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Hello good buys

Damon Jones looks at some of the diverse frameworks available which improve purchasing prowess and consolidate ethical standing

Posted by Hannah Oakman | May 01, 2014 | Finance, legal, HR

2011’s Efficiency & Effectiveness in Higher Education ‘Diamond’ report challenged the UK’s universities to employ a collective, economic approach to acquisition. But cost is no longer the bottom line. 

Neatly lumped into the category of ‘other expenses’ by the Higher Education Statistics Agency, the £10.5bn of non-staff spending outlaid by Britain’s universities in 2012/2013 is a sum so vast it invites the principle of economies of scale. Supported by various regional consortia and purchasing bodies, the sector has made marked progress in this regard, aspiring to meet the targets set by the Diamond report. This document suggested that procurement could benefit from further "joined up and strategic development" – which, by 2016, should result in at least 30% of all non-pay spend being applied using collaborative agreements.

University of the West of England, Bristol (UWE) is an award-winning leader in this respect, having achieved over £1.3m of procurement savings in 2012/2013. This success can partly be attributed to their impressive use of shared services and collaborative agreements which, in the last academic year, exceeded the Diamond report goals – representing 30.32% of their purchasing. “We work collaboratively with local, non-university partners,” explains Helen Baker, the institution’s head of procurement. “There’s a group of public sector partners in the region we consider to be ‘PIP’ – Partners In Procurement. The group consists of universities in Bristol and Bath, and also three local authorities, the NHS, police and one local college.” Employing best practice gleaned from outside a strict HE context, the University has been able to access a variety of purchasing frameworks, and utilise them to realise efficiencies.

Accessing such frameworks from outset, Baker believes, is extremely advantageous, as they provide several helpful benchmarks. “Utilising one of the national purchase consortia or a crown commercial supplier can prove very useful, as contract products have warranties in place, providing safeguards and assurance. Heads of procurement should think creatively, to find relevant frameworks they can use,” she proposes. “Because of the numerous options available, it’s equally important for staff to liaise with procurement teams in the early stages of purchasing activity. If this occurs, it’s possible for the procurers to fully engage with and understand the customer base. This makes it easier to locate the best solution – even if it wasn’t one they were initially expecting.”

To help raise consciousness of such admirable policies, the Higher Education Procurement Academy (HEPA) – a body established in response to a recommendation from the Diamond report – was established in 2013.

“As procurement raises its profile within an institution, more departments within it will rely on procurement expertise,” summarises Caroline Blackman-Edney, a member of the steering group for HEPA, and also head of procurement at The University of Cambridge.

“Building the capacity to offer these services should be key to a university’s wider risk management strategy. HEPA provides tools which enable personnel to achieve this.” Up-to-date skills and qualifications, alongside access to professional online resources and networking help staff to comply with important legal obligations, such as the Social Value Act, EU / UK Public Procurement Regulations, and equip them to withstand the scrutiny afforded by freedom of information requests. To assist them, HEPA has introduced a competency tool which uses a framework to identify individual staff training and development needs. This matrix also provides job descriptions and specifies competencies – thereby identifying opportunities for improvement and stimulating creative responses to them.

Complementing its focus on upskilling, and to highlight exemplars of best practice, HEPA launched a new online resource on 1 March 2014, entitled the Procurement Journey. A comprehensive ‘how to’ procurement guide, the Journey offers online support and a wealth of documentation, materials and advice for buyers at all levels. HEPA hopes that, through consolidating the various informational assets scattered throughout the web, the Journey portal will become the ‘go to’ source of HE procurement knowledge. By accessing these resources, says Blackman-Edney, professionals can concentrate on higher risk areas. “The Procurement Journey is holistic – it provides users with a complete tool, which relates to the entire process from start to end. Because of this range, it can also help colleagues within HE to understand standard procurement methodologies.”

