Strategic Sourcing Strategies for Educational Institutions
Last updated: May 30, 2018
In the realm of higher education, spend analysis reports allow university stakeholders to distinguish between wasteful and necessary spending. With proper analysis and feedback from a third-party procurement specialist, schools can discover methods that save money.
Strategic sourcing for higher education is a concept that has grown in popularity as universities find themselves hit with budgeting restraints. As such, experts in procurement consulting for higher education have been in high demand at colleges both large and small.
Procurement’s Role in an Educational Institution’s Organizational Structure
One of the big problems with supply spending at colleges is that different departments make purchases separately from one another. For example, the science department will use one supplier while the engineering department will use a different one. This division can lead to inconsistent and inefficient spending practices for the university as a whole. When bidding takes place, stakeholders should be present from each institutional branch that will be affected by the RFP.
In response to demands for improved strategic sourcing in higher education, the role of procurement professionals has vastly risen at America's colleges. Even though procurement was once regarded as a function of minimal importance among administrative staff, the ability to source supplies with maximum fiscal solvency has become a much-valued skill set.
In addition to the negotiating skills and resourcing acumen that procurement professionals bring to the table, the field has also gained prestige among the executive branches at the nation's leading universities. At Arizona State University, for example, procurement specialists are included among executive bodies for help with drafting large-scale strategic plans.
Amidst the rise of procurement as an esteemed skill set among university executives, two priorities have risen to the top of the heap among the educational sector at large. One is the growing trend at smaller schools to pay closer attention to the scope and reach of budgets. Another is the increased support for budgeting proposals with sustainability in mind.
Changes in Action
According to some university higher-ups, smaller schools have an unprecedented chance to improve their budgeting with the new ideas that are being brought to the table by procurement specialists. In the past, smaller schools got the short end of the stick by lacking the necessary in-house procurement staff to negotiate supply deals to their own fiscal advantage. Essentially, these schools were considered to be covering their bases merely by getting their paperwork completed. Anything more complex, such as the planning of strategic resourcing, was considered beyond the scope and reach of smaller schools.
Thanks to the accessibility of the Internet, schools on the smaller end of the spectrum can also utilize solutions that automate the tasks involved with processing. As such, these schools have discovered more efficient ways to pool resources, find the best deals and save money in the process. In effect, they've become part of a revolution in the way that supplies are purchased.
Another development in this line of innovation has been group procurement, where multiple schools combine their buying functions around a single Web-based procurement platform. With this e-procurement option, these schools can purchase items at the same time and thereby secure better deals in the process. As such, they can benefit on numerous fronts.
When schools band together to combine their purchasing power, they can secure more favorable terms and conditions. For smaller schools, this process provides the opportunity to procure better supplies in vaster quantities and save money in the process. Moreover, it helps these institutions bolster their purchasing clout, which in turn leads to a more secure independence and control over fiscal matters.
When schools synchronize their purchasing behind an e-procurement platform, they mutually benefit from the shared sourcing expertise of one another. If one of the schools within the cooperative is staffed with an especially savvy procurement expert, the other schools can learn from the insights brought to the table and put the knowledge to use at their own institutions. As an increasing number of schools place a higher value on procurement expertise, many of these institutions are partnering to synchronize their buying tasks.
Amidst these developments, procurement experts are emerging as the ambassadors of intelligent spending among schools and universities. In some cases, intelligent spending has put stronger support behind suppliers of eco-friendly products and services. Likewise, procurement specialists have also directed attention toward smaller, local suppliers. In effect, the movement has been mutually beneficial for small schools and small suppliers alike. As such, procurement has been a game changer in the realm of fiscal policy.
The rise of procurement as a specialty has marked a huge change from the days when education executives had only scant understanding of their counterparts in the supply-chain industry. Today, campuses field some of the most forward-thinking and efficient methods of supply sourcing.
How Dryden Can Assist With Strategic Sourcing and Cost Reduction for Higher Education
Dryden Group assesses a university's purchasing processes to pinpoint office supply expenditures, which typically account for 75 percent of total spend. This analysis is conducted with regards to the school's location, capacity, leasing terms and maintenance costs. Combined, these insights allow us to develop a plan to cut expenditures, maximize resources and secure the best deals. Our procurement services yield the following benefits. They:
- Pinpoint wasteful spending on office supplies through audits of recent, successive billing statements: Have the office supplies been put to use, or have they taken up space in the school's storage units? Moreover, is the school paying too much for certain office supplies?
- Distinguish vital and unnecessary office supplies, both contract and fixed price: Which supplies are essential to the school's operation, and which have amounted to little more than an extraneous expense? A few unnecessary purchases can add up when multiplied across an entire university.
- Identify necessary service requirements: What services are vital to the operation of a school and should therefore be among the basic requirements? What would be the acceptable benchmark for an institution of the size, capacity and location in question?
- Establish present and ongoing procurement office-supply essentials: How would procurement best serve the school's current needs in regards to office supplies? Will these needs remain the same going forward, or will things fluctuate in the foreseeable future?
- Locate new suppliers and negotiate better terms with established vendors: Who are the best suppliers for school office supplies, and where are these vendors located? How can terms be renegotiated to the school's benefit with existing vendors?
- Examine and classify spending habits to identify wasteful areas and develop ways to improve inventory management: On what supplies has money been wasted, and how so? Has the school been overbuying and under-using or purchasing too much of certain supplies at unreasonable prices? What practices could the school implement to improve spending?
- Find opportunities to consolidate supplies for mutual cost savings: Does every lab at the university use a different supplier? Could all labs consolidate their purchasing? Are there other colleges in the area with good deals established with supply vendors?
