How the International School of Zug and Luzern Achieved Time- And Cost-Savings by Transforming Its Purchasing Process

Company: International School of Zug and Luzern
Location: Switzerland
Industry: Primary and Secondary Education
Website: https://www.iszl.ch/
Using Precoro since: June 2022
Users: 305
Client’s rating of Precoro: 9/10
Featuring: Business Project Lead at the International School of Zug and Luzern

The International School of Zug and Luzern: Fostering a knowledgeable, multicultural community

The International School of Zug and Luzern (ISZL) is an independent, non-profit day school in central Switzerland. It was established in August 2008 through the successful merger of three esteemed institutions: the International School of Zug (est. 1961), the Riverside School (est. 1989), and the International School of Luzern (est. 2006).

As an authorized International Baccalaureate® (IB) World School, ISZL offers a comprehensive range of programs, including the Primary Years, Middle Years, and IB Diploma. Grade 11 and 12 students can also undertake Advanced Placement® (AP) courses and exams audited by the College Board.

With over 1,200 students from 65 different nationalities, the school embraces its multicultural community and nurtures the development of both primary and secondary languages – in fact, there are 50 first-language classes taught at the school! Furthermore, ISZL is a member of the European Sports Conference (ECS) and the Association for Music in International Schools (AMIS), and it encourages its students to explore various sports and arts outside of academics.

The International School of Zug and Luzern strives to maintain an inclusive and inspiring environment for all students, parents, faculty, and staff. Its core motto, “Respect | Motivate | Achieve,” permeates all aspects of school life and helps cultivate a strong and caring community.

Initial purchasing process at ISZL

Before last year, when faculty and staff at the International School of Zug and Luzern wanted to buy something, they could briefly discuss it with the principal or other budget holders and then order what was needed instead of going through a formal process. Interestingly, there was still a system of getting written internal approvals, but the approvals were granted only after the purchase was made.

So, each person bought what they wanted, filled out an Excel form, and physically sent it to the approver. Consequently, later, they couldn’t check what was ordered due to insufficient documentation. Thus, for many years, the school made orders without creating any purchase requisitions (PRs) or purchase orders (POs), so there was no visibility into purchases that specific departments made.

In general, the process seemed to operate backward compared to the conventional purchasing flow. The Business Project Lead also highlights that the purchasing process was "more consumer-based as opposed to business-based ordering," where people need pre-planning and official approvals.

Main pain points in the purchasing process of ISZL

When the Business Project Lead joined the company, he was supposed to review their existing purchasing process and see how it could be optimized. However, as he delved into the intricacies of the manual process, he quickly realized that minor improvements would not suffice because there were significant pain points. Even though, according to the Business Project Lead, the process seemed fine to many people. "When you looked at it in detail for audit purposes, you saw that the approval process was nonexistent, a paper trail wasn’t there in most cases, and who approved what and for whatever reason wasn’t clear," he explained.

Lack of transparency

According to the Business Project Lead, the number one pain point was the lack of transparency when people who made purchases didn’t know their budget limits and ended up overspending. In addition, when an invoice came in, the finance team wasn’t sure who ordered the items, why they were needed, and whether the order was correct.

Loose budgeting control

Most importantly, the Business Project Lead highlights that staff wasn’t to blame for disorganized purchases; they just didn’t know their budget limits, and they followed the established process everyone was used to. However, not having a real approval process and transparency for all parties involved resulted in miscommunication, overspending, and a lack of internal control over purchases.

Another significant issue was the confusion surrounding the budget codes assigned to various types of purchases. Whenever someone made a new purchase, they had to navigate through a lengthy list of 80 budget lines utilized by the school and essentially guess which one was appropriate for their purchase. Sometimes approvers weren’t even familiar with which codes corresponded to their department, so they would approve purchases that fell under the wrong budget. As a result, finance teams had to spend time regularly going back to fix such mistakes.

Lack of paper trail for orders

Another major issue was the lack of a paper trail which is crucial for auditing. Auditors couldn’t look through the school’s procurement documents and evaluate their spending because there was insufficient record keeping of purchase requests and purchase orders.

