Collaborative Procurement in Education
Working Together to Save Money
Despite a huge drive towards collaboration across the public sector in the last decade, several barriers are still in place preventing successful growth. However, as numerous industry studies (such as those from the National Audit Office and CIPS) have shown, the benefits can far outweigh any drawbacks.
To help you identify whether collaborative procurement is the right choice for your organisation, we have put together some of the key advantages of collaboration, plus advice on how to overcome those potential pitfalls.
What is Collaborative Procurement?
Collaborative procurement is where two or more organisations team up to conduct purchasing activities with the goal of achieving financial and operational efficiencies.
As discussed last week in our blog post on bridging the FE funding gap, collaboration can be a key tool in combating financial shortfalls. Collaborative procurement has been proven to help bodies across the public sector continue providing services in a time of rising need and diminishing funds.
Educate and Collaborate
Collaboration is by no means a new concept; in Higher Education and the wider public sector, there has been a significant drive towards collaborative procurement as a means of combating budget cuts. The 2011 Diamond Report set a target for 30% collaboration across all relevant non-pay spend within the HE sector (with a level of 25.7% achieved by 2013-14).
In Further Education, there have been great strides towards enhanced joint working in recent years. Collaborative bodies such as the Crescent Purchasing Consortium and the Energy Consortium allow easy access to EU-tendered frameworks across goods, works, services, and utilities. The use of framework agreements is proven to reduce administrative costs, slash process times, and deliver sustainable business savings.
But what about those one-off projects that cannot be covered by a framework agreement? Or where a local solution is needed? To go even further – what about calling off from these framework agreements together? This is where true collaborative procurement comes into the spotlight.
The Benefits of Collaborative Procurement
1. Buying Power
Partnering with other schools, colleges, or wider public-sector bodies can save you time and money. Not only are you offering a larger pot of business to suppliers, but you represent a larger slice of the market, giving you more leverage for negotiation. By collaborating with others, you are maximising your purchasing volumes and achieving benefits from economies of scale that could not be enjoyed alone.
2. Better Data
As with most things, in procurement, knowledge is power. Using your own data can give you an idea of the purchasing landscape within your own organisation. But combined with others, you paint a broader picture of the markets and sectors you are working in, and identify key areas where real benefits could be gained.
3. Process Efficiencies
Most organisations recognise that competitive procurement processes are necessary, to ensure legislative compliance and achieve value for money. So, why not save time and resources by doing these together? As well as avoiding the duplication of five separate tenders for the same goods or services (giving you time to spend on other value-adding activities), collaboration can help reduce the risk of non-compliance.
4. Sharing Best Practice
This benefit is perhaps the simplest: by working with others, we can utilise their expertise, gain new ideas for our own organisations, and build our knowledge and capabilities.
5. Savings for the Market
Alongside the benefits for your organisation, there are benefits for the market too. When organisations collaborate, instead of having to tender five times for the same contract, suppliers only have to complete one set of documents and go through one single process. Less work involved in winning business means fewer resources are needed – generating savings that are passed on to you!
The Challenges of Collaboration – And How to Overcome Them!
Of course, there are always challenges when multiple parties are involved in a procurement exercise. Barriers to success can include a lack of forward planning, scarcity in time and resources, and the perception of complexity in managing multi-organisational stakeholders. However, collaborative procurement does not need to be any more time consuming – it just takes proper planning.
Top Tips for Collaborative Procurement
- Plan Ahead: leverage the data in your contracts register and procurement pipeline, and share information on your planned projects with others.
- Communicate: have a strategy that sets out clear communication channels with your internal stakeholders and external teams, to ensure the continued flow of information.
- Set clear roles and responsibilities: by allocating tasks within the project team, this will avoid any duplication and maximise the use of resources across your organisations.
- Be realistic: set clear and achievable goals for your organisation before you start any collaborative procurement project.
- Use Lots: some organisations worry that collaborative procurement means less autonomy in final decision making, but this couldn’t be further from the truth. By splitting your collaborative procurement into Lots based on each participating organisation, you can retain final decision-making autonomy, and prevent delays to your own contract award.
Collaboration: A £1m Success Story
Collaborative procurements can be run across a range of goods and services, from building cleaning to waste management and beyond. But facilitating collaboration can be difficult; after all, it’s hard to know where to start.
In the further education sector, Tenet Education Services are proud to lead the way in collaboration with its innovative business model, FE+ Group. In a group consisting of nine colleges (all of whom compete for students), Tenet coordinate a range of joint projects that have delivered combined savings of £1.2 million to date. Just think what results like this could mean for your organisation!
Considering collaborative procurement for your business? Give Tenet a call today for a free, no-obligation discussion: 01376 511 411.