- Implement a better set of supplier compliance procedures: What is the current state of the school's supplier relationships? Is communication optimal, or are things falling through the cracks? Find ways to develop more efficient supplier compliance.
- Run price-analysis comparisons to find the best savings opportunities on office supplies: Which suppliers offer the best deals on today's market? Has the university been purchasing supplies at reasonable prices, or have various products been overpriced? How much money could be saved with other suppliers?
- Run comparative analysis of supply prices and contracts in the event of mergers: How much would office supplies cost if a certain merger were to take place? Would the financial benefits of a merger justify the move?
Dryden Group consists of MRO procurement specialists with experience at helping schools manage their sourcing methods. Our team has helped educational institutions develop purchasing procedures that keep costs under control and establish compliance with vendors. At Dryden, we identify and eradicate wasteful areas in a school's supply chain with the following courses of action:
- Consolidate suppliers, establish a favored supplier base and improve vendor management: Through audits, analysis and price comparisons, schools can save money by establishing relationships with the most favorable suppliers of MRO items.
- Establish contingencies for unexpected demands that prompt abrupt, ill-planned spending: Could a sudden surge in enrollment cause supply spending to go over-budget for a season or more? How might a school better prepare itself for spikes in supply needs?
- Reduce occurrences of unexpected, sudden-need purchases that prove too costly: Might an expense arise that could leave a lab in jeopardy if a big purchase is not made? Would the school even be able to swallow the cost? How can these occurrences be avoided?
- Optimize pricing and boost compliance through periodic audits: How can the best prices be located and locked into place? How can relationships with vendors be secured on the best of terms for the benefit of the school?
- Gain access to multiple streams of data to get information on the best deals and prices: Are you really getting the best deals from your current supplier, or are there better prices being offered elsewhere? Where do you look to find and compare?
When it comes to indirect commodities, Dryden Group helps clients in the education sector save money. Regardless of how much a school might currently spend, we provide consulting services that illuminate hidden expenses and boost efficiency. Dryden procurement specialists help schools find the best ways to meet the following objectives:
- Spending assessments: With our thorough analysis of a school's spending habits, we help institutions reduce spending and pinpoint savings opportunities.
- Merger and acquisition support: In the face of mergers and acquisitions, it's crucial to have third-party procurement consulting. We provide guidance that helps schools reorganize at all levels during the merging process
- Benchmarking: Learn how the costs of your lab line up with prices that others within the same industry are currently paying for supplies.
- Auditing: We conduct audits of each item, service and invoice to find whether overcharges have been made and verify the compliance of vendors.
Dryden group has reduced spending at institutes of higher education on numerous fronts, including the following:
- Lab supplies
- Print services
- Building maintenance and upkeep
- Office supplies
- Phone and Internet expenses
- Call centers
- Computer software licensing and upgrades
- Contract labor
Dryden Group procurement experts help schools slash spending and put their money to better use for the benefit of student bodies and faculty.
Major University Case Study Information
At one major university Dryden worked with, one supplier of payrolling services and numerous suppliers of temp staff were used to fill the applicable functions. Here at Dryden, we gathered data on each of these suppliers to get more of an idea of the university's special requirements. We worked with the university's procurement to bring together an advisory group comprised of chief stakeholders from each of the school's departments.
We conducted surveys of university's stakeholders to gain an understanding of their special requirements. After reviewing the RFP questionnaires, references and pricing documents, we concluded that the university would be best served by implementing a managed service provider (MSP) that would offer payrolling and single-handedly manage the numerous staffing firms at play.
Even though the MSP would be an added expense for the University, it would also consolidate the school's contact point and provide vital organization. Furthermore, the MSP can secure special, money-saving deals through its work for other client institutions.
With our analysis complete and the scorecards reviewed, we sent the results to the University's advisory board with a final recommendation. We estimated the following savings:
- Payrolling Savings = seven percent and significant process improvements
- Staffing Savings = minimum of 10 percent based on markups alone plus access to a greater contingent workforce
As indicated, this university stands to make significant savings with our recommendations.
Lab Supplies Procurement for Educational Institutions: Case Study Information
Dryden has extensive experience working with clients in laboratories. In one case, we observed that the client was using several different suppliers, but the market hadn't been tested in a long time. Supplier complacency had become an issue, and the client wanted to comprehend the program intricacies and implement a measurable and sustainable program that would generate substantial savings. They had two major suppliers, two diversity suppliers, unsatisfied stakeholders, an untested market for the last 10 years and $30 million in annual spend.
Direct objectives were to implement a more robust diversity program, buy from more local suppliers, increase the satisfaction of stakeholders, audit for compliance after reviewing current terms and, finally, benchmark the opportunity to figure out the best way to streamline the program. After our process of data collection, consolidation, finding the baseline of the program, auditing contracts, collecting overcharges, conducting stakeholder interviews, RFP draft, launch and analysis, meeting with stakeholders to review analysis and reviewing and implementing an MSA, the following outcomes took place:
- Initial audit recovery: $200,000
- Total savings: $3.5 million
- Product savings: $2.1 million
- Incentives: $715,000
- Other service reduction savings: $447,000
Procurement Consulting for Higher Education From Dryden Group
In the realm of higher education, strategic sourcing is a vital component of budgeting. It's crucial for each lab to secure the best supplies at reasonable prices. At Dryden Group, we help educational institutions pinpoint their inefficiencies and balance budgets through smart spending and vendor compliance. Contact Dryden Group for more information about strategic sourcing for educational institutions.