RTI

By Staff -- Purchasing, 4/5/2001

Name: Jon M. Davis, C.P.M.

Title: Director, office of purchasing

Company: Research Triangle Institute (RTI), Research Triangle Park, N.C., a not-for-profit contract research organization

Reports to: James J. Gibson, CFO and VP of finance

Education: B.S. in business administration, East Carolina University, 1980; Certified Purchasing Manager (C.P.M.), 1993; re-certified C.P.M., 1998

Work experience: Joined RTI's purchasing department in 1985; became director in 1992

Responsibilities: Davis is responsible for the day-to-day operations of the purchasing office, including buying activities, strategic sourcing, materials management, inventory management (including shipping and receiving), property control, travel management and food service.

Current initiative: RTI is moving from the traditional "obtain three quotes, low bid wins" process to a supplier management concept that involves true strategic sourcing initiatives. "We look at the total cost of ownership and then identify ways we can reduce it," explains Davis. The process begins by conducting a complete cost analysis of all of RTI's purchased goods and services, followed by a complete review of the supply chain, to determine who the top suppliers are and with whom RTI wants to consider entering into partnerships.

At this point, the organization considers several strategies to help reduce the cost of the purchasing process. These include leveraging the combined purchasing power of all of the different units within RTI and utilizing e-procurement so users can place their own orders online. "Involving users in the procurement process is key to our success," he states. "We seek their involvement even before we come out with RFIs and RFPs," explains Davis. "The process begins once purchasing has identified a popular or high-dollar purchased item that is worth considering for strategic sourcing. Purchasing arranges for supplier workshops, where supplier representatives visit to provide information on the product. Users are invited and encouraged to actively participate in these workshops. "If appropriate, we will visit supplier sites, and key users will also accompany us," he adds.

One of the main purposes of the workshops it to gather detailed information on what goes into supplier cost structures. In the area of "workplace solutions" (formerly called "furniture"), for example, team participants learned about suppliers' hardware costs, design service costs, marketing/sales costs, installation costs, warehousing, orientation and other service costs. "After a number of these meetings, our strategic sourcing team members often know more about cost structure than the supplier marketing representatives who are making the presentations," states Davis. Users subsequently help to develop RFIs/RFPs and negotiate contracts. "We try to negotiate three- to five-year contracts, so we can reap the benefits of a long-term, win-win partnership," adds Davis.

One element of the partnership involves measuring supplier performance over the life of the contract. "We also seek feedback from the suppliers on how we are performing, what we can do to help lower costs, and what things we can do together to mutually reduce our shared costs," he continues. Users are becoming enthusiastic about the process. "We document savings, which we report to top management and throughout the organization," he explains. "Once users see the savings and the other benefits of long-term contracts, they quickly come on board."