'Value for money' is, however, a contested concept, and one that is difficult to define. Depending on the setting it is invariably used to explain return on investment for graduates (monetary and otherwise), the wider impact that universities have on their communities, or very simply, a measure of how money is spent in institutions. In reality, a singular definition would need to incorporate all of these things; but a common and largely unsung area underpinning it all is university procurement – or how institutions purchase goods and services.
Data gathered during the recent procurement value survey (PVS) managed by the Higher Education Procurement Association (HEPA), provides clear insight into the value of university purchasing teams. Information submitted by 89 universities for the year ending July 2018 revealed gross efficiencies of £316 million against a total spend of £7.7 billion – on average, a return of £3.5 million for each university. These savings are reinvested into world-class teaching and facilities and help to ensure that institutions get the most out of the money they receive – particularly from students.
Alongside these material impacts, the procurement process itself can add value for students. Examples reported in the survey this year include the involving of student representatives on tender assessment panels, collaborative working with students' unions on major projects such as rebrands, and the safeguarding against unethical practices in procurement and supply chain management to ensure the ethos and aspirations of the wider student community are reflected in university purchasing.
And it's not just students that stand to gain. Small and medium-sized enterprises (SMEs) also benefit enormously from effective university purchasing, with the average university currently spending 32% of its impactable spend with SMEs. In 2017–18 this accounted for a whopping £1.5 billion, – an amount expected to rise as reporting becomes more regular and accurate – meaning that universities are well on the way to meeting the UK government's target of £1 in every £3 being spent with SMEs by 2022. When considered alongside the ready supply of highly-skilled graduates, the economic value of universities to their regions is clear to see.
For example, since 2012 we have worked with Northampton-based logistics business, Goodwill Solutions, who have helped over 300 ex-offenders back into paid employment through projects such as archiving services and recycling disused furniture for the university.
With procurement teams costing on average just 0.4% of the total impactable spend of an institution, investment in effective procurement is demonstrably money well spent. Universities have proven themselves to be adept at this too, helping to set a benchmark for other sectors. It will be important not to lose sight of this good news story as the value and efficiency of what universities do continues to be scrutinised.
1. How to do good stuff when buying things: a handbook for higher education institutions, University of Northampton, 2018
To access the publication, and the full procurement value survey which breaks down the data by institution size, please contact firstname.lastname@example.org.
Nice article, it’s worth noting the good work the various purchasing consortia and Jisc do. However, the SME category is too broad to be meaningful for many purposes. How much of university spend is supporting innovation, start-up and micro businesses? Those figures may tell a different story, that procurement processes still favour larger organisations able to put bids together.