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In education, we’re at a critical crossroads. You can no longer depend on year-over-year procurement budget increases, stable prices, or continuous funding streams. The increasing pressure to reduce costs, without sacrificing quality, is enormous.
Yet, within this environment, there is opportunity.
McKinsey analysts say that for procurement leaders, this is a “career-defining moment.” By shifting the focus from transactional to strategic, you can position your team as problem solvers, helping your administration overcome some of the biggest financial challenges they face.
In this article, we’ll look at the key trends in education and how they impact procurement, and provide you with actionable steps you can take to improve your procurement. We will also explain how cooperative procurement is key to achieving savings and efficiency.
Procurement is the sourcing, soliciting, negotiating, and purchasing of goods and services. A well-executed procurement strategy produces a smooth process that complies with increasing regulations and internal goals while delivering value.
There are different types of procurement, including:
Consider education procurement as a subset that focuses on the unique needs of school districts, colleges, and universities. Today’s budget challenges along with shifting student priorities have made it extremely challenging for procurement professionals and finance teams to keep everything in balance, procure the goods and services needed at a competitive price, and manage compliance requirements.
The process for procurement typically follows a pattern, including:
This orchestrated process is key to the procurement of the goods and services you need, but it is also labor and resource-intensive. Sourcing and developing RFPs, answering queries, and waiting periods to ensure fairness and competition take time—something today’s procurement teams have a shortage of.
In contrast, cooperative procurement can accelerate the timetable and simplify the process. For example, by working with an education-focused sourcing cooperative like E&I Cooperative Services, you can find hundreds of pre-negotiated contracts with standardized terms and ready-to-use coop agreements.
Because these contracts aggregate demand across multiple educational institutions, you can benefit from volume pricing discounts you likely could not achieve on your own.
Such cooperative contracts are highly beneficial when you have urgent needs but want to make sure you aren’t overpaying. Moreover, coop agreements offer significant benefits for all types of purchases. The National Institute of Governmental Purchasing (NIGP) estimates that cooperative purchasing can save up to 15% annually. Other studies report savings of 30% or higher.
Besides cost savings, the benefits of working with a group purchasing organization for procurement include:
You also get expanded access to suppliers. Vendors prefer large volume sales that come with a cooperative contract, meaning their cost of sale is reduced. This allows suppliers to pass on savings to buyers.
An effective procurement system provides the technology and tools to streamline the process. Essentials include:
Cooperative agreements provide transparency and reduce complexity. Standard terms and pricing make it easier to track and align with internal policies and compliance needs.
Leveraging coop agreements can go a long way in making your procurement process more efficient.
Other strategies include:
There is often some confusion about cooperative agreements versus grants. Some schools are reluctant to use coop agreements for grant fulfillment due to the grant’s stringent requirement for transparency and reporting. In reality, cooperative contracts provide an ideal vehicle for purchasing what you need to fulfill grants.
Most grants have objectives and timelines but do not require purchasing specific goods. This enables you to use coop agreements to lower your costs. For example, a school awarded a grant for STEM education might use a cooperative contract to buy lab equipment software at discounted rates while remaining in compliance.
Many grants also have firm timetables, which means procurement needs to happen quickly. Pre-negotiated coop contracts allow you to move forward quickly without having to rush charges.
Suppliers impact higher education procurement in key ways, especially top-tier suppliers. When you work with an established supplier with a proven track record, you can be confident in your purchasing process.
Cooperative agreements amplify this impact by fostering strong supplier partnerships, increasing visibility for suppliers, and reducing administrative overhead for institutions. Suppliers in cooperative networks benefit from streamlined contracting processes and access to a broader market.
You can’t talk about the trends in education procurement without taking a moment to discuss current realities. We’ve seen a whirlwind of change over the past five years, and the financial situation continues to evolve, making the job of procurement even more challenging.
“Procurement leaders are facing unrelenting pressure to alleviate short-term sourcing challenges, while also getting ready for new conditions that could arise in the future,” said Aaron McMillan, editor at Procurement Magazine. For many procurement and finance teams, this pressure is taking a toll. 55% of those surveyed said they are experiencing increased stress , with about half saying they are burned out; 86% report a bigger workload as well.
Unfortunately, the pressure may not ease anytime soon.
Enrollment concerns continue to plague colleges and universities. Talk about an enrollment cliff seems to be easing a bit. In fact, there will be more high school graduates next year than in the past. Still, the National Center for Education Statistics (NCES) does not anticipate an increase in college enrollment. Enrollment fell off 5.8% in fall 2023, reversing any gain made the year before. Even a gradual reduction in student population creates significant revenue problems. A report from the Federal Reserve suggests as many as 8% of colleges and universities are at greater risk of closing over the next few years.
Added to the list of challenges is aging infrastructure. The average age of school buildings now exceeds 50 years. And, while CapEx on construction projects generally increased last year, a study by Moody’s reports that schools need between $750 and $950 billion over the next decade for campus projects.
No wonder the report from the Federal Reserve said schools are facing “unprecedented fiscal challenges.”
When you understand the current landscape, it makes sense that a Deloitte survey of procurement leaders shows a pronounced shift in focus from transactional to strategic approaches for managing costs and workloads. Taking a strategic approach to procurement activities will be crucial to balance the workload and achieve cost control.
Key trends for education procurement going forward include:
Partnering with a sourcing cooperative like E&I Cooperative Services empowers you to stay on top of trends and access deep expertise in the needs of educational institutions. Over 6,000 schools, colleges, and universities are members of E&I, the only nonprofit and member-owned group purchasing organization that focuses solely on the education sector.
Coop agreements provide the flexibility and transparency you need to meet these growing challenges, fostering a collaborative environment. E&I has hundreds of ready-to-use cooperative contracts, meaning you can find just about anything you need for your school, including:
Sourcing cooperatives go beyond transactional support to act as strategic partners. While achieving cost control, cooperatives also provide three key benefits you need in today’s environment:
Most cooperative contracts span several years, giving you a better opportunity to develop strong supplier relationships.
Overcome the challenges of education procurement by partnering with E&I Cooperative Services. There is no cost to become a member, and you can benefit from significant savings. Because E&I is a nonprofit cooperative, members can also share in the proceeds in the form of patronage based on their purchasing activity, at the end of the year. These refunds provide you with a way to generate revenue from your spending.
What is a sourcing cooperative?
A sourcing cooperative is an organization that aggreagates the purchasing power of its members to negotiate contracts with suppliers, and by pooling resources it can often secure better pricing, terms and conditions than individual members can achieve on their own.
How can a cooperative agreement benefit educational institutions?
Cooperative agreements simplify procurement by providing access to pre-negotiated contracts, ensuring compliance, and saving time and resources. Collective purchasing power also typically produces significant cost savings.
How does data analytics improve procurement?
Data analytics provides insights into spending patterns, which can be used to identify cost-saving opportunities and monitor supplier performance.
What is a strategic spend assessment?
A strategic spend assessment (SSA) does a deep dive into your contract portfolio to find areas where you can consolidate purchasing to increase discounts, bring more spend under contract, and find cost savings by switching to different supplies. E&I Cooperative Services offers no-cost SSAs for its members.
Become a member of E&I Cooperative Services and browse hundreds of pre-negotiated contracts to maximize your procurement process.
