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CLIENT CASE STUDY

Miami University: Powering cost savings and improved customer service

Learn how Miami University used strategic sourcing, sustained savings and services during the economic downturn to shape higher education for the future.

Overview

Founded in 1809, Miami University based in Oxford, Ohio, is the 10th oldest public university in the United States. Boasting a diverse curriculum that includes the opportunity for graduate and undergraduate students to collaborate with faculty on significant scholarship and research activities, the institution successfully attracts a multicultural and international student body of 16,000. It was rated third among the nation's top universities for its commitment to undergraduate teaching in the 2013 edition of the U.S. News & World Report Best Colleges ranking.

In the midst of the economic downturn, Miami University took decisive action and implemented strategic sourcing to identify ways to close a looming budget gap and avert tuition hikes and staff cuts.

This major process improvement initiative transformed the university’s procurement system by putting it on firmer financial footing while improving customer service. The initiative also served as a leading best practice for others in the higher education community in search of sustained savings to shape higher education for the future.

Business Challenge

Like all institutions of higher education, Miami University was faced with serious gaps in its $625 million annual budget during the economic downturn which threatened the services it provided to students.

The university needed to rapidly identify cost savings and improve efficiencies to avoid staff reductions and tuition hikes. Miami University’s annual spend with external suppliers, 30 percent of its annual budget, represented a major opportunity.

University officials realized they needed to team with a third party who was experienced in both process improvement and the unique requirements of an institution of higher education.

Accenture was selected by Miami University because of our extensive work with universities and proven track record in transforming procurement processes to attain significant cost savings and improve customer service.

We collaborated with Miami University procurement officials to employ a world-class strategic sourcing process to target and deliver millions in annual cost savings.

How We Helped

The institution’s first comprehensive spending assessment and analysis began in 2011—a process that was completed seven months later in the spring of 2012. With Accenture’s help, the university’s procurement team followed a three-step process:

  1. Identified opportunities by benchmarking the university’s capability against leading public and private sector practices

  2. Determined potential cost savings by pinpointing performance gaps and developing savings targets by category, taking into consideration market conditions

  3. Created a savings roadmap with:

    4.

    • Short- and long-term recommendations for capturing cost reductions

    • Savings broken down by category

    • An implementation timeline

This intricate exercise involved classifying, sorting and normalizing data for the 29,000 unique supplier references, representing $200 million in spending on goods and services. Once the data was processed, the team consolidated all references to a supplier so that officials could quickly see the total amount spent on each provider and in which categories.

This allowed Miami University to prioritize and identify their major suppliers and develop strategies for lowering costs through discounted pricing and long-term planning.

High Performance Delivered

The benefits from strategic sourcing have been immediately influential. With Accenture’s help, Miami University’s transformed procurement process has:

  • Reduced the number of supplier records by 37 percent, allowing a fresh look at savings opportunities and ways to strengthen key supplier relationships

  • Identified annual estimated procurement cost savings of between $1.2 million to $4.5 million

  • Delivered $2.3 million in annualized savings in the first phase, exceeding the target of $2 million

  • Saved 6 percent in annual maintenance, repairs and operations

  • Helped win an onsite contractor resource for ordering and inventory management at no additional expense, freeing up procurement employees to work on value-added activities

By teaming with Accenture, Miami University has achieved a win-win for its students and faculty: critical savings and focused spending that better serve their needs, putting the university firmly on the path to high performance.