of your more novel cost-cutting measures?
KH: The purchasing unit, with eight people, is the largest division within materiel management. We also have equipment management, which is responsible for the inventory function of the campus. The university uses a current inventory value of $1,500, so anything costing greater than that amount and is a piece of free-standing equipment with a lifecycle of more than two years has to be inventoried with a property tag.
We have a receiving department that makes deliveries onto the campus. We have a storehouse. We used to handle a lot of office products, but we’ve gotten away from that, as most universities have, because we’re using online desktop deliveries from Office Depot or Staples or Boise Cascade.
We still handle some of the compressed gasses for research functions and various types of items used by our researchers out in the field. We’re an agricultural-based campus, so we have researchers who will need, for example, hammers and stakes and picks. We also have a lot of responsibility for physical plant inventory. We do the inventory for parts for the Electrical, Plumbing, Grounds, and Asbestos-Abatement Departments, so we basically run their inventory and spare parts program for them. It’s their budget and they carry the inventory, but we manage the process.
In equipment management, we’ve done something novel. We have a lot of lab equipment, which used to be mechanical devices that were easy to sell, either for reuse or as scrap metal. Today, because so much equipment is based on microprocessor design, old lab equipment is harder to dispose of-we find that we’d have to simply throw the stuff away.
Now we work with a friend of the university who is very good with technology and has allowed us to sell old lab equipment through eBay and a company called LabX. Over the last year and a half, we’ve sold approximately $25,000 worth of equipment all over the county. He handles everything including repairs, cleaning, photography, shipping, and crating, and we split the proceeds-80 percent of the university’s share goes back to the department as found money. If these items had gone to the scrap bin, we might have made one dollar off them.
Another idea we consider novel is the receiving department’s relationship with express carriers, particularly UPS. A lot of campuses still have UPS delivering to their receiving departments, which then turn around and make the final delivery. For more than 10 years, we’ve had UPS deliver materials directly to their final campus destinations. Our receiving staff works with UPS for a half hour every morning to work out ambiguous addresses and to identify where materials should go. UPS puts them back on the truck and makes the deliveries. We no longer have the cost and work associated with delivering those items.
MJ: How does being part of a larger campus network affect purchasing?
KH: The process is changing now because the Office of the President is slowly taking over more and more of the commodity buying. It used to be-and to some degree still works this way-that each campus has certain assigned commodities for which it is responsible. When it came time to renew the contract or to go back out to bid, the campuses would be responsible for getting in touch with one another and finding out what is needed, and then combine those needs with the items to be covered in the contract.
MJ: Where is the University of California system headed with electronic commerce and purchasing?
KH: There still are decisions to be made at the Office of the President, but they’re looking at the feasibility of having campuses use a system of pre-established contracts for online catalogues. That way purchasers and campus customers could access them, see what they need, and place an order and it all would be integrated right into the financial system, even to the degree that there would be electronic invoices and payments could be made against that. That’s the broader picture.
The reality is, all customers are facing issues involving electronic commerce and cost is certainly one of them. There also are technology issues and issues with ongoing maintenance processes.
Schools that maintain catalogue management need to make sure the catalogue is current, the prices are right, and the items are right. The cost factor is primarily associated with having an individual dedicated to doing the work. A lot of suppliers are doing catalogue management because it’s in their best interest to supply the institution with the most current catalogue.
We still have to make the decision as to whether the system would be centrally funded or funded at a campus level. It’s fair to say that most of the campuses are supportive of the idea of e-commerce-that’s not an issue-it’s just there has to be a return on an investment.
MJ: Is rapidly-changing technology making long-term supply contracts less appealing?
KH: Markets change, things get more or less expensive. In a long-term contract, you have to have some type of built-in price control mechanism, whether it’s based on a market indicator, the producer-price index, or the consumer-price index. Something has to allow for inflation or deflation.
There also are potential pitfalls with changes in technology, particularly with equipment or services. If you get locked in with a supplier that’s not currently state of the art, and then some other company comes along with much greater capabilities, that’s a liability for you unless you have some clause allowing you to get out of the contract without penalty. There also are issues with new suppliers coming into the marketplace. If you’re locked in with a supplier, even if they’re doing a good job, there’s always a chance someone can come along offering a better service.
Long-term contracts may be more cost-effective, but there are concerns.
MJ: UC Riverside is a fast-growing campus. Tell me about construction projects on your campus.
KH: One new building that was occupied within the last few months is what we call a surge facility, offering room to grow as departments move around. It’s a three-story building, with the learning center already occupying the ground floor. The additional space will be used whenever we perform seismic abatements, which is a common thing here in Southern California. To be able to conduct those abatements, a department has to move out of its facility and into the surge space, which has all the amenities, including a large, 600-seat auditorium with state-of-the-art projection and audio/visual equipment.
MJ: How early is your department brought into the planning process?
KH: We are brought in fairly early and, quite honestly, it’s taken a long time for it to get that way-I personally fought for it for years. Many, many years ago we were always brought in at the last minute and we knew nothing of the project and didn’t know what would be required. It was ridiculous. Part of the reason was that we didn’t have a lot of building going on until 10 years ago. Building was so infrequent, nobody was programmed to put us into the system.
Now, we’re on the list of departments to consult when a new building is proposed. There are delivery issues, which determine whether or not the facility has a loading dock, whether or not there’s a freight elevator, and the size of the door openings and hall corridors. There also are access issues in terms of where to park the trucks when delivering goods; is there a designated area for truck parking? How big should it be? We now participate in meetings as they work toward design.
MJ: What were some of your more challenging buys?
KH: Two years ago, we had to buy 28 modular building units that would be assembled into one large complex housing our computing department. There obviously was a considerable amount of planning because of facility specifications and because of the physical logistics of bringing them on campus. This was a role the purchasing manager undertook and, fortunately, he was able to coordinate with our design and construction department and with the physical plant.
Prior to that, we had a situation in which the purchasing department was, in fact, the project manager for the construction of a vivarium-used to house lab rats. There was a seismic renovation being performed on the building housing the existing vivarium, so three modular buildings were purchased. The purchasing manager addressed issues pertaining to animal cage rack washer, ventilation issues. He did all the coordination for all the university departments involved and all the various contractors and subcontractors.
When you work in a large organization, things don’t always happen when they should. From the Purchasing Department’s perspective, they’re dealing with suppliers and timelines, and if nobody steps up to the plate to make a decision, purchasing will take action to make sure it gets done.
With the surge building I mentioned earlier, the learning center was moved into the ground floor after having occupied 11 old wooden trailers adjacent to the construction site. They were in bad condition and we needed to get rid of them. Purchasing just went ahead and made sure that we found a supplier who would haul them off for a dollar a piece-and we were able to free up the area in short order to allow the parking lot to go in.