Why procurement excellence can be the driver of transformation in Higher Education
The Higher Education sector is facing unprecedented change. Universities are now operating in a
competitive, global marketplace.
At the same time, student expectations have risen rapidly and continue to rise, driving an increasing need
for improved facilities, new technology and all with a fundamental requirement for the highest ethical and
Higher Education procurement functions must support these changes by;
- Addressing rising costs through cost reduction initiatives
- Sourcing best value-for-money goods and services to deliver a high-class student and talent
- Supporting new technology introduction through facilitating University-Supplier interactions
- Delivering a sustainable university through appropriate procurement policy
- After staff costs (both academic and support), operating expenses account for the next biggest spend
area for a University – up to 40% of total costs. So, how bought-in goods and services are managed is
fundamental. In Higher Education, procurement really matters
However, although many Higher Education procurement functions are developing, most are still in the early days of procurement maturity – delivering a predominantly tactical, reactive approach or influencing only centralised spend areas or just tendering specific requirements. The gap between what is now needed and what most current functions can support is growing. A drive towards collaborative procurement has helped to some degree but, even if this is increasing, it will only ever cover a relatively small percentage of commodity-type spend. Universities shouldn’t let this mask the need to have a procurement function able to support every spend requirement and the impact of a high-performance procurement function.
Raising the game of procurement in Higher Education is not without its challenges. Highly devolved decision making to departments and faculties, and the importance of academics makes stakeholder engagement one of the most critical success factors. However, approaches such as Category Management with its focus on stakeholder engagement, demand challenge and supplier-led innovation are ideally suited to this sector and have already been demonstrated to be effective.
The potential benefits are significant and change can be self-funding. Our work with Higher Education clients shows a clear business case for transforming procurement. Universities have the potential to make significant cost savings on their operating expenses through improved procurement, to not only make a significant impact on their financial performance but also to become the core process by which change to services, facilities and technology is delivered.
Points to consider:
- Put procurement in focus. Operating expenses are the second biggest spend area after staff and can account for 40% of total costs. Procurement matters and should be on the agenda of senior management
- Assess the maturity of your procurement function. Benchmarking the performance of your current function will provide both the starting point but also indicate the potential cost savings
- Understand what Procurement Excellence looks like and build the vision for the future organisation
- Consider using expert support to accelerate change and maximise financial impact