Penn Purchasing Services
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>> Cost Containment
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Return on Investment (ROI)

At the University of Pennsylvania, the work of Purchasing Services and the resolve of our senior leadership to place procurement on the leading edge of Penn's cost containment efforts enable us to leverage our buying power and strategically impact the institution's bottom line.

The success of the Purchasing Services organization is measured by the utilization of staff and annual operating budget to achieve significant results in support of its key performance metrics. These annual accomplishments support our multi-year strategic objectives, are in alignment with the goals of the President and Executive Vice President, and result in a financial Return-on-Investment (ROI) to the institution.

Listed below are several key metrics which we use to determine the purchasing organization's ROI which is determined by documented accomplishments in key business categories versus the department's total annual operating budget.

Exhibit A: Cost Containment ROI - Annual Documented Cost Containment vs. Annual Department Operating Budget

In June 2006, Purchasing Services launched a new four year $50 Million cost containment initiative that builds upon the success of the past and produces even greater financial ROI in the future. The Cost Containment ROI Ratio is determined by the total documented cost containment each fiscal year versus the department's annual operating budget.

Cost Containment ROI

Exhibit B: Sourcing Productivity ROI - Annual Documented Cost Containment vs. Annual Sourcing Resource Budget

The focus on strategic and value added activities by sourcing related resources is resulting in significant cost containment accomplishments. The Sourcing Productivity ROI Ratio is determined by the total documented cost containment each fiscal year versus the department's annual sourcing resource budget.

Sourcing Productivity ROI

Exhibit C: Contracting Productivity ROI - Annual Contracting Results vs. Department Contracting Resource

The focus on strategic and value added activities by sourcing related resources is resulting in significant contracting accomplishments. The Contracting Productivity ROI Ratio is determined by the average number of university-wide supplier discount pricing agreements awarded per Strategic Sourcing Manager.

Contracting Productivity ROI

Please direct all questions regarding this information to Ralph Maier in Purchasing Services.

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