As HEIs embrace the ‘internet of things’ concept, it’s also critical that assets are effectively linked. To install and design these networks, external consultants, such as TA Triumph-Adler, a firm which specialises in digital document workflow solutions, are often sought out. “Universities generate huge amounts of paperwork, for administrative and educational ends,” observes Shaun Wilkinson, TA Triumph-Adler UK’s managing director. Because of the numerous obligations using this format in volume places on a HEI – including health and safety assessments, data protection, compliance procedures and the load-bearing capacity of premises, Wilkinson argues that it’s often difficult for them to quantify what ‘value for money’ actually means, in terms of their printing resources.

“Initial costs, or monthly payments under a lease might not divulge the whole picture; especially if various departments have accumulated printer units or multi-function devices (MFDs) in an ad hoc fashion, over a number of years,” he asserts. Key to controlling expenditure, he argues, is calculating the total costs of ownership (TCO) of an institution’s entire printing apparatus. This requires carefully assessing consumables, repairs and running costs, and will also consider the total performance of units. Modern printers are, Wilkinson reminds, versatile devices which can not only scan, copy and print, but may also assist in archiving, encryption and energy saving – offering a plethora of possible configurations for users.

To maximise the utility of devices, the firm conducts free audits, which, according to TA Triumph-Adler’s MD, can often achieve surprising results after their findings are implemented. “We’ve been able to achieve surprisingly large savings, of between 18% and 40%, in some businesses,” says Wilkinson. “This has been realised simply by monitoring, and managing their accounts remotely.” Introducing authentication policies – either via biometric logins or swipe cards – can reduce wastage, offering greater control to managers, and accountability for users. Even minor changes – like replacing multiple printers with fewer larger, high-performance units, could dramatically reduce running costs, he advises, because of their durability, efficiency and faster ‘warm up’ times.  

For smaller institutions, however, struggles with funding for capital equipment may not only prevent them from streamlining, but can also inhibit their capacity for research. This is a dimension of university activity where changes in procurement practice could have far-reaching results. Despite semi-competitive conditions, HEIs often share key values and objectives – commonalities which could, through accessing shared resources, give their research interests a collective fillip.

To help address the operational issues which arise when equipment is shared, the N8 Partnership, comprising of eight research intensive universities from the north of England, has launched a new Equipment Sharing Toolkit (located at http://www.n8research.org.uk/asset-collaboration/n8-est/). Amongst the resources it offers are a number of templates and guiding principles, which can help universities to address health and safety, pricing and legal requirements. “Access to leading-edge equipment can enable new science and bigger and better outcomes,” comments Sarah Jackson, Director of the N8 Research Partnership. After investigating these opportunities in 2011, a report prepared by the organisation “found a number of barriers, including pricing and charging models, and having the relevant legal and insurance agreements in place,” says Jackson. “We knew if we could look at potential solutions to some of these, we would make it easier for our academics to share equipment.” Flexibility is thus a fundamental attribute of the toolkit, which has been designed so that each institution can create bespoke agreements that meet their unique circumstances and needs.

Developed closely with other cluster groups of research-intensive universities, including the M5 and GW4, the N8’s own High Performance Computing Facility, funded by EPSRC, is currently being run as a shared facility, offering a helpful model for other universities seeking to adopt this model. “All the running and support costs are shared evenly among the N8 universities” says Jackson. “We’re also looking at models for regular capital investment, as well as other types of equipment, such as Nuclear Magnetic Resonance”. The tool kit also provides guidelines on how to enable businesses to access the equipment, and suggests ways of making economies, like utilising the VAT Cost Sharing Exemption permitted by HMRC. The N8 suggests the establishment of a Cost Sharing Group (CSG) company to make best use of this legislation, which, despite creating some additional accounting requirements, offers substantial benefits. “For example, on our HPC resource, we estimate that around £80,000 is saved each year, through using this model,” said Jackson.

Such infrastructure, N8’s director reminds, is a vital catalyst for new advances in research, which can enhance the UK’s industrial competitiveness and growth – strengths which may not always immediately benefit universities, but are nonetheless directly linked to the procurement choices they make. “Maintaining the competitive position of the UK science base is dependent on researchers having access to state-of-the-art equipment, so that they can progress ideas and push the boundaries of the latest research in their field,” she emphasised.

 

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