Amazon Business Produces Successful Results to Virginia Tech University's Purchasing Strategic Plan
Addressing Diversity Spend Goals, Compliance & Visibility
Colleges and Universities spend a significant portion of their operational spend with non-contract vendors.1 The remaining spend is often difficult to manage, presents compliance issues, and is a challenge to analyze and track given the diversity of vendor data. In addition, higher education institutions, on average, work with over 1,200 unique vendors – with over 1,000 of these vendors in the long tail (represented by low average spend and large numbers of low-value transactions). Approximately two-thirds of vendors account for less than $1,000 in spend per year. Managing each of these suppliers can be time consuming and expensive, and the costs of processing the small dollar orders can be cost prohibitive.
As with many large-scale public sector organizations, Virginia Tech began to realize that consolidating these vendors to reduce time spent managing contracts for non-strategic purchasing was an opportunity to simplify on behalf of their end users.
Real-World Challenges: Virginia Tech
Virginia Tech manages hundreds of new and existing vendors annually at a significant cost – both in time and money. Virginia Tech was struggling with one-off purchases with vendors and was experiencing difficulty standardizing purchases across categories – even with a mature e-procurement system in place. In addition, the University wanted to take advantage of features that allowed the university to restrict categories, use their preferred payment method of Pay-by-Invoice, and meet competitive requirements. These challenges are what brought Virginia Tech to Amazon Business, through OMNIA Partners, for a solution.
“Our campus buyers wanted to utilize the many benefits of Amazon Business in their academic, research and administrative purchasing,” Mary Helmick, Director of Procurement at Virginia Tech explained. “They depend on it, so we chose to incorporate it into our purchasing options through our e-procurement system.”
Amazon Business offers a one-stop-shop for many of the day-to-day purchases while standardizing to a single source for procurement as an alternative to managing single purchases with individual vendors. By centralizing sourcing to Amazon Business where hundreds of thousands of sellers are competing to offer the university the best price, they were able to simplify the approach.
“The volume of university spend on Amazon Business greatly enhances our ability to analyze and report on purchasing trends and volume cost savings at the university with a single preferred and trusted contracted vendor.” Helmick said.
The Partnership
As part of their strategic initiatives, Virginia Tech utilizes a cooperative purchasing organization, OMNIA Partners, Public Sector. OMNIA Partners specializes in aggregating the purchasing power of public agencies nationwide. Participants have access to the largest portfolio of competitively solicited and publicly awarded contracts with best-in-class national suppliers.
As a supplier partner through OMNIA Partners, Amazon Business was able to address Virginia Tech’s procurement challenges through the competitively solicited contract.
“The volume of university spend on Amazon Business greatly enhances our ability to analyze and report on purchasing trends and volume cost savings at the university with a single preferred and trusted contracted vendor.” Helmick said.
Solutions
Amazon Business empowers procurement teams to drive greater value for their organizations or institutions through tools that help track compliance and provide detailed analysis. It also provides their users a way to more efficiently engage with many vendors without the cost or effort.
Leveraging the Amazon Business contract offered through OMNIA Partners, Virginia Tech was able to leverage their own E-procurement software (Jaggaer) to bring ordering under their current process and in compliance with other vendors, as well as gain visibility and spend control while identifying savings opportunities through Amazon Business’ metrics.
Amazon Business offers a wide selection of products with competitive prices and discounts for all their end-users within the institution, P-card management and timely reporting and analytic capabilities for the administrators.
For Virginia Tech, one of the benefits of implementing this solution was the ability to onboard local vendors, providing the community the opportunity to utilize Amazon Business as a matchmaker to large organizations like Virginia Tech, and conversely and for the institution to direct spending to local diverse suppliers to help support the organization’s goals.
Results
Virginia Tech’s partnership with Amazon Business has continued to produce successful results in the areas that are most important to the university’s purchasing strategic plan.
“We asked for assistance introducing our local small businesses with options for an electronic platform to sell to the university. Amazon Business came to the campus to meet with those local vendors and introduce them to opportunities to join the Amazon marketplace,” Helmick said. “Ease of reporting was a high priority and Amazon Business continues to provide enhancements to an already easy-to-use reporting platform within the product.”
Virginia Tech was able to provide the freedom for faculty and staff to get the supplies they need and identify reportable second tier diversity spend while meeting management standards at the state level, and increase visibility and control.
“Our campus loves having the option to use Amazon Business for their day-to-day purchases. This partnership has been a win-win for Virginia Tech.” Helmick said.
1 A NAEP benchmarking report estimated that on average, higher education institutions had approximately 6-12% of their spend with contract vendors. The National Purchasing Institute Achievement of Excellence in Procurement Award cites a public agency’s use of 25% of total dollar commodity and services purchases as a reasonable benchmark.
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