Breaking New Ground in Program Optimization
Our Purchase Card Program Optimization initiative is a powerful way to improve the effectiveness of procurement programs by identifying opportunities to increase the use of purchase cards within an organization. Several federal agencies are currently maximizing their programs with the initiative, which has recently become available to states and public universities as well. The first university to implement these tools, the Medical University of South Carolina (MUSC), is already seeing outstanding results.
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Budget reductions compel significant savings
Founded in 1824, MUSC is a progressive education pioneer, having transformed itself from a small private college into a respected state university with a medical center and six colleges that produce medical doctors, dentists, pharmacists, biomedical scientists, and many other health professionals.
Motivated by a round of budget reductions, MUSC first instituted its purchase card program with Bank of America in 1998, training and certifying 1,197 cardholders. By using purchase cards for routine purchases, MUSC currently saves more than $69 per transaction and has realized total savings to date of $22.8 million.
A leader looks ahead
Susie Edwards, director of budget and purchase for MUSC, is still looking ahead. “We’ve made great strides, but it’s important to us to continue to save as much as possible,” she said. “Our Issuer, Bank of America, gave us a compelling outline of what Program Optimization could help us achieve. And Visa’s Program Optimization gives us access to Visa’s Benefits Calculator (a Procure-To-Pay consulting tool) that will allow us to measure the success of our program.”
“MUSC is a real leader when it comes to cost savings.” said Henry Siler, vice president, Bank of America. “Susie and her team continue to make their purchase card program a model for other organizations to follow.”
MUSC began its program optimization process in April 2005. Our initial analysis of its accounts payable files revealed that the university conducts 30,000 transactions annually, totaling $6.8 million with Visa vendors.
Edwards’ team developed an action plan to identify what they call “quick hit opportunities” to gain the most value from the project:
Edwards says it’s amazing how much the optimization process has already revealed about their card program, even at this early stage.
“Visa’s Program Optimization has sorted and organized our data in ways that give us a new, transparent look at how our organization operates,” she said. “It’s amazing how looking at the same figures from a different angle can be so revealing.”
Sharon Ford, purchase card administrator for MUSC, agrees. By analyzing the program optimization data, Ford has already noticed that several departments are not using their purchase cards for all purchases, even though they were authorized to do so.
“Many of our research areas are growing very quickly and don’t realize they need to equip their new staff with the cards,” she said. “Now that we’ve identified this problem, we can quickly educate the new staff and provide them with cards.”
Ford also found several specific account codes that are not allowed on the purchase card. A total of 6,100 transactions are currently being made through more expensive payment channels, such as checks. Visibility and exact data give her the tools to potentially convert these codes to purchase cards—a potential savings of over $426,000.
Both Ford and Edwards are excited by these preliminary findings and eager to find even more opportunities to make their program more efficient.
“This helps us see what’s not happening. Until now, we weren’t aware so many of our departments were not utilizing the purchase card as often as they could,” Ford explained.
Spreading the message of cost savings success
Although the program is still in its initial phase, both Edwards and Ford already say they would definitely recommend Visa’s Program Optimization to other organizations.
Edwards also said that program optimization has made her very popular with other purchase card program administrators in the state.
“At conferences where we network, like Bank of America’s User’s Conference for South Carolina, Sharon and I get approached by all kinds of colleagues curious about our progress with program optimization,” Edwards said. “We have lots of phone numbers — everyone wants us to keep them informed of our results. Many state organizations are learning from our experience.”
Those final results will be well documented. Edwards’ team has an action plan in place to monitor purchase card performance indicators from start to finish. MUSC is tracking all transactions per month per department, and after implementing the optimization strategies, they will do another review to document the extent of their progress.
“This is a wonderful benchmarking opportunity for us,” Edwards said. “We’re making sure we can quantify every cent of our program optimization success.”
Need further assistance with Visa Government products and solutions? Email us at: firstname.lastname@example.org. For questions regarding disputed transactions or other issues with your current card activity, contact your issuer.