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More than 2,500 years ago, the Greek philosopher Heraclitus remarked that “change is the only constant in life.” His words still ring true today, especially in the landscape of higher education.
Higher ed has been hit with a wave of challenges, including dealing with flat or declining enrollment, rising costs, online alternatives, and shifting attitudes toward the value of a college education. For procurement teams, it’s been a bit of a roller coaster ride since the pandemic disruptions. Even for those colleges and universities that have deep pockets, budget constraints are now the norm.
Procurement leaders are increasingly being tasked with finding innovative ways to reduce costs without diminishing the quality of services. It is a significant job and a challenging one. However, there are proven financial and procurement management strategies that can meet today’s demands and provide savings.
For years, procurement teams have been challenged with squeezing out increased savings. It can seem like there is little room for continued improvement—particularly in the face of inflationary pricing. Despite an average 4% increase in expenses for colleges and universities in fiscal year 2023, certain categories of spending saw notably higher price increases. A 4% budget increase can also get swallowed up quickly when the cost of goods and services surpasses budget allocations.
If you are a CFO or procurement leader at a college or university, here are five tactics to improve financial and procurement management.
Data can be your best friend when you are looking for additional savings opportunities. E&I’s Strategic Spend Assessments (SSAs) can sort spending by category to look for potential cost reductions.
Conducting a detailed procurement financial analysis can uncover consolidation opportunities to produce volume discounts and priority areas where alternative suppliers can spur competitive pricing. Benchmarking best-in-class pricing can help negotiate better deals with more favorable terms.
Higher education institutions still struggle with maverick spending at the department level. A spend analysis can help demonstrate the potential savings from bringing more spend under contract.
While you may have significant purchasing power individually, aggregating bulk buying power by joining with other colleges or a sourcing cooperative like E&I Cooperative Services can produce even greater cost efficiencies.
For example, E&I leverages collective spending across more than 6,000 schools to negotiate more favorable pricing and terms. Competitively sourced contracts can help bring more spending under management and produce considerable savings.
eProcurement platforms can also help you rein in spending. You can require department heads and anyone involved in buying to choose from preferred providers and contracts enabled on the platform. The most effective systems will allow you to set approved spending levels and access approved supplier catalogs.
The RFP process can be tedious and complicated. At best, it takes time. You can reduce administrative overhead by letting E&I handle the RFP process for you. E&I offers n extensive portfolio of competitively solicited contracts to help you remain compliant while saving you a significant amount of time.
There are also opportunities to generate revenue from your financial and procurement management strategies, reducing your expenses and returning money to the bottom line. Besides volume discounts, many suppliers provide rebates and incentives for commitments.
Many of the cooperative contracts through E&I include rebates and incentives for colleges and universities. E&I also provides patronage refunds at the end of each year based on purchasing through the cooperative. As a non-profit, member-owned sourcing cooperative, E&I returns proceeds and provides participation rebates. For 2022 and 2023 spending, E&I provided rebates totaling more than $15 million in the form of cash and Certificates of Equity.
E&I can help with your financial and procurement management. Besides cooperative contracts, E&I offers procurement financial analysis. No-cost Strategic Spend Assessments can take a detailed look at your spending by category to create greater transparency in your spend and look for opportunities to reduce cost by:
E&I Cooperative Services has a team of experienced procurement and category specialists who focus exclusively on the education sector. Contact E&I today to discuss opportunities to improve your financial and procurement management strategies.
