Thank you to everyone for making the transition to Show-Me Shop as smooth as it has been. One topic that is often brought up to us in Procurement Services is "Why are we making this transition to Show-Me Shop?"
Why Show-Me Shop?
This innovative business process offers the most efficient cost effective mechanism for ordering commonly purchased goods, and has saved the University over $8.1 million as of December 2009 with an additional savings in excess of $502,000 in processing costs. A statistically relevant study identifying the average transaction costs of a Show-Me Shop (SMS) order was just completed and the results are impressive. Krista Young from the UMKC office led a team effort including representation from all campuses in this study and found that the average processing costs of a SMS order ranged from $8.29 - $4.89. The average cost from all participants in the study was $7.06. This is a significant process savings compared with a cost of approximately $20 for a P-card transaction. The following shows the P-card steps eliminated in the SMS process.
Process savings is only one of the important reasons why this transition is important. Moving purchase transactions into SMS also allows Procurement Services to get item level detail on what is being purchased. This level of detail is not readily available in P-card transactions. Having this information will be invaluable with assisting Procurement Services in conducting spend analysis which will lead to even better contracts.
Another important reason for the transition to SMS is that it puts University spend against established contracts. Every transaction in SMS is against an established University contract. These contracts reduce hard dollar cost of all products purchased by a significant percentage. Contract utilization also increases leverage with contract suppliers and over time will result in additional discounts.
Vendors might approach individual departments with a "better" price for buying off SMS, indicating immediate hard dollar savings, the call to buy local, or other sales tactics. The immediate hard dollar cost savings to the department is lost in the increased Process cost. In addition to the lost process savings, these apparently great prices do not include the supplier's entire catalog so there might be a cost savings on a few items but significantly higher prices are paid for other items. Across higher education, using eProcurement to consolidate buying across campuses carries enormous financial benefits to institutions (read more in Campus Technology - "Spending Smart" by Mary Grush 11/01/09).
If Procurement Services can assist you or your business unit in finding the most efficient use of this valuable tool please don't hesitate to contact us.
Reviewed 2019-08-05