Rising prices and shrinking budgets are just part of the landscape, continuing a procurement trend into 2024 that has been ongoing for several years. While overall enrollment may have returned closer to norms, declining enrollment in incoming freshman classes continues to trigger warning bells about further belt-tightening ahead.
Procurement teams have a big job to do and can make a significant impact in higher education institutions, and the process is evolving rapidly. In this guide, we will look at how to address the procurement challenges in higher education, what are modern trends in procurement sourcing for 2024 and beyond, and key strategies higher education procurement leaders are employing to improve sourcing in procurement.
The past few years have seen significant changes in procurement. Teams are being asked to do more than ever—often with smaller budgets and increasing compliance requirements.
A survey of Chief Procurement Officers (CPOs) said their top three challenges in 2023 were budgetary constraints amid inflationary pricing and a higher cost of capital, managing supplier performance, and assuring cost-efficient quality.
Those surveyed said they expected these areas to be continuing concerns as procurement trends in 2024.
Procurement teams in 2023 had to adapt to meet these challenges. Given the economic conditions, 2024 procurement trends are likely to expand on these priorities by focusing on three key areas:
Procurement teams are looking for ways to trim expenses across all categories. Here are some of the ways higher education procurement leaders are approaching these challenges in 2024 and beyond.
Strategic sourcing and procurement utilize a data-driven approach that goes beyond just negotiating lower prices to take a systematic, collaborative approach to improvement.
Some keys to strategic procurement sourcing include:
Regular strategic spend assessments (SSAs) are one effective strategy. By analyzing spending across the institution, you can identify top categories by volume, spending levels, and cost increases. This surfaces priority areas needing further research into:
This helps set better pricing targets and uncover alternate suppliers. The key is taking a holistic, data-driven approach to systematically optimize procurement from end to end.
E&I Cooperative Services® members can get a no-cost Strategic Spend Assessment to compare current contracts and pricing to identify immediate savings opportunities, consolidation potential, and ways to streamline the process.
Data can also be leveraged in other ways, including:
Leveraging data, analytics, and market intelligence produces key insights to enable procurement teams to make more strategic, better-informed sourcing decisions. This empowers teams to move from reactive purchasing to proactive supply chain optimization.
By understanding the competitive landscape through market research, you get optimal pricing and contract terms from suppliers. Benchmarking purchase prices against the market is an effective tactic.
E&I members have access to more than 150 competitively bid contracts with pre-negotiated pricing and terms against which higher education buyers can leverage and compare.
With a solid fact base and supplier relationships in place, procurement teams can negotiate optimal contracts by:
E&I contracts are designed specifically for higher education’s unique needs. Key benefits include:
The combination of data, supplier collaboration, and leveraging competitively solicited contracts gives procurement teams significant advantages in contract negotiations. This strategic, collaborative approach allows procurement to deliver greater value.
While supply chains have settled down, risks remain due to economic uncertainty and global unrest. Teams need strategies to maintain resilience amid this instability.
A key part of strategic procurement is identifying and mitigating potential supply chain risks. We have seen the disruptions supply chain instability can cause, from the pandemic to ongoing inflationary pressures.
In addition to evaluating spend, procurement teams should conduct regular risk assessments. Proactively evaluating vulnerabilities helps uncover risks that could disrupt the flow of goods and services. Once risks are identified, redundancy can be built into the supply chain through strategies including:
Ongoing risk assessments allow procurement teams to get ahead of potential disruptions through proactive planning.
Procurement teams are expanding their supplier pools in several key ways:
Identifying secondary and tertiary suppliers in critical spend categories provides backup options should primary vendors underperform or be unable to deliver. This reduces overdependency risk.
Exploring New Suppliers
Researching new vendors entering the market uncovers innovative solutions and capabilities not offered by incumbent suppliers.
Widening Geographic Reach
Tapping into a wider global supplier base mitigates regional impacts and provides access to new supply markets, increasing resiliency.
Leveraging Group Purchasing
Group purchasing organizations like E&I provide pre-negotiated contracts with numerous suppliers, enabling faster onboarding of backups if needed.
Enhancing Supplier Selection
Adjusting supplier selection criteria to emphasize stability, capacity, continuity planning, and financial health builds resilience from the start.
By taking a proactive approach to expanding and diversifying supplier ecosystems, procurement teams can quickly adapt to disruptions and maintain operational continuity.
For higher education procurement teams, building strategic partnerships with key suppliers is another effective way to build supply chain resilience.
Collaborating directly with suppliers can unlock innovative solutions not uncovered through traditional RFP processes. Suppliers bring strategic insights from working across diverse sectors, which sparks new ways of thinking. By partnering closely, they can apply this broader perspective to tailor more effective approaches for your specific institutional needs.
Some examples of the benefits of supplier collaboration include:
Identifying the Right Strategic Partners
When assessing potential suppliers for strategic partnerships, look for shared values, complementary capabilities, and interdependence. Suppliers who understand the higher education landscape can add greater value.
Prioritize suppliers that are willing to collaborate to meet evolving needs and are interested in long-term relationships.
Creating Mutual Value
Effective strategic partnerships are mutually beneficial. The supplier gains stability and volume while the institution benefits from discounts, service levels, and expertise. Deeper relationships incentivize vendors to provide greater value.
Building Trust and Communication
Partnerships only succeed with trust, transparency, and accountability. Both parties must be willing to share information to drive mutual success.
Sustaining Partnerships Over Time
To sustain partnerships long-term, regular engagement and performance evaluations are key. Procurement needs to develop relationships and go beyond just identifying preferred providers.
As environmental and social responsibility become increasingly important, procurement teams face the challenge of making their supply chains more ethical and sustainable while still meeting budget goals. Building a green supply chain that aligns with institutional values is crucial, but it can be difficult to do cost-effectively. Creative solutions are needed.
Some options procurement teams can explore include:
The key is for procurement personnel, sustainability leaders, finance, and other internal stakeholders to be aligned on common goals for an ethical supply chain. With collaboration, it is possible to make meaningful progress on supply chain responsibility while still meeting budgetary constraints. But it requires strategic thinking, supplier engagement, and looking beyond short-term unit costs.
In 2024 and beyond, the different types of procurement methods for higher education generally fall into these categories:
eProcurement tools can streamline processes and provide significant benefits. Besides helping address the emerging procurement trends in 2024, the right platform can help procurement teams in a variety of ways.
By automating various procurement processes, these tools reduce the need for manual intervention, streamlining workflows across departments. Electronic systems facilitate seamless collaboration between stakeholders-and suppliers-resulting in faster and more efficient procurement cycles.
eProcurement improves negotiation with suppliers, leading to more favorable terms and reduced costs. These tools provide the detailed analytics you need for more strategic sourcing and purchasing. Procurement teams have ready access to the data they need for more informed decision-making.
You get a heightened level of transparency and compliance with real-time visibility into spending patterns for effective tracking and management of expenditures. You can also limit spending to preferred providers and enforce compliance with institutional policies.
As procurement sourcing and purchasing continue to evolve, E&I can help you meet the challenges in 2024 and beyond. Discover the full benefits of becoming an E&I Cooperative Services member today.