Buy smarter, buy better
Can clever thinking in procurement help universities stay lean while delivering a great student experience? Samantha Cade, a procurement specialist with experience working in the education and healthcare sectors, thinks so.
The idea that student tuition fees means that universities are sitting pretty couldn’t be further from the truth. Drastic reductions in public funding combined with higher expectations from students and parents mean that institutions have to work harder than ever to remain competitive, and move up those all-important rankings.
Making procurement more efficient can help, reducing a university’s cost base by smarter purchasing, helping it tender for better services and supporting smaller, local suppliers.
Procurement in the university sector has attracted some attention in recent years, with debate about the right way to set up functions and teams. Currently, approaches vary. Some institutions have appointed directors of procurement, with a place on the executive board. Some may have a head of procurement reporting to the chief finance officer.
Others may simply have a purchasing team who undertake the transactional day-to-day activity of placing orders and paying suppliers.
Universities seem undecided on the right model, or even if a right model exists. Yet while it’s true there’s no one-size-fits-all approach, there are certainly common factors that all procurement teams should be aware of to improve services and achieve value for money. Getting involved in collaborative procurement is relatively straightforward.
1. Act on the Diamond Report
What’s it about?
Published in 2011, The Universities UK report, Efficiency and Effectiveness in Higher Education, led by Professor Sir Ian Diamond, brought procurement to the forefront for vice chancellors. The report is specific about the contribution that procurement can make to a university and the impact a strategic function can have, and it challenges procurement functions to think more strategically.
What are the implications?
Linking a university’s strategic objectives with its procurement strategy that supports them is crucial. Objectives must be realistic and achievable, and demonstrate how procurement teams can contribute to delivering value for money in terms of solutions and whole-life costs, not just the lowest price. The key here is to establish robust methods for measuring success. What indicators form your baseline? What evidence do you need? How will you measure success in 12–24 months’ time?
2. Drive collaboration
What’s it about?
One of the Diamond report’s objectives is collaborative procurement. It says that 30 percent of a university’s procurement should be carried out collaboratively, either at a national or regional level.
What are the implications?
Getting involved in collaborative procurement is relatively straightforward. Start engaging with national framework agreements and regional agreements such as the Southern University Purchasing Consortium and the North Western Purchasing Consortium.
Sponsoring academies also naturally lends itself to collaboration, enabling you to work together to achieve better value procurement. University procurement teams can also help fill knowledge and skills gaps in academy procurement functions.
3. Implement the Social Value Act
What’s it about?
The 2012 Public Services (Social Value) Act emphasises that those procuring public sector services should consider the impact on the social, environmental and economic benefits. In particular, it asks those procuring services to consider how it could benefit the local area and stakeholders. It also requires procurement teams to show how these elements have been applied during the buying process.
What are the implications?
Universities are in an ideal position to work with their local communities and providers to introduce new ideas for delivering services and looking at ways to innovate. Embedding social value into procurement strategies is a good way to start. This could include considering how requirements can be divided into ‘lots’ or apportioning budgets for projects to appeal to a wider range of potential suppliers, not just large organisations with high turnover.
Incentivising suppliers and contractors to implement recruitment and training initiatives that support the local economy could also be useful. They could offer work placements in conjunction with government initiatives or run apprenticeships or training and development packages to increase the skills of their workforce.
Measuring success or return on investment of these initiatives is a challenge. There is a range of non-financial indicators that procurement teams and their suppliers could deploy, including the wellbeing of individuals, communities and the environment. Suppliers have an important role to play delivering higher education-led social value, and developing strong relationships and mutual objectives with forward-thinking suppliers is crucial.
4. Adopt the 2015 Public Contracts Regulations
What’s it about?
The 2015 Public Contracts Regulations implement the European Union’s 2014 Public Sector Procurement Directive in the UK. There are a number of areas that will interest university procurement teams, including: the change in thresholds and implications of the ‘light touch regime’ for education; the shift in focus to pre-contract market engagement and a more collaborative approach to supplier engagement; the provision of clear definitions of requirements and outputs; and the opening up of competition to provide better access for smaller suppliers.
What are the implications?
Procurement teams must be up to speed with the new regulations, so that they can implement them in their own institutions or advise those who may be affected by them. This is particularly important where EU funding may apply and the risk of clawback of funds due to non-compliance with the regulations is high.
There is an opportunity, too. The new regulations have been introduced to provide modernised rules for procurement, to make it quicker and easier to tender public sector contracts, and to reduce the administrative burden for suppliers. Procurement teams should take this opportunity to improve their efficiency and do things better, complying with the spirit, as well as the letter, of the regulations.
5. Start e-procurement
What’s it about?
One of the new requirements in the Public Contracts Regulations is that all procurement for public services should be conducted electronically by October 2018.
What are the implications?
Although this puts pressure on universities to adopt e-procurement, it is important to remember the benefits of doing so. These include reduced transaction times, better contract compliance and freeing up staff time to concentrate on more strategic activities. E-procurement also significantly reduces the associated costs of tender submissions for suppliers and evaluation costs for buyers.
There are a number of ways in which e-procurement can be implemented. Procurement teams should investigate the use of electronic catalogues, adopt electronic auctions and implement online purchase-to-pay processes. The benefits to the universities of successfully adopting e-procurement include the value that is added by freeing up time for directorates to concentrate on improving student services and the cost efficiencies that can be achieved.
By taking account of these factors and the changes in regulations, procurement teams are well-placed to be at the forefront of organisational efficiency and lead a rigorous drive for cost improvement and service delivery.