The benefits of collaboration in procurement

Two people shaking hands in a meeting
Working together: photo credit: Nguyen Vu Hung (vuhung) via photopin cc
Collaboration in procurement is nothing new, but is becoming ever more important as universities seek to double their capital spending, Rex Knight writes.

Collaboration in procurement in higher education (HE) has a distinguished history. I write as chair of the Southern Universities Purchasing Consortium (SUPC), one of the four regional purchasing consortia for English HE, which has just celebrated its fortieth birthday.

The consortia work together as part of Procurement England Ltd (PEL) to ensure that English institutions get all the benefits of collaboration.

We are working together to meet the target set out in Professor Sir Ian Diamond’s 2011 report on efficiency and modernisation that 30% of non-pay spend should be through effective collaborative arrangements by 2016. As another efficiency report by Sir Ian approaches, we are hoping to build on these achievements

Collaboration benefits

Books have been written on the benefits that can be gained by collaborating on procurement but they can be summarised as follows:

  1. Better information on which to base decisions: Information is power in procurement and being able to gather data nationally on what we are buying, and from which suppliers, puts us in a good position to identify key areas of spending where there is real value to be gained by putting national agreements in place.
  2. More efficient processes: Given that we all need to undertake competitive procurement processes to achieve best value and comply with regulation and law, it makes sense for this to be done just once for all institutions, so that local procurement offices can make use of national agreements. As ever, this is easier said than done, and requires very close dialogue between institutions and the consortia so that the national agreements reflect the different needs and priorities of institutions in a complex and diverse sector.
  3. Spending power: The obvious point of course, but one worth making, is that collaborative purchasing can enable institutions to buy at prices that they would not have been able to achieve on their own. For example, last year SUPC members spent £346m through the collaborative agreements available to them, with £44m in savings on that spend.
  4. Development and sharing best practice: This is something the higher education sector excels at and procurement is no exception. Courses, online training, websites, conferences, and specialist group meetings all take place on a regular basis. This is the responsibility of individual institutions and the regional consortia, but also the Higher Education Procurement Association. I have just attended the SUPC December council and I was very impressed by the welcome to new members and the level of genuine collaboration and sharing going on, including over dinner and in the bar, as well as in the formal sessions.

Challenges for the sector

Over the coming years, I think the role of procurement in the sector is going to increase in importance. The sector will continue to face challenges in demonstrating value for money in the context of challenging targets for reductions in public expenditure, and there is a perception that, so far, we have been relatively protected. Financial forecasts analysed by HEFCE indicate that institutions are planning to double capital expenditure over the next five years in comparison with the previous five and procurement teams in institutions and consortia will need to be engaged with ensuring that this investment delivers best value to the sector.

So, how is the English sector gearing up to face the challenge? Firstly it’s important to say that PEL, the overarching body for English HE procurement, is a relatively young organisation, having only been set up just over a year ago to ensure that the regional and national consortia work well together.

We are building on firm foundations, as historically the consortia have shared information and intelligence and ensured that individual members lead on key national agreements so that we do not duplicate effort and dilute our buying power.

National contracting plan

PEL has adopted a plan for the next couple of years. At the heart of that is a national contracting plan based on national spend analysis and clarity about who is working on what.

For example, there is a national body, The Energy Consortium for energy, and The University Caterers Organisation for Catering. Jisc also has a significant role in procurement on behalf of the sector, in relation to IT infrastructure and e-journals.

Institutions and the consortia are also reviewing strategies and resources. Last week I took part in a very productive session at the SUPC council on its five year strategy, for example. At that meeting one of the SUPC heads of procurement who has joined from outside the sector described collaboration as the jewel of procurement in HE and all of us are committed to ensuring that it gleams ever more brightly in the future.

Rex Knight is chair of SUPC and PEL, the overarching body for English HE procurement.

photo credit: Nguyen Vu Hung (vuhung) via photopin cc