The Ultimate Guide to Financial Services Procurement for Higher Education Institutions

It’s no secret. Colleges and universities today have significant financial concerns. Procurement teams are facing increased pressure to lower costs and create efficiencies to reduce overhead. Yet, teams must continue to provide the goods and services institutions need to function smoothly.

It can often feel a bit overwhelming, especially when you consider additional requirements necessary for things like sustainability and supplier diversity initiatives. Fortunately, there are strategies you can deploy in the procurement process to streamline workflow and produce considerable savings.

What Is Procurement in Simple Terms?

In simple terms, procurement for higher education is the purchasing and sourcing of services and goods to support activities at a college or university. It encompasses the entire procurement process, including efforts to ensure cost-effective purchasing strategies, comply with institutional policies and regulatory requirements, and provide quality goods and services.

Standard procurement procedures include identifying the needs of the academic institution, evaluating and selecting suppliers, negotiating contracts, and managing supplier relationships and performance. It is a big job, and it has only grown in importance to counter-balance tight budgets.

The Importance of Strategic Procurement in Achieving Institutional Goals

Procurement teams play a crucial role in purchasing and cost control. Strategic practices and financial procurement methods will support institutional goals and optimize procurement. This can produce several significant benefits for colleges and universities, such as:

  • Optimizing spending and maximizing the value of every dollar invested
  • Ensuring compliance with regulations and institutional policies
  • Mitigating risks associated with supplier relationships and contracts
  • Supporting sustainability and diversity initiatives through responsible sourcing practices
  • Enhancing operational efficiency and streamlining administrative processes
  • Fostering collaboration and leveraging collective buying power through cooperative agreements

Seven Steps of the Procurement Process in Higher Education

The financial services and procurement process in higher education typically involves seven steps.

1. Identifying Needs and Defining Requirements

As the financial procurement process begins, the first step is to identify your institution’s goals and needs. Collaborating with departments and key stakeholders helps develop a set of priorities to outline the goods and services needed for your college or university, taking into account overarching goals and budget constraints.

Example: When procuring a new student information system, procurement teams would work with key members of the Office of the Registrar or Enrollment Services to develop a list of requirements. This might include integration with existing systems, data migration capabilities, robust reporting features, and the handling a specified number of concurrent users based on enrollment projections.

2. Conducting Market Research

Market research looks for sourcing options and potential suppliers while gathering information on pricing, capabilities, trends, and alternative options.

Example: When researching office supply vendors, procurement teams may analyze each supplier’s product catalog, delivery capabilities, customer service ratings, sustainability practices, and available discounts or cooperative contracts.

3. Developing the Procurement Strategy

Using the needs assessment and market research findings, the procurement team develops its strategy. This outlines the solicitation approach, timelines, evaluation methodology, weighted criteria, and guidance for making the award decision.

Example: For a campus construction project, the strategy may involve issuing a Request for Qualifications (RFQ) to prequalify contractors, followed by an RFP open only to prequalified firms that can meet the needed requirements.

4. Soliciting Bids and Proposals

The procurement method drives the solicitation process. Common methods include Requests for Proposals (RFPs), Requests for Quotations (RFQs), Invitations to Bid, or other customized solicitations sent to potential suppliers.

Example: For lab supplies, procurement teams may issue an RFQ to a pre-approved list of suppliers, requesting fixed pricing for a list of commonly ordered items for the year.

5. Evaluating Proposals and Selecting Suppliers

Proposals are generally assessed by a cross-functional team against weighted criteria like cost, qualifications, references, technical fit, and compliance with policies and regulations. The top-scoring supplier is then selected.

Example: For financial services, procurement teams may score potential suppliers on total cost of ownership, data security, training offerings, and the vendor’s track record in higher education.

6. Contract Negotiation

The next step is to negotiate the contract, finalizing the terms and conditions governing the agreement, such as deliverables, pricing, service levels, invoicing, and termination clauses.

Example: There is often a trade-off in negotiations for both parties. Procurement teams may negotiate a higher level of integration support during the early stages in exchange for a longer contract for software systems.

7. Supplier Relationship Management

After the agreement has been signed, procurement teams monitor supplier performance and ensure compliance with contract terms. Nurturing a collaborative relationship with key suppliers can pay dividends, especially when goals align.

Example: For office supplies, this may involve periodically reviewing spend levels, addressing any service issues, and renegotiating pricing at renewal based on updated requirements.

6 Procurement Methods in Higher Education

Academic institutions may use various procurement methods depending on the nature of the goods or services, internal policies, and complexity. The six most common procurement methods in higher education include:

  1. Competitive bidding: Issuing a public solicitation and awarding the contract to the lowest responsible bidder, typically used for commoditized goods or services with well-defined specifications.
  2. Request for Proposal (RFP): Used when the institution seeks a comprehensive solution or when factors beyond cost—such as technical expertise or project-specific requirements—are essential.
  3. Request for Quotation (RFQ): Soliciting price quotations from multiple suppliers for standardized goods or services, often used for smaller purchases or when pricing is the primary factor.
  4. Negotiated procurement: In some circumstances, institutions may negotiate directly with a supplier, such as when there is a sole source or when specific expertise or proprietary technology is required.
  5. Cooperative purchasing: Higher education institutions may leverage cooperative purchasing agreements to benefit from the collective buying power of multiple institutions, resulting in better pricing and terms.
  6. Emergency procurement: In cases of emergencies or unforeseen circumstances that pose a threat to public health, safety, or property, institutions may utilize an expedited procurement process to address immediate needs.

