Cost Containment

The Office for Supply Management Services has launched Procurement Workforce Planning. Utilization of innovative contracting strategies, electronic purchasing tools, and supply chain management initiatives has enabled the Office for Supply Management Services to leverage the university's significant buying power and identify and report significant "documented hard dollar" product and service cost savings.

Cost savings have been achieved as a result of the persistent search for value. When reporting a new cost savings, the Office for Supply Management Services ensures that it is both identifiable and measurable. A reported cost savings must be the result of a planned or deliberate action taken by the Office for Purchasing Services to:

• Reduce purchase or ownership costs
• Avoid a higher cost that would have otherwise occurred
• Improve the total value of a purchased product or service

An unsolicited price reduction caused by factors such as market conditions does not qualify as a cost savings for which the Office for Supply Management Services can take credit. Cost-saving opportunities exist not only in what we at the Office for Supply Management Services do, but also in how we do it. However, we will not allow the pursuit of cost savings to be the sole determining factor in the selection of a product, supplier, or work method to meet the university's need. It is essential for the Office for Supply Management Services to meet those needs in a manner consistent with the best quality of products and services.

Cost Savings Criteria

A purchase cost savings occurs when a lower-than-previously-paid cost results in the purchase of the same or comparable product or service. This may be accomplished by a number of means, including:

• Strategic preferred contract supplier relationships 
• Competitive bidding of annual requirements and spot purchases 
• Contract negotiations 
• Equivalent product substitution or standardization while meeting customer requirements 
• Favorable contract terms and conditions 
• Reduction or elimination of a new cost that would have otherwise occurred