University collaboration must become the norm to cut costs, not standards
Working together can be a tough sell, says Florence Gregg – but it's about understanding when collaboration is appropriate
Florence Gregg
Mon 25 Nov 2013 06.35 EST First published on Mon 25 Nov 2013 06.35 EST
Detachment from day-to-day costs needs addressing if we're to make every pound count, says Florence Gregg. Photograph: Christopher Furlong/Getty Images
Our universities are going through a period of unprecedented change, from uncertainty around future higher education funding to a falling, yet ever more demanding, student intake. All of this has created financial pressures on a scale never seen before.
Procurement can be an important avenue to addressing some of these issues. Getting better value for money from universities' sizeable buying power makes sense and there's plenty of scope for that to happen. But to understand the challenges this entails, it's important to appreciate the complexity of higher education procurement. When I was head of purchasing at Queen's University Belfast, my staff were involved in buying everything from toilet rolls to the latest scientific equipment. Universities buy everything a local authority buys and a whole lot more.
One anecdote, from the mid-1990s, that highlights the complexity of what we buy was the purchase of a large piece of high-end equipment for installation on the eleventh floor of a building. After dismissing all possible options – including hiring a helicopter to lift it through a window – we concluded the item we bought would have to be able to be divided in half, taken up the stairwell and put back together again. It duly arrived in two parts, was hoisted up and reassembled. It worked! The trouble is, a few weeks later it became apparent the equipment used a phenomenal amount of electricity, making it too expensive to run.
How could this happen? Well, the university's energy bills were paid for centrally so from the point of view of the academic, when making his research grant application, electricity wasn't something that he had to worry about. This detachment from real day-to-day costs is common across many institutions and must be addressed if we're to make every pound count. In Queen's, we started to look at the total cost of ownership of all our purchases.
A number of universities are taking a fresh look at the way they spend. One example is Lancaster University, which following detailed business process reviews, has decided to be proactive in driving down its costs and consolidating spending activity. Over the past year, department by department, it has been centralising its procurement so that every area of spend goes through one office. The main gain has been efficiencies in process but the change has also highlighted inconsistencies in approach and areas where departments could be using the same contracts rather than developing them from scratch.
The need for a fresh look at procurement has been more pressing for others. Soon after its launch in 2007, the University of Cumbria found itself with rising debts as the economic downturn and austerity measures kicked in. It has set about restructuring its approach to procurement in order to find £800,000 of savings over the next four years.
Cumbria discovered it had numerous examples where the lack of a joined-up approach meant opportunities to work more efficiently were being missed. One example was training: five departments were sending staff out to the same courses when it would have been cheaper to hire someone in to deliver the training. From now on, senior managers will be given responsibility for different categories of spend with the aim of challenging demand and identifying where savings can be made.
One thing Cumbria and Lancaster have in common is the use of the North Western Universities purchasing consortium for their 'bread and butter' spend – things like stationery and computers. It not only saves money but also frees up time to focus on more strategic areas of procurement.
Many universities have used collaborative procurement as far back as the 1980s, but there's scope to do more. Universities have been challenged to collaborate on 30% of their non-pay spend – the current figure is a long way short of this target. But how do you convince people to make working together the norm at a time when they are competing in an increasingly tough market?
It boils down to understanding when it's appropriate to collaborate. A good example is the university prospectus. You may not want to share the same graphic designer – the design differentiates you from others – but why not use the same printers? Regional purchasing consortia have an important role to play in making it easier for universities to procure goods and services collaboratively and highlighting the benefits when they do.
Florence Gregg is a higher education procurement consultant and former head of purchasing at Queen's University Belfast.
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