Why More Universities Are Turning to Group Purchasing Organizations for Cost Savings

The University of Lynchburg in Lynchburg, Virginia, has shut down 17 academic programs 25 academic minors, and MBA tracks; 80 staff and faculty positions are being eliminated. Brandeis, in Waltham, Massachusetts, is eliminating 60 positions to reduce a projected $2 million budget deficit. The University of the Arts in Philadelphia announced a permanent closure as of June 7, 2024.

Sadly, these are just a few of the latest cutbacks colleges and universities are facing amid enrollment concerns and budget restraints, and the situation does not appear to be improving. California’s latest budget called for a $200 million reduction to the state’s University system.

Against this backdrop and continuing price hikes, procurement leaders at schools are facing unprecedented challenges. Under pressure to reduce costs, procurement teams are actively seeking ways to cut spending.

Now more than ever, colleges and universities are turning to group purchasing organizations (GPOs) to unlock cost savings—leveraging collective buying power to lower the cost of goods and services and reduce administrative overhead.

How GPOs Reduce Costs in Higher Education

GPOs use the aggregated buying power of their members to achieve cost savings that schools likely could not achieve on their own.

Combining Demand

Combining demand across colleges and universities allows for expense reductions and often includes more favorable terms. For instance, E&I Cooperative Services, the only non-profit, member-owned sourcing cooperative that focuses solely on education, negotiates contracts on behalf of its more than 6,000 member organizations.

Streamlining Processes

Procurement teams are being asked to find savings at every level, and many are doing so despite smaller staff or unfilled positions. A group purchasing organization enables a streamlined procurement process with pre-negotiated cooperative contracts.

Besides saving money on goods and services, you also dramatically decrease the administrative time it takes to solicit, source, negotiate, and purchase. This eliminates much of the time-intensive sourcing process, saving time and money.

Expanded Pool of Suppliers

Since the potential sale for suppliers is much greater, solicitations from group purchasing organizations are much more attractive. University procurement teams get access to a pool of suppliers that might not otherwise bid on projects.

Because of the volume, this process also results in more competitive bidding among suppliers, driving prices down even further. This enables procurement teams to have more choices and makes it easier to find diverse suppliers and meet sustainability goals.

Specialized Knowledge

GPOs maintain teams with in-depth category expertise, providing valuable market intelligence and benchmarking data. This specialized knowledge aids in securing favorable terms and pricing for members as well.

Reducing Maverick Spend

In nearly every academic institution, maverick spending is a problem. While individual purchases by departments may not be for significant dollars, they can add up quickly. By working with group purchasing organizations and employing an eProcurement platform or P-cards, you can limit purchases to pre-approved vendors and catalogs where you have pre-negotiated prices.

This can reduce out-of-compliance spending and help rein in costs through a centralized procurement process.

Data Analysis

Data analysis can be a big component of your cost savings efforts. There are often significant savings from consolidating purchasing, using fewer suppliers, and leveraging volume discounts.

E&I Cooperative Service offers members a no-cost Strategic Spend Analysis (SSA). By reviewing your spend data, E&I’s procurement specialists can find opportunities to reduce costs, maximize efficiencies, and bring more spend under contract.

Comparing your current contracts with what E&I cooperative contracts offer can show whether switching can result in savings. As part of this analysis, the E&I team can identify future opportunities for alignment with existing contracts and upcoming RFPs. This helps you plan ahead and determine where you can take advantage of E&I’s education-focused RFP process. This can save considerable time for your procurement team, enabling them to focus on more strategic activities.

About E&I Cooperative Services

There is no cost to become a member of E&I Cooperative Services and no obligation to use contracts or minimum spending levels. You can browse the available contracts and compare them to your existing purchases to see if there are savings available. It is not unusual for colleges and universities to find seven-figure savings.

As a non-profit cooperative, E&I also provides patronage rebates to its members based on annual purchasing volume. For example, the Cooperative returned $3.35 million in cash to members as patronage refunds for 2023 spending.

With continuing budget concerns, a group purchasing organization like E&I Cooperative Services can help you find ways to lower your costs and streamline your operations.

View available contracts through E&I Cooperative Services or contact your dedicated rep today.


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