Published: April 18, 2012

MSU student projects could save nonprofit groups $500,000

Contact(s): Andy Henion Media Communications office: (517) 355-3294 cell: (517) 281-6949 Andy.Henion@cabs.msu.edu, Tobias Schoenherr Supply Chain Management office: (517) 432-6437 schoenherr@bus.msu.edu

EAST LANSING, Mich. — In 2010, Tobias Schoenherr had a novel idea: turn his supply chain management students at Michigan State University into volunteer business consultants for nonprofit organizations.

After all, the undergraduates in SCM 371 needed real-world experience. And the nonprofits were too busy running day-to-day operations to focus on streamlining their supply chains.

Two years and two classes later, Schoenherr’s idea is a resounding success. His students have identified about a half-million dollars in potential yearly savings for a handful of Michigan-based nonprofit groups, including Peckham Inc. and Hope Network.

“I had high hopes with the projects, but I really didn’t expect these tremendous savings,” said Schoenherr, assistant professor in the Department of Supply Chain Management. “It illustrates the future potential that projects like this can have on the community.”

At Lansing-based Peckham, where people with disabilities make clothing and other products, hundreds of thousands of boxes are needed every year to ship the products. But officials at the nonprofit weren’t sure they were getting the best prices on their packaging and didn’t have time to do a full-scale pricing comparison, said Allison Parker, materials manager for Peckham.

So earlier this academic year, a team of supply chain students evaluated the market for box suppliers and came back with recommendations that stand to save Peckham as much as $160,000 a year.

Peckham plans to make a decision relatively soon on which vendor to choose, Parker said, adding that any savings will allow the nonprofit to enhance existing services and even develop new programs. Serving more than 1,400 clients a year, Peckham works to create positive change in the lives of people with barriers to employment.

“The student team identified a significant cost savings and can feel good knowing that it will have a positive impact on many individuals,” Parker said.

At Hope Network, a Grand Rapids-based nonprofit that operates dozens of residential treatment homes across the state, a team of supply chain students in fall 2010 developed a concept for a centrally located “store” at one of Hope’s facilities that would stock nonperishable items such as cleaning supplies and tissue paper. Delivering those items from the central store eliminated the need for staffers at the residential homes to make frequent trips to retail outlets to buy the items, saving significant money on transportation and lost employee hours.

The project launched for a limited number of residential homes in late 2011. It hasn’t taken off as much as officials had hoped – not because of the plan itself but because the employees have been slow to embrace the concept, as old habits die hard, said Joe Seeber, director of purchasing for Hope Network.

Seeber hopes that will change. He said the student concept, if fully applied, has the potential to save about $250,000 a year.

“It’s a great opportunity for Hope Network,” Seeber said. “As a nonprofit, savings like this is a big deal for us.”

From a student perspective, the class – required for supply chain majors – was a refreshing change from the usual bookwork, said Alex Zuellig, who was part of the Hope Network project.

“It was a lot of work,” said Zuellig, who has since graduated and landed a job in the purchasing department of a Chicago-area distributor. “But it was great, because with most class projects you can’t necessarily relate them to what you might be doing in the real world.”

The students also worked with Goodwill Industries, Gift of Life, Greater Lansing Food Bank and other organizations.

Schoenherr developed the idea for the class through the Lilly Teaching Fellows Program, a yearlong fellowship at MSU that encourages effective practices in teaching. The Lilly program gave him the opportunity to spend several months preparing for the project, including sending out proposals to a host of nonprofits, winnowing the list and meeting with officials from the selected organizations.

Schoenherr said this appears to be the first time that such a real-world project has been undertaken by supply chain students. He’s writing an academic article highlighting the results.

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