"Prior to implementing Precoro, the main challenges faced by leadership were centered around transparency and approval in the purchasing process. These were critical areas that caused frustration among budget holders because approvals were being sought only after the purchases were made.
For instance, a teacher might inform the principal about the need for new desks, estimating a cost of ₣5,000 during a casual conversation. However, when the teacher finds suitable desks from the UK, the actual cost ends up being ₣7,000. And then, due to customs and shipping expenses, the total eventually comes to ₣11,000. When seeking approval after the fact, the principal is taken aback as he was originally informed about a much lower budget of ₣5,000. This recurrent situation of unexpected budget increases posed significant challenges for the school's financial management."
— Business Project Lead at the International School of Zug and Luzern

No accountability for purchases

The school also suffered from the lack of accountability in purchasing. So, for example, the finance director saw a costly purchase that wasn’t needed or would cost less if it was ordered from a different vendor, so they could ask the budget holder why they approved it. Then, the budget holder, for instance, a principal or a department head, would say that the purchase was made before they could actually approve it. And the person who ordered the item would say they just followed the established process when they needed something and bought it. So there was a problem – overspending – but neither the finance team, budget holder, nor requester could be held responsible.

Ineffective vendor management

One more pain point was the lack of vendor responsibilities. As the school didn’t use purchase orders or negotiate agreements, it was complicated and time-consuming to sort out the situations when the wrong order was delivered. In addition, even if the leadership noticed that one department was spending too much, the lack of clarity on specific purchases made it impossible to analyze the reasons behind excessive spending. They could not identify savings opportunities, such as exploring alternative vendors, negotiating more favorable contracts, or eliminating redundant purchases after evaluation of existing stock.

"The existing purchasing process had areas where money was being wasted, leading to financial leakage. Moreover, it lacked a systematic approach that would allow the school to effectively negotiate contracts with preferred vendors. The lack of data accumulation made it challenging to track the exact amount spent with each vendor. If such data were available, it would enable the school to engage in meaningful negotiations based on concrete figures and expenditures with specific vendors."
— Business Project Lead at the International School of Zug and Luzern

Ultimately, the Business Project Lead believes these issues arose due to the absence of a dedicated procurement team and a lack of a well-defined purchasing process. When the school was small, they didn’t recognize the need for a procurement team; problems became obvious and out of control as ISZL got bigger and made more orders, with staff purchasing in a number of different ways. While they had a finance team, it did not fully encompass procurement operations for what was required. The Business Project Lead realized that the school’s purchasing process would need to be rehauled and would need someone to specifically manage it.

How the International School of Zug and Luzern envisioned the ideal purchasing process

Analyzing the challenges the school faced in its purchasing process, the Business Project Lead insisted on establishing a new approach that would include planning the budget in advance. He highlighted that it was vital for the finance team to set budgets for different departments and the school as a whole before the beginning of the school year so that approvers would be able to consider the present budget before okaying an order.

The school also wanted to tailor budgets to department needs instead of allocating the same budget amount to each department. To do so, they would need to track expenses and decide budgets based on that data.

An ideal purchasing process for the school would also require creating and approving purchase requisitions and purchase orders, utilizing receipts, storing invoices, and tracking budgets and expenses. According to the Business Project Lead, the most important change would be an established policy so that everyone would follow the same procedure.

But he quickly realized that they didn't have a tool to manage this process flow in the first place. That’s why he proposed implementing a centralized system to bring everyone under alignment. However, at first, stakeholders opposed this idea.

"Finance and leadership teams thought it might be too technical to train everyone to use some new software; it would be too much work. We're not a big pharma or finance organization; we don't need these big tools. There was a fear of over-technicalizing and over-complicating everything, and then they thought it would be too expensive.
There were many conversations around improving the Excel document type systems or using Google Sheets. But Google Sheets can't do what we need if we want transparency and real control over spending."
— Business Project Lead at the International School of Zug and Luzern

How ISZL chose the software

Initially, the Business Project Lead was searching for a solution via Google. Trying to understand what system would be the best, he contacted several other international schools and asked what they were using. It turned out that most of them were either utilizing Google Sheets or Excel, like ISZL did, or their accounting software to cover some purchasing processes.

The International School of Zug and Luzern uses Abacus accounting software. Still, it doesn’t let users track the orders, set up an approval process, or store the information about who ordered what, so it's insufficient for managing purchasing for complete transparency.

The school was looking for a system that could:

• automate the purchasing process and make it simple for users;
• streamline approval workflows;
• keep track of the stock balance and register the shipments from the warehouse;
• set up separate budgets for different departments;
• track expenses.

"It had to be something very user-friendly. As you can imagine, 250-300 people starting to use a new system where there was none can be quite daunting: there was some apprehension as a few people admitted they weren't technically savvy. So, it needed to be something that was extremely easy to engage with."
— Business Project Lead at the International School of Zug and Luzern

Through online research, the Business Project Lead chose seven purchasing software solutions to test, including Precoro. Then, he went through their trials to see how they would work in practice. The Business Project Lead highlights that with Precoro, he instantly noticed the simplicity behind the system. After completing the trial and becoming more familiar with Precoro, he decided it would be the perfect solution for ISZL.

