Case 3-1 Open with Google Docs Donovan Valley Purchasing Consortium On September 2, Bob Hamilton, manager district opera- so we got together with the other three districts in the tions for the Lowe School District, was preparing for his valley and formed an Executive Steering Committee, meeting the next day with Rick Lewis, secretary trea- which is made up of the senior staff and the elected surer for the district. Bob and Rick were getting ready school board chairman from each district, We investi- for the Purchasing Steering Committee meeting sched- gated several areas for potential cooperation, and eventu- uled for September 10, where the future of the Donovan ally focused on purchasing, information technology, and Valley Purchasing Consortium (DVPC) would be dis- human resources. We have recently established a separate cussed. Under the proposed arrangement, the informal steering committee for each of these areas to gather infor- operating structure of the DVPC would be replaced by mation and provide recommendations to the Executive a newly created central purchasing organization, and the Steering Committee regarding our future direction. current district-level purchasing departments would be eliminated. Bob's primary concern was establishing what course DONOVAN VALLEY of action would be in the best interests of his district. Donovan Valley was located in the western region of the While he recognized that centralizing purchasing opera- province. Anderson, Lowe, Martin, and Morgan Ridge were tions presented certain opportunities to reduce costs, he the principal urban centers in the valley. Exhibit 1 provides remained concerned whether joining a formal consor- summary data on district operations, including purchasing. tium represented the best approach for the Lowe School District. He was well aware that Rick Lewis was expect- Anderson School District ing a well-reasoned argument for or against the proposal. Wendy Graham, manager, purchasing and warehouse services, was quite proud of her accomplishments: PROVINCIAL EDUCATIONAL SYSTEM "Since first coming to Anderson seven years ago, I have The public school system provided education to residents been able to raise the profile of the purchasing group. from kindergarten to grade 12. Responsibility for manag- My group is now involved in areas such capital construct ing the public education system in Canada was shared tion projects, legal and audit services, and employee between the provincial and local governments. The prov- benefits. The objective of the purchasing department is to ince set funding levels and established the curriculum play a key role in the supply chain for the areas of educa- guidelines. The province-wide education system was sep- tion and operations and to identify opportunities and con- arated into 54 school districts, each with an elected school tribute to the strategic success of the organization." board and full-time staff to oversee day-to-day operations. Wendy was also responsible for the district warehouse, Funding levels were set on a per-student basis and it was which carried two types of commodities: general supplies up to the local district to allocate its annual budget based (e.g., office supplies, paper, and cleaning supplies) and on the priorities established. Over recent years, the level maintenance, repair, and operations (MRO) supplies for of funding provided by the province to the school districts use in school building maintenance and bus repairs. Wendy had not increased. Instead, school districts were expected to commented on the district warehouse: "We just set up the identify and implement cost-reduction opportunities. warehouse last year. It took me three years to convince Provincial officials viewed consolidation of district senior management and the board that we needed the ware- operations as a primary method of reducing costs through house to control our MRO stock. Previously, we had things economies of scale. John Bowman, superintendent of the scattered throughout the district, with no controls in place." Morgan Ridge School District observed: Lowe School District Five years ago, the Ministry of Education eliminated The operating philosophy at Lowe was complete decen- about 15 districts through consolidations. They were tralization, where the school principal had total control about to repeat the budget. Although district schools had the tricts proposed worki Page ther 3 mee/ prov& cial post- @ thorin fo bypass purchasing and negotiate indepen reduction targets. would ld rather do things on our terms, nt agreements with suppliers, most schools preferred