University Spend Collaborative

Spotlight on Outside Spend

With universities hit especially hard by the economic downturn, key components of their revenue stream including federal research funding, state funding, and endowment have declined and are unlikely to recover significantly for several years. Thus far, most universities have turned to quick—and largely inadequate—fixes, and are warily casting an eye towards the possibility of cuts to research and teaching.

Supplies and services, on the other hand, represent a meaningful and immediate savings opportunity, without impacting the core mission and activities of the university. Advisory Board research indicates that nearly one-third of university operating expenses comes from outside spend, approximately $100 million for a mid-size university.

Moreover, industry sourcing analysis suggests that universities have an opportunity to reduce commodity spend by $1–4 million.

 

Four Key Levers for Reducing Supply Costs

While reforming university procurement has its challenges (e.g. limited oversight of individual purchasing decisions, highly fragmented purchasing volume among departments and buyers), the Advisory Board has identified several successful strategies:

Negotiating Lower Vendor Prices
Procurement officers can decrease spending by renