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It’s no secret. Colleges and universities today have significant financial concerns. Procurement teams are facing increased pressure to lower costs and create efficiencies to reduce overhead. Yet, teams must continue to provide the goods and services institutions need to function smoothly.
It can often feel a bit overwhelming, especially when you consider additional requirements necessary for things like sustainability and supplier diversity initiatives. Fortunately, there are strategies you can deploy in the procurement process to streamline workflow and produce considerable savings.
In simple terms, procurement for higher education is the purchasing and sourcing of services and goods to support activities at a college or university. It encompasses the entire procurement process, including efforts to ensure cost-effective purchasing strategies, comply with institutional policies and regulatory requirements, and provide quality goods and services.
Standard procurement procedures include identifying the needs of the academic institution, evaluating and selecting suppliers, negotiating contracts, and managing supplier relationships and performance. It is a big job, and it has only grown in importance to counter-balance tight budgets.
Procurement teams play a crucial role in purchasing and cost control. Strategic practices and financial procurement methods will support institutional goals and optimize procurement. This can produce several significant benefits for colleges and universities, such as:
The financial services and procurement process in higher education typically involves seven steps.
As the financial procurement process begins, the first step is to identify your institution’s goals and needs. Collaborating with departments and key stakeholders helps develop a set of priorities to outline the goods and services needed for your college or university, taking into account overarching goals and budget constraints.
Example: When procuring a new student information system, procurement teams would work with key members of the Office of the Registrar or Enrollment Services to develop a list of requirements. This might include integration with existing systems, data migration capabilities, robust reporting features, and the handling a specified number of concurrent users based on enrollment projections.
Market research looks for sourcing options and potential suppliers while gathering information on pricing, capabilities, trends, and alternative options.
Example: When researching office supply vendors, procurement teams may analyze each supplier’s product catalog, delivery capabilities, customer service ratings, sustainability practices, and available discounts or cooperative contracts.
Using the needs assessment and market research findings, the procurement team develops its strategy. This outlines the solicitation approach, timelines, evaluation methodology, weighted criteria, and guidance for making the award decision.
Example: For a campus construction project, the strategy may involve issuing a Request for Qualifications (RFQ) to prequalify contractors, followed by an RFP open only to prequalified firms that can meet the needed requirements.
The procurement method drives the solicitation process. Common methods include Requests for Proposals (RFPs), Requests for Quotations (RFQs), Invitations to Bid, or other customized solicitations sent to potential suppliers.
Example: For lab supplies, procurement teams may issue an RFQ to a pre-approved list of suppliers, requesting fixed pricing for a list of commonly ordered items for the year.
Proposals are generally assessed by a cross-functional team against weighted criteria like cost, qualifications, references, technical fit, and compliance with policies and regulations. The top-scoring supplier is then selected.
Example: For financial services, procurement teams may score potential suppliers on total cost of ownership, data security, training offerings, and the vendor’s track record in higher education.
The next step is to negotiate the contract, finalizing the terms and conditions governing the agreement, such as deliverables, pricing, service levels, invoicing, and termination clauses.
Example: There is often a trade-off in negotiations for both parties. Procurement teams may negotiate a higher level of integration support during the early stages in exchange for a longer contract for software systems.
After the agreement has been signed, procurement teams monitor supplier performance and ensure compliance with contract terms. Nurturing a collaborative relationship with key suppliers can pay dividends, especially when goals align.
Example: For office supplies, this may involve periodically reviewing spend levels, addressing any service issues, and renegotiating pricing at renewal based on updated requirements.
Academic institutions may use various procurement methods depending on the nature of the goods or services, internal policies, and complexity. The six most common procurement methods in higher education include:
In some instances, multiple methods may be explored to find the best solution. For example, procurement teams may request bids but then compare them against available cooperative agreements before making a decision. Conversely, procurement teams may use pricing and terms from cooperative agreements to negotiate with existing suppliers.
Let’s take a closer look at how cooperative agreements through purchasing cooperatives can help colleges and universities meet their goals. There are significant benefits from using cooperative contracts with a purchasing cooperative, including:
E&I Cooperative Services offers a broad range of competitively solicited cooperative contracts with industry-leading suppliers. Leveraging the aggregate purchasing power of more than 6,000 member institutions, E&I can achieve significant discounts for the goods and services you need. Because E&I focuses solely on the education sector, these contracts often include favorable terms for the benefit of higher education institutions, including rebates and incentives. E&I handles the entire contracting process for members, from RFP development to supplier management.
When you partner with E&I, you also gain an advantage by utilizing the combined expertise of education procurement professionals and category experts.
Spend analysis in procurement can provide insight into significant savings. With the amount of data generated through transactions today, schools that are not leveraging data are missing a big opportunity. By analyzing historical spend data across different categories, departments, and suppliers, procurement leaders can:
Collaboration between procurement, finance, and IT is likely to be required to capture accurate and comprehensive spend data.
E&I Cooperative Services provides no-cost Strategic Spend Assessments (SSAs) for its members to identify and capitalize on cost-saving opportunities. Benefits of E&I’s SSA include:
The SSA offers comprehensive visibility into your institution’s spending, breaking it down by category and top suppliers. This data-driven approach helps reveal trends and uncover areas for potential savings.
E&I’s procurement experts will examine your existing commodity spend, identifying opportunities to save money through consolidation and bringing more spend under contract.
The SSA allows you to see the potential savings you could achieve by opting into one or more of E&I’s cooperative contracts, empowering informed procurement strategy decisions.
The E&I team evaluates your spend patterns and suppliers to find areas where supplier consolidation can redirect spend toward more cost-effective options. Consolidation can produce better volume discounts and streamline your procurement process by reducing the number of suppliers.
A thorough analysis can also identify any variances from under-reporting by suppliers, ensuring that you have a complete understanding of your institution’s spending patterns.
E&I’s procurement experts leverage the insights gained from the SSA to identify future alignment opportunities based on your existing contracts and upcoming requests for proposals (RFPs). This strategic guidance can help you optimize your procurement strategy for long-term success.
With the volume of work that procurement teams must handle, technology and automation are key to productivity. Several solutions can enhance the process and help with cost controls.
Implementing eProcurement can streamline the entire procurement process, from requisitioning to invoicing, reducing bottlenecks, errors, and manual effort. This can also reel in maverick spending by requiring departmental purchasing to use the eProcurement platform with preloaded catalogs for preferred providers and negotiated contracts.
While E&I can conduct targeted spend analysis for procurement teams, institutions may want ongoing data analytics to uncover patterns and opportunities at every stage of the procurement process.
Dedicated contract management software can help institutions efficiently manage and track contracts, ensuring compliance and optimizing supplier relationships. For example, tracking renewals on cloud software can prevent automatic price increases from going into effect.
Supplier portals can aid in communication between procurement teams and suppliers to improve transparency and collaboration.
Robotic process automation can handle rule-based tasks, such as data entry, invoice processing, and compliance checks. This reduces rote tasks for procurement teams, freeing them up to focus on more strategic activities. RPA also reduces error rates, such as typos or duplicate invoices.
What is the common procurement method in higher education?
The most common procurement method in higher education is the Request for Proposal (RFP). RFPs allow institutions to evaluate proposals based on multiple criteria and select the supplier that best meets their needs.
What are the five “rights” of procurement in higher education?
The five rights of procurement are product, quantity, place, time, and price:
Contact E&I Cooperative Services to discuss your procurement strategies and see how E&I can help you save time and money.
