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University takes cost-saving measure to out-source receiving and delivery services to MagRabbit, Inc.

The University of Texas at Austin has initiated a cost-saving measure that will eliminate the university’s Central Receiving and Delivery Department and replace it with a logistics company–Austin-based MagRabbit, Inc.

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AUSTIN, Texas—The University of Texas at Austin has initiated a cost-saving measure that will eliminate the university’s Central Receiving and Delivery Department and replace it with a logistics company—Austin-based MagRabbit, Inc.

The measure is expected to save the university about $200,000 annually for services that include receiving products from vendors and transportation companies, inspecting them for quantity and damage, delivering to departments on campus and providing other shipment and delivery services.

The 20 employees working in Central Receiving and Delivery were informed in a meeting Friday (July 8) about the decision to out-source to MagRabbit and were told efforts were being made to help them obtain employment within other areas of the university or with MagRabbit.

Kevin Hegarty, the university’s vice president for financial affairs, said the employees are being given six months notice before their employment with the university ends. State law only requires 60 days notice but the university wanted to provide a longer period for the transition to other employment, he said.

“While we can’t make promises, our goal is 100 percent placement of those employees who wish to continue working for the university,” Hegarty said. He said the department’s 20 employees were encouraged to apply for other non-teaching positions posted on the university’s Human Resources Web site.

“Our Human Resources Services people will keep in their files that these are ‘special consideration employees,’ which puts them at the top of the list for employment opportunities,” Hegarty said.

The arrangement with MagRabbit is the latest in a series of cost-saving measures Hegarty has initiated to provide an annual savings to the university of about $7 million. Money-saving initiatives have included consolidating the university’s purchasing power by creating a centralized purchasing program, making more efficient use of office equipment to make better use of technology and reduce the cost of supplies and implementing new credit card payment options.

Hegarty said MagRabbit took over management of the university’s receiving and delivery services on Monday (July 11) with a combination of its own staff and university staff members who work for the university’s Central Receiving and Delivery Department. The company has expressed interest in hiring some of the people who had been working in Central Receiving and Delivery.

Hegarty said he expects no major change in the type or quality of services provided to the university community as a result of the switch to MagRabbit. He said the employees in Central Receiving and Delivery provided good service in the past but the out-sourcing was instituted as a measure to be more efficient and save the university money.

“We see it as a means of reducing our immediate cost and better controlling the growth of future cost, while at the same time providing the same level of receiving and delivery service this campus has come to know and expect,” Hegarty said.

Floyd Self, the university’s director of purchasing, will manage the out-sourcing relationship between the university and MagRabbit.

MagRabbit, Inc. is an Austin-based, minority-owned logistics provider that has received numerous accolades for its excellence. The awards include the 2001 Minority Supplier of the Year award from the National Minority Supplier Development Council, the Small Business Administration’s 2002 Administrator’s Award for Excellence and Dell Corporation’s 2001 Diverse Supplier of the Year award.

For more information contact: Robert D. Meckel, Office of Public Affairs, 512-475-7847.