Managing Procurement at Harvard   back to top

In the early 1980s, Harvard, like many similar institutions, had a purchasing process that was managed by a central purchasing department. Forty employees examined each purchasing request, bidding on the purchase or channeling it to a pre-negotiated contract. Although this allowed purchasing activity to be tightly controlled, it took a lot of time to get an order placed and often the user didn't receive exactly what he or she requested.

To overcome these deficiencies, the mid-1980s saw a decentralization of purchasing authority and responsibility to the departments within each school. In some ways the greater local autonomy was positive for departments, but the prices that each unit paid in the fragmented buying process increased substantially from the central purchasing era, and the service levels that vendors provided sometimes declined.

In 1995, based on research by McKinsey & Company (a nationally regarded consulting firm), a different model for managing buying and vendor relationships began to take shape. An analysis of Harvard's expenditures for goods and services identified areas of potential leverage. Cost containment committees with stakeholders representing campus-wide interests were formed and given the task of identifying the qualities of a "world class" supplier in each commodity area. Request for Partnerships (RFPs) were then developed to find these "world class" vendors. Traditionally, an RFP targets lower prices for current purchases; the "new" RFPs, however, had different objectives.

The vendor's chief responsibility was to outline its plan to capture fifty percent of University business in the first year of the agreement, and to increase this percentage in subsequent years. The supplier could only achieve this aggressive goal by significantly reducing prices while improving service levels. In return, the University promised to act as a partner, helping to find effective ways to market the vendor in our decentralized environment.

Harvard recognized that the vendor needed to remain on solid financial ground to deliver the required level of service over the long haul. Vastly different from the traditional buyer/seller model, these partnerships were based on an "open books" model. Harvard business was to be captured in a fully allocated Profit and Loss (P&L) center with an agreed upon level of profitability for the vendor. The P&L statement would document and report all vendor revenue and costs. Quarterly results would determine pricing based on the net profit goal. Should the vendor exceed the net profit goal, they would agree to reduce their prices for Harvard.

All vendor partnerships are presented to and authorized by the financial deans of the schools. The deans have authorized the Procurement Management Department (PMD) to actively manage the partnerships and alert vendors to critical community needs. Since these partnerships are not mandated, PMD can determine the overall effectiveness of a partnership by monitoring how the University community votes with its purchasing dollars.

Current Vendor Partnerships   back to top

Your support of the following partnerships has allowed the University to deliver increasing revenue and market share to these vendors, allowing the vendors in turn to provide significant cost savings and customer service improvements to you. For these reasons, Procurement Management encourages and endorses purchasing from the following vendors:

Other Procurement Resources   back to top

The newly updated Procurement Management Department website provides additional resources to support your purchasing activities:

New Financial Paper Provides
Guidance on Appropriate
Segregation of Duties   back to top

A new paper entitled Best Business Practices Supported by the University: Review and Approval of Non-Payroll Disbursement Transactions (full text available here) was recently reviewed and approved by the Financial Deans and Directors.

The paper addresses segregation of duties -- a financial management principle based on the idea that one employee should not have total control over all aspects of a financial transaction. For example, one employee should not be able to order goods from a vendor, receive the goods and invoice, prepare and approve the web voucher, and reconcile it to the general ledger. A unit in which segregation of duties is not practical due to its small size or organization should work with its tub-level financial office to establish alternative means of reviewing and approving transactions.

Back Office Systems that Support Cash Receipts Are Changing   back to top

The FAD Cash Management Department is pleased to announce a change in the way we do business. In order to expedite processing and increase accuracy, effective May 1, 2001, we will begin using Oracle Accounts Receivable to post credit voucher deposits to the general ledger. At the same time, we will retire our antiquated legacy system.

For end users, the process for submitting credit vouchers will remain the same. Hard copy credit vouchers, with cash and checks attached, should be prepared and delivered to Holyoke 453 for deposit and posting to your 33-digit account coding.

However, the way transactions will appear on the Detail Listing is changing. Below is a table that compares the information (before and after the change) made available in the affected Detail Listing report columns.

Here is a sample Detail Listing report that compares the data made available for reporting from the old legacy system versus the new Oracle Accounts Receivable columns.

If you have questions regarding these changes, please feel free to call Cash Receipts staff members Jen Gill at 495-2738 or Linda Paolera at 495-1903.

About the e-News  back to top

The Financial Administration publishes this semi-monthly electronic newsletter for users of Harvard University's financial systems, policies, and procedures. Generally, the e-News is published on the 12th and 26th of each month.

It contains:

• updates on projects underway to build or improve University financial systems;
• information about new University financial policies, procedures, and forms;
• reminders about upcoming deadlines and cut-over dates;
• tips and tricks for working more easily or productively.

We welcome questions and suggestions for improvement from readers. If your questions are of general interest, we will answer them in future issues.

Please send comments, questions, or suggestions for improvement by email to us at: fad_communications@harvard.edu

How to Subscribe or Unsubscribe from the e-News    back to top

The e-News, including all back issues and an index by topic, is available to anyone with internet access at: http://vpf-web.harvard.edu/training/enews.html. No subscription or password is needed.

When we publish each issue, we send out a notification email to all users of Oracle financials, STAR, the Budget Tools, and the Data Warehouse. Because there are nearly 5,000 users, we compile and maintain this "listproc" in an automated way. The Harvard Data Warehouse and the STAR security module are queried for all registered users. Twice a month, the queries are re-run to pick up new users. Disabled or terminated users automatically drop off. Duplicates between systems are eliminated. As a final step, email addresses are pulled from the HUID system, which is fed by the UIS Telecommunications Directory.

If you do not actively use Harvard University financial systems and find the semi-monthly notification email bothersome, you should ask your local security administrator or financial office to disable your financial system access. This is the only way to get off the listproc.

If you are an active user of Harvard financial systems, but do not receive the notification email, it is likely there is no email address listed for you in the UIS Telecommunications Directory. You can submit an email address, or change it, in three ways:

1. Via the directory coordinator for your department. This contact -- often, but not always, your department administrator -- is responsible for updating directory information throughout the year, whenever staff contact information changes. This info is fed into the online directory and to the telephone operators the next business day.

2. On the update directory page on the UIS web site.

3. FAS faculty and staff should update their records via the FAS Portal. The Portal requires a Harvard University personal identification number (PIN). PINs and supporting documentation are available on the PIN Administation site at www.pin1.harvard.edu.