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