In some instances, multiple methods may be explored to find the best solution. For example, procurement teams may request bids but then compare them against available cooperative agreements before making a decision. Conversely, procurement teams may use pricing and terms from cooperative agreements to negotiate with existing suppliers.

How Purchasing Cooperatives Improve the Procurement Process

Let’s take a closer look at how cooperative agreements through purchasing cooperatives can help colleges and universities meet their goals. There are significant benefits from using cooperative contracts with a purchasing cooperative, including:

  • Cost savings: By aggregating demand and negotiating as a group, institutions can secure more favorable pricing and terms from suppliers.
  • Reduced administrative burden: Participating institutions can leverage the work done by purchasing and organizing to conduct RFPSs and negotiate contracts to reduce duplication of effort and save considerable time.
  • Expanded product and service offerings: Cooperative contracts often cover a broad range of categories, providing institutions with a wider selection of goods and services and alternative suppliers.
  • Compliance assurance: Cooperative contracts are generally established through a competitive process, ensuring compliance with procurement regulations and policies. Cooperative often provide ongoing supplier relationship management with suppliers on behalf of member institutions.

E&I Cooperative Services offers a broad range of competitively solicited cooperative contracts with industry-leading suppliers. Leveraging the aggregate purchasing power of more than 6,000 member institutions, E&I can achieve significant discounts for the goods and services you need. Because E&I focuses solely on the education sector, these contracts often include favorable terms for the benefit of higher education institutions, including rebates and incentives. E&I handles the entire contracting process for members, from RFP development to supplier management.

When you partner with E&I, you also gain an advantage by utilizing the combined expertise of education procurement professionals and category experts.

The Role of Spend Analysis in Procurement

Spend analysis in procurement can provide insight into significant savings. With the amount of data generated through transactions today, schools that are not leveraging data are missing a big opportunity. By analyzing historical spend data across different categories, departments, and suppliers, procurement leaders can:

  • Identify opportunities for cost savings through consolidation, renegotiation, or alternative sourcing strategies.
  • Mitigate risks by identifying potential supplier dependencies, compliance issues, or areas of overspending.
  • Enhance decision-making by providing insights into spending patterns, trends, and areas for optimization.
  • Improve budgeting and forecasting accuracy by understanding historical spend data and projecting future requirements.

Collaboration between procurement, finance, and IT is likely to be required to capture accurate and comprehensive spend data.

E&I Cooperative Services provides no-cost Strategic Spend Assessments (SSAs) for its members to identify and capitalize on cost-saving opportunities. Benefits of E&I’s SSA include:

Reported Contract Spend

The SSA offers comprehensive visibility into your institution’s spending, breaking it down by category and top suppliers. This data-driven approach helps reveal trends and uncover areas for potential savings.

Contract Portfolio Alignment

E&I’s procurement experts will examine your existing commodity spend, identifying opportunities to save money through consolidation and bringing more spend under contract.

Comparison to E&I Contracts

The SSA allows you to see the potential savings you could achieve by opting into one or more of E&I’s cooperative contracts, empowering informed procurement strategy decisions. 

Consolidation Potential

The E&I team evaluates your spend patterns and suppliers to find areas where supplier consolidation can redirect spend toward more cost-effective options. Consolidation can produce better volume discounts and streamline your procurement process by reducing the number of suppliers.

Contract Spend Variance

A thorough analysis can also identify any variances from under-reporting by suppliers, ensuring that you have a complete understanding of your institution’s spending patterns.

Strategic Roadmap Opportunities

E&I’s procurement experts leverage the insights gained from the SSA to identify future alignment opportunities based on your existing contracts and upcoming requests for proposals (RFPs). This strategic guidance can help you optimize your procurement strategy for long-term success.

Modernizing Technology in Higher Education Procurement

With the volume of work that procurement teams must handle, technology and automation are key to productivity. Several solutions can enhance the process and help with cost controls.

eProcurement Systems

Implementing eProcurement can streamline the entire procurement process, from requisitioning to invoicing, reducing bottlenecks, errors, and manual effort. This can also reel in maverick spending by requiring departmental purchasing to use the eProcurement platform with preloaded catalogs for preferred providers and negotiated contracts.

Spend Analytics Tools

While E&I can conduct targeted spend analysis for procurement teams, institutions may want ongoing data analytics to uncover patterns and opportunities at every stage of the procurement process.

Contract Management Software

Dedicated contract management software can help institutions efficiently manage and track contracts, ensuring compliance and optimizing supplier relationships. For example, tracking renewals on cloud software can prevent automatic price increases from going into effect.

Supplier Portals

Supplier portals can aid in communication between procurement teams and suppliers to improve transparency and collaboration.

Robotic Process Automation (RPA)

Robotic process automation can handle rule-based tasks, such as data entry, invoice processing, and compliance checks. This reduces rote tasks for procurement teams, freeing them up to focus on more strategic activities. RPA also reduces error rates, such as typos or duplicate invoices.

Frequently Asked Questions—FAQs

What is the common procurement method in higher education?

The most common procurement method in higher education is the Request for Proposal (RFP). RFPs allow institutions to evaluate proposals based on multiple criteria and select the supplier that best meets their needs.

What are the five “rights” of procurement in higher education?

The five rights of procurement are product, quantity, place, time, and price:

  1. Product: Identify the right product that meets the business’s needs.
  2. Quantity: Obtain the right quantity to keep things running smoothly.
  3. Place: Ensure the product is delivered to the right place.
  4. Time: Ensure goods are delivered at the right time.
  5. Price: Procure goods at the right price to optimize value.

Contact E&I Cooperative Services to discuss your procurement strategies and see how E&I can help you save time and money.


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