"What made Precoro stand out was the ease of use, visual simplicity, and amazing price, but even more impressive was the support mechanism that was offered, the pre-support, post-support, and the continued training of staff.
— Business Project Lead at the International School of Zug and Luzern

The onboarding process

After deciding in favor of Precoro, the Business Project Lead presented the system to his leadership. He explained the benefits Precoro would bring, and this was swiftly approved. From there, the Business Project Lead prepared a plan for the implementation process, which involved a lot of communication with all the departments.

He began organizing online meetings with each department to discuss upcoming changes and also arranged live meetings. During these sessions, he walked people through the new purchasing process, provided clear explanations, and promptly addressed any questions.

The Business Project Lead acknowledges that some individuals were skeptical about implementing the new system, fearing potential delays in the ordering process and the complexity of the new procedure. Additionally, they feared their orders would get declined more often, or they would be asked to find vendors with better prices.

Thus, some people resisted the software implementation instead of embracing this opportunity for improvement. The Business Project Lead highlights that, although changes may seem daunting at first, the centralized approach is a must-have for transparency, effective budgeting, inventory management, and cost control.

Therefore, the Business Project Lead focused on planning for each department separately, starting with the primary school, which was the first one to be configured in Precoro. According to the Business Project Lead, he provided the needed information, and the team at Precoro added the users (at the beginning, there were less than 10 main users). Then, they worked together to make changes in the system so it would fit the school’s purchasing workflow.

After configuring the users, the Business Project Lead had drop-in sessions with different departments in the first six months to train people on how to use the software. He says that, overall, they had a 3-month period to transition all departments from the old process to the new one.

"We implemented the system in departmental stages. The first and second departments that underwent training were impressed with the system's efficiency and effectiveness. As a result, other departments expressed their eagerness to be included earlier than scheduled. The enthusiasm to adopt the new system was widespread, which was fantastic.
Although approximately 10% of people initially expressed reluctance to use Precoro, the Director decided to engage with those directly by explaining the current process and showcasing the benefits offered by Precoro. After walking them through the process, they realized that using the system involved only a few simple steps instead of the complex processes they were accustomed to, and they quickly started to embrace the change."
— Business Project Lead at the International School of Zug and Luzern

The current purchasing process

Now, all of the school’s departments use Precoro to create and approve procurement documents, monitor inventory, track expenses, and manage budgets. The purchasing process starts with a requester creating a purchase requisition and sending it for approval.

The purchasing team is the first line of approval as they ensure the numbers and other information is correct. Then it goes to the budget holders, usually principals, for the next step of approvals. When a PR is approved, a requester creates a corresponding PO, which goes to the vendor.

When the items are received, receipts are created in Precoro, and corresponding invoices are registered in the system. Thus, each PO is linked to an invoice and receipt. With all of this in place, each purchase goes through all the necessary approval steps, and the related documents are stored centrally.

"So, initially, Precoro was to be used for physical purchases that teachers made. This is the area where we had the biggest issues due to the number of users; with Precoro, this was reduced significantly. The other major costs we had, such as business expenses, rent, and telephone, would typically go through the finance team using the Abacus accounting tool.
However, as we could attest to how well it was working, the Director and the Head of Finance said, 'This thing is working so well, let’s put every single order through it. We can capture all the information, including our spending, and are able to have PO numbers for all the orders.'
So the outcome has been extremely positive. Now if anyone spends any school finances, it is captured in Precoro; that's our policy moving forward. Not only that – this works extremely well for auditing purposes. We can now provide clear and concise information for our auditors by simply running a report on any category."
— Business Project Lead at the International School of Zug and Luzern

The Business Project Lead also points out that, thanks to Precoro, the school can realize cost savings. One of the ways this is achieved is by preventing overstocking, as the system provides visibility into the school’s existing inventory. When a person wants to buy something, they or the approver can check that it wasn't already bought.

The Business Project Lead says it’s really easy to set up budgets in Precoro, and he’s waiting for the 2023-2024 school year budgets to put in the numbers for different departments. Each department will see its budget line and clearly understand how much they have left.

According to the Business Project Lead, it’s also incredibly helpful that now members of different departments will be able to choose only the budget codes that are related to their specific budget. This will ensure that departments can't accidentally use money from the wrong budget and will also prevent overspending.

One more positive change that the school made was hiring a purchasing manager who now helps the Business Project Lead ensure that the purchasing process stays organized. Now, faculty and staff know who they can turn to in case they face any challenges or have questions about ordering new items. They also understand what procedure they should follow so the whole process is clearer to all stakeholders.

The school’s results and conclusions

Complete transparency

From the Business Project Lead’s perspective as the creator of the purchasing department, implementing Precoro made the purchasing process completely transparent. He also notes that the need to configure the system encouraged them to formalize policy on who’s approving what and for what amount because, in Precoro, they can separate approvals based on the price of an order.

Full budget control

The Business Project Lead highlights that the new process has empowered budget holders to be more accountable for their approvals, resulting in more responsible spending decisions. For the first time, it’s guaranteed that purchases will go through an appropriate approval pipeline. The finance and the leadership enjoy full control over budgets, and they can also view a breakdown of expenses, which allows them to identify the highest spenders and engage in meaningful conversations around their spending patterns if needed.

The school can also now create budgets based on how much people actually spend instead of allocating the same sum of money every year. As a result, the Business Project Lead reports that they have successfully reduced budgets significantly compared to previous years. While the finance team had wanted to achieve this earlier, without an effective purchasing system, the school didn’t have the visibility into spending to see how much the budget could be reduced without detrimental effects.

Central storage for order-related documents

The general staff and faculty, who use Precoro on a daily basis, appreciate the convenience of having all necessary documents accessible to them in the system. With a simple process in place that includes automatic documentation, storage, and visibility, they can look back on everything they’ve ordered – items, their quantity, prices, dates of delivery, approval steps, and more – to make better purchasing decisions.

"We have received an overwhelming number of highly positive reviews from various individuals. Interestingly, there was a recent situation where two individuals who were initially skeptical about implementing Precoro now have a strong desire to take it with them as they leave the school to other organizations.
At the outset, even the finance team was hesitant about the idea of working with new software, fearing it would only complicate their processes. However, their perspective has since changed, and they are fully on board.
We have now garnered around 95% positive feedback, and this positivity isn’t limited to specific departments or individuals in certain positions—it spans across the business and within the leadership team. Everyone recognizes the immense value that Precoro brings, and they are truly appreciative of its impact on streamlining our purchasing processes."
— Business Project Lead at the International School of Zug and Luzern

Effective internal communication

When asked about his favorite Precoro feature, the Business Project Lead sang praises about the purchase requisition module, saying, "Each person can see their purchases, how much they’ve spent, and whether their documents have been approved. All that is clear, and it’s like the system is made for the people. It may sound trivial to you now, but previous to that, calls were going around. 'Has this been purchased? Where is this? What's happening with this?'" He appreciates its simplicity and that all the required information is visible in one place.

"The time savings we’ve experienced are truly remarkable; it’s difficult to fully grasp the extent of it. Previously, we used to spend so much time running around, chasing after paper documents. However, with Precoro in place, everything becomes transparent. We can easily track what has been approved and what hasn’t.
If there are any questions or concerns about approvals, discussions can be held directly within the system through comments. This ensures that all information is captured, leaving no room for disputes or misunderstandings—no more situations where it’s your word against theirs. It’s like having a comprehensive contact management system that allows us to see and understand everything that’s happening, all while effectively streamlining our purchasing process."
— Business Project Lead at the International School of Zug and Luzern

Better communication with vendors

According to the Business Project Lead, Precoro has also empowered the school to communicate with vendors more effectively. They see how many items are ordered from each vendor, and they might notice that, for instance, 100 people buy something from one place and they pay the regular consumer price. The school can then present this number to the vendor and negotiate a 15% discount for future purchases, realizing cost savings.

Regular improvements to the system

The Business Project Lead is also very appreciative of the new releases that come out twice a month as the Precoro team continuously tries to enhance and enrich various modules of the software. As a result, the school is confident in forging a long-term partnership with Precoro, and school management is eager to experience what else Precoro has to offer.

Key Takeaways

Before Precoro:

• Limited visibility into purchases
• Orders with post-factum approvals
• Fixed budgets that didn’t consider actual expenses
• Lack of accountability for approvers
• Lack of paper trail for audits
• No ability to analyze the expenses of each department
• Not clear how much was spent with each vendor

With Precoro:

• A clear overview of all purchases
• Streamlined approvals for purchase requisitions and purchase orders
• Budgets based on real expenses and with clear limits
• Visible data about who approved what, when, and based on which budget
• Centralized repository of the procurement documents
• Detailed breakdown of expenses
• Ability to negotiate discounts with vendors based on order history