Reimagining Procurement

How to reduce costs and improve compliance.

GUEST COLUMN | by Matt Busbridge

Picture this: it’s Monday, and you’ve learned that your student body association needs 500 first-aid kits for incoming freshmen by the end of the week.

What typically happens is that your staff will look up kits in several supplier catalogs online and visit retail locations—they may even call and fax suppliers to get quotes. Then, they’ll pick a supplier based on who has the best price but, it turns out, the supplier needs to be on boarded, which causes a two-week delay. You ask if there is a possibility to get the kits next week but rush charges are too expensive. What do you do?

Under Pressure

Colleges and universities around the country are fighting a mix of financial pressures—due to budget cuts or rising costs—on everything from labor to supplies. Because of this, procurement teams are under pressure to demonstrate cost-savings through lower prices paid and minimizing the overhead with every transaction.

The good news is that procurement has the opportunity to generate real cost savings for academic institutions, through the use of modern technology.

‘By bringing procurement online, education leaders have the ability to look at their spend holistically and determine what is strategic, how to consolidate spending, and where to improve efficiency.’

Although digital transformation has been steadily gaining steam in academia, the education industry is still behind the technology curve, with less than 3% of overall expenditures allocated to digital.

However, technology spend is expected to grow to $342 billion by 2025, as organizations realize the benefits technology brings in keeping up with today’s digital-first world.

Taming Tail Spend

When looking to bring down costs, procurement teams should first take a look at non-strategic or unmanaged spending otherwise known as “tail spend”. Tail spend is costly and time-consuming to manage, spanning categories across the organization such as office, IT peripherals, maintenance, repair and operations, food service, janitorial, and more.

According to the National Association of Educational Procurement, the average college or university has around 1,000 separate vendors with whom they are spending less than 10% of their budget, and 80% of those vendors account for less than $1,000 each per year. In addition, each year, procurement teams receive hundreds of new vendor and non-catalog requests with an average of two weeks to onboard, further increasing the portion of operational spend with non-strategic vendors.

By bringing procurement online, education leaders have the ability to look at their spend holistically and determine what is strategic, how to consolidate spending, and where to improve efficiency. With the right spend analytics, colleges or universities can make more informed choices about products and suppliers while limiting rogue, unmanaged spend.

Compliance

For all educational institutions, adherence to policies and preferences specific to their needs is top of mind. For example, many have mandated supplier diversity programs, but finding suppliers to meet these goals can be time-consuming and challenging. By utilizing an online B2B store, education procurement leaders can more easily find small and diverse business sellers, purchase from them, and track and report on their spending.

Another compliance pain point I continue to hear about is the use of purchasing cards (P-cards). While P-card programs empower faculty and staff to purchase their own supplies, they lack consistency in recording transactions and often do not follow internal workflow controls.

An alternative model that many higher education institutions are adopting is “punch-out” catalogs, which creates a single system that procurement teams can use to streamline the purchasing process.

For example, when Virginia Tech University switched from P-cards to punch-out catalogs, the team realized greater efficiency, transparency, and oversight of expenditures.

While adding these new technologies might be an investment up front, they can make a serious impact on college and universities’ bottom lines while also driving efficiency.

Let’s revisit the first-aid kit scenario but, this time, with the right tools and technologies in place. Your staff searches for kits on strategic contracts but doesn’t find them. They turn to an online store that has all the policies and preferences specific to your school’s needs, finds kits at a low-cost and orders same-day shipping.

Not only do the kits arrive cheaply, quickly and efficiently, but your staff now has one less vendor to onboard and manage. This is how your procurement processes can be when you adopt new technologies—fast, easy, and cost-effective.

Matt Busbridge is General Manager, Higher Education for Amazon Business. He sets strategy and vision, directs sales and marketing, product, tech, and invents new ways to serve education from concept to scale. At industry conferences, Matt is the face of Amazon Business Education. He holds an MBA from The Ivey School of Business (focus on marketing and entrepreneurship), sits on the Ivey Alumni Network Board of Directors, volunteers actively as a mentor with iMentor, and won his Fantasy Football Championship last year. Contact him through LinkedIn. linkedin.com/in/mattbusbridge

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