VILLAGE OF
BUFFALO GROVE
September 8, 2011
To:
Dane Bragg, Village Manager
From:
Leisa Niemotka, Assistant to the Village Manager
Subject:
Centralized Purchasing – Follow Up
As you requested, I have put together follow-up information and next steps for the Centralized
Purchasing plan.
Introduction
On July 18 the concept of a Centralized Purchasing program was presented to the Village Board at the
Committee of the Whole meeting. The recommendation includes the addition of a full-time Purchasing
Agent position in the Finance Department. This position would be responsible for the standardization of
all purchasing decisions, be versed in all legal aspects of procurement - such as bidding requirements
and conflict of interest laws, author and implement an updated village purchasing policy and garner buyin throughout the organization for the new program. This position is proposed at a pay grade of 14 with
a salary range of $65,111 - $98,563.
The purpose of this memo is to address questions that were raised at the July 18 meeting.
Q: How can a Purchasing Agent do a better job purchasing material than the subject matter experts?
A: Because a purchasing agent is the subject matter expert for obtaining the best cost, consolidating
specifications, writing contracts and assuring that all vendors/suppliers are treated in the same, ethical
and equitable manner. Further, a purchasing agent can:
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Establish long term relationships with vendors
Eliminate unnecessary and time consuming paperwork
Assure prompt payment of invoices to earn cash discounts
Negotiate higher levels of warranties on capital purchases
Aggregate purchases of like materials and equipment to obtain the best possible bids
This program will provide a new level of internal control while streamlining the bureaucracy for the
subject matter experts. The purchasing agent would spend the time necessary to “service” the vendors,
all the accounts and all purchases on behalf of the village.
Example: In a neighboring municipality, the Purchasing Agent worked with the Fire Department to spec
out and purchase over $160,000 worth of flooring for four Fire Stations. Two years later, the floors
began to fail. The vendor claimed that under their typical warranty, the cost of replacing the floor was
not fully covered. Because of the expertise provided by the Purchasing Agent, who co-wrote the
specifications with the Fire Chief, the warranty on the floor was outlined as part of the Request for
Proposal and the floors were replaced.
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VILLAGE OF
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Q: What else will the Purchasing Agent do in the Finance Department?
A: The Finance Department staff has recently been reorganized; positions have been eliminated and
restructured. In 2009 there was the complete elimination of one full time position; in both 2010 and
2011 a full-time position was reduced to permanent part-time. Because this is a degreed position, it is
envisioned that the incumbent can provide general support to the Finance and Assistant Finance
Directors. Tasks such as inventory control, central stores, bank reconciliation, budgetary compliance and
more would fall under this role.
The Purchasing Agent would also be responsible for working with various vendors and grant agencies to
pursue and implement grant programs on behalf of the village.
Example: The Purchasing Agent in a downstate community works with engineering firms to secure grant
funding for alternative fuel purchases for the municipality. This work saves money and assists the
municipality in achieving Federal Environmental mandates.
Q. How can we better measure the need for a Centralized Purchasing Program?
A: There is not a formula that can be universally applied to predict specific dollar savings. However, a
review of specific commodities from 2010 – provides important information supporting the need for a
centralized purchasing program.
There are a variety of vendors used across the organization. Purchasing is decentralized and is currently
a highly bureaucratic process-based function versus a customer- focused program. Having a centralized
purchasing agent manage this program in a knowledge/results based platform will provide great
benefits to the Village through:
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VILLAGE OF
BUFFALO GROVE
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Lower costs through higher volume purchasing
Inventory controls and management
Stimulation of vendor competition
Standardization of commodity purchasing
Lower costs to “service” vendors (i.e. less checks/bills to process)
Q. Is the Village really large enough to justify having a Centralized Purchasing Program? How much
business could this really affect?
A: Based on the 2011 budget, the estimated total discretionary spending for 2011 is
$17,540,328.00, a fairly sizable amount – certainly large enough to justify having a centralized
purchasing program.
According to the 2010 Treasurer’s Report, the village paid out at least $600 to 774 different vendors.
Many of those different vendors were providing the same or similar services to the village. Below is
a chart outlining some examples of those types of vendors – clearly cost savings can be achieved by
combining and streamlining these efforts. Close to half a million dollars were spent last year in the
sample commodities presented in this chart.
Commodity
Office Supplies
7 Vendors
Cell Phones
4 Vendors
Regular Phone Lines
3 Vendors
Photocopiers
3 Vendors
Computers
4 Vendors
Vendor List
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Garvey (Fire)
Warehouse Direct (Public Works)
Staples (Finance/OVM/B&Z)
Des Plaines Office Equipment (Police)
TriComm (Finance/OVM/B&Z)
Logsdon (Finance/OVM/B&Z)
IKON (Public Works)
Verizon (Police)
Sprint/Nextel (Public Works/Fire/Finance/OVM/B&Z)
USA Mobility (EMA)
AT&T
Call One
AT&T
MCI
Oce (Public Works/OVM/Finance/B&Z)
Des Plaines Office Equipment (Police)
IKON
New Egg
MNJ Technology
CDW-G
Tiger Direct
Estimated*
2010
Costs
$49,924.00
$21,732.42
$62,297.26
$38,429.52
$257,297.57
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VILLAGE OF
BUFFALO GROVE
Commodity
Uniform Companies
7 Vendors
Mail Machines
2 Vendors
Vendor List
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Estimated*
2010
Costs
$62,780.33
Kale
Uniformity
Aramark
G&K
All American Uniform
Gale
Rogan's Shoes
Neopost (Village Hall)
Pitney Bowes (Police)
$3,023.41
TOTAL
$495,484.51
*This information was obtained from the 2010 Treasurer’s Report, so some information may not be
readily apparent, i.e. a department could purchase office supplies from Sam’s Club, but that is not
reflected here.
Recommendation
The centralization of purchasing practices will help save costs and increase efficiency. Currently there
are insufficient staff resources to coordinate this program. Having a professional purchasing agent on
staff in the Finance Department is a critical step in modernizing and professionalizing business practices
in the village. It is recommended that the Village Board approve this position in accordance with the
prior recommendation of staff.
Next Steps
With the approval of the Village Board – the Village Manager’s office will implement the following
revised timeline:
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November: Advertise the position of Purchasing Agent for the Village of Buffalo Grove.
Development of formalized work plan for position/function will occur concurrently
November/December: Screen resumes, interview candidates, make candidate selection
January: Orientation and Departmental Meetings. Review of formalized work plan
February/March: Draft purchasing ordinance/purchasing policy to Village Board for review
April/May: Codification of Village of Buffalo Grove Purchasing Policy
June/July: Six month report on new purchase program
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