Strategic sourcing involves optimizing a school’s overall spending with few suppliers, going through the process of establishing contracts as a university or as one educational institution, as opposed to every department or school having to go through this process themselves. With strategic sourcing, schools and universities save money, centralize their procurement planning and management processes.
The university’s strategic sourcing plan involves establishing lasting relationships with suppliers who provide deep discounts on services and products. As a university’s spending on strategic contracts increases, it creates opportunities to expand discounts and enhance service levels.
The benefits of strategic sourcing for educational institutions include; better-negotiating power, improved supplier and contract management, and lower overall procurement costs by reducing transactions that use the competitive bidding process.
Cost Savings
Having a formally adopted and well-defined sourcing strategy saves schools and universities money in several ways. First, administrators can identify and select suppliers who offer maximum value. Secondly, schools can negotiate lower unit prices against high volume purchases, thus achieving economies of scale. Finally, procurement is carried out against external market factors like competition and changing regulations, maximizing profits, and achieving a competitive edge.
Risk Mitigation
Strategic sourcing adheres to a cost-focused approach in offsetting potential risks. By analyzing total spending and value delivered by suppliers, enterprises can carry out quality, financial supplies, and customer risk assessments. By identifying these risks, schools and universities can establish a solution to mitigate these risks. In addition, fostering close relations with trusted suppliers can keep you ahead of possible inhibitors in the supply chain.
Continuous Improvement
Strategic sourcing is not a one-off plan or activity. It calls for continuous monitoring and constant evaluation and re-evaluation of strategic sourcing processes. It is a sustained cycle of improvement where executives and managers identify room for improvement and build sustainable solutions. Further, strategic sourcing enables stakeholders to make informed decision-making in areas such as future development of business models, staying competitive, and capitalizing on market opportunities.
Contract Management
Strategic sourcing enables schools to analyze spending in terms of dollars and the number of transactions. It enables suppliers to talk to schools and departments and establish an evaluation committee to spearhead procurement processes. Strategic sourcing enables schools to issue formal invitations to bid using the templates created by the procurement service. Strategic sourcing helps in contract management processes throughout the contract lifecycle stages.
Spend Analytics
Spend analytics is a core part of strategic sourcing. Trusted service providers for strategic sourcing services for schools and universities optimize strategic sourcing through spend analysis. This analysis broadly involves identifying, gathering, cleansing, grouping, and analyzing the data to identify trends and patterns. Strategic sourcing service providers use real-time data analytics to realize a host of benefits: cost avoidance, cost reduction, incentives, revenue, and efficiencies.
Strategic Spend Management
Strategic spend management provides real-time visibility in an institution, enabling administrators to know where every single dollar is going. Strategic sourcing tracks and reports expenditures, providing clear visibility of completed transactions. By identifying expenditures, it’s possible to make comparisons and identify how new expenditures compare to previously approved budgets. Strategic sourcing provides spend management services customized to your institution’s internal needs.
Alignment of Objectives and Sourcing Processes
Naturally, all procurement and sourcing activities must fall in line with business goals. Procurement strategic sourcing broadly entails the alignment of business objectives and sourcing processes. As a result, schools and universities achieve better performances, greater efficiencies, and minimal risks when they leverage strategic sourcing.
Procurement’s Role in a School or University Setting
One of the biggest problems with procurement in schools and universities is that departments make purchases separately. For instance, the applied sciences department will use one supplier while the engineering department will use a different vendor. This division can lead to inefficient and inconsistent spending practices for the university as a whole. When bidding is initiated, stakeholders must be present from each institution branch that’s likely to be affected by the request for proposal.
In response to demands for strategic sourcing in schools, the role of procurement staff has vastly risen in American colleges. Even though procurement was traditionally regarded as a function of least importance among administrative personnel, the ability to source products and supplies with fiscal solvency has become a much-valued skill.
In addition to the resourcing acumen and negotiation power that procurement professionals bring, the field has also attracted attention among executive branches at the nation’s leading colleges. At Arizona State University, procurement professionals are included among executive bodies to help in designing and drafting large-scale strategic plans.
Amidst this rise of procurement as a valued skillset among university executives, two priorities have risen to the top of the heap. One is the growing trend for smaller schools to pay attention to the scope and reach of institutional budgets. The other priority is the increased support for accounting and budgeting with financial sustainability in mind. So, as institutional budgets shrink and as demand rises, schools and universities will be forced to adopt strategic sourcing to cut costs and improve efficiency.
ProcurePort Strategic Sourcing Solutions
Whether you represent a university, college, vocational training, technical, or specialty school, ProcurePort can help you with category management and strategic spend management. ProcurePort’s strategic sourcing methods allow higher learning institutions running lean to be more efficient and produce massive cost-savings in their procurement. ProcurePort reduces reliance on tuition hikes by examining school and university budgets to find and optimize hard-dollar savings.
Contact ProcurePort for timely strategic sourcing solutions.