Universities are feeling the financial squeeze from the fall in student numbers and rising costs. Collaboration on procurement is one way to meet the spending challenge
Latest figures show that the number of undergraduates entering higher education in the UK last year was 9 percent lower than expected – equating to 28,000 students.
It’s not yet entirely clear what has led to this shortfall, although the introduction of tuition fees and uncertainty over higher education funding must have been key factors.
But one thing is for sure: it highlights the financial challenges many universities are now having to grapple with.
Getting better value from their multi-million pound spend is one way institutions have been challenged to adapt to these rapidly changing
circumstances. Like local government and other parts of the public sector, there’s been a concerted drive to find greater efficiency, in particular via collaborative procurement.
Collaboration is nothing new in higher education. My organisation, the North Western Universities Purchasing Consortium, has for a number of years helped institutions to mutually secure value for money from their spending on goods and services. We’re collectively owned by 22 institutions in north west England, north Wales and Northern Ireland, so there are many economies of scale to take advantage of. Across the UK, other regional consortia are performing much the same role.
But we’re a long way short of the target set out in Sir Ian Diamond’s review of efficiency in higher education for 30% of 'non-pay spend' to be addressed through collaborative arrangements.
Most institutions already use consortia for what you might call their day to day spend – things like office supplies, IT and legal services. So a key role for us now is to raise awareness of the part procurement can play internally in putting universities on a sounder footing.
Part of this is about tailoring procurement to the unique nature of higher education, as too often it’s shaped by practices borrowed from the private sector. But for this to happen it needs to raise its profile within institutions.
The University of Liverpool has one of the most established procurement departments in the country and has used collaborative arrangements for many years. Over the last five years it has focused on having a greater influence over high spend areas like capital projects where it can have a major impact on getting value for money.
The university opened a new halls of residence last year and has another due to open in 2014 – both projects involved input from procurement staff from the outset. This has enabled them to ensure aspects such as furnishing and catering make use of existing contracts and framework agreements.
Liverpool is just one of many examples of institutions reshaping how they approach procurement. Universities are complex organisations and the process of addressing efficiency through procurement can be complicated when every department has its own devolved budget.
Some have opted to centralise as many aspects of spend as possible and this has helped to highlight where collaborative agreements would make more sense.
However, despite the progress, there’s often a reticence to engage fully with the collaborative procurement agenda. In many ways it’s understandable – universities are competitors, vying to attract students in an increasingly tough market. But for most areas of spend there are clear dividing lines.
Take halls of residence as an example. The design helps differentiate one university’s offer from other institutions so it wouldn’t make sense to all use the same architect. But if several universities are embarking on building projects, why not collaborate over the bricks and mortar? It’s an area where regional consortia are well placed to bring institutions together and exploit their collective buying power.
Ultimately, working together can actually lead to greater financial independence.
Mike Haslin is deputy director of North Western Universities Purchasing Consortium, one of England’s four regional consortia for higher education. NWUPC will host the biennial conference on university purchasing in Liverpool on 9-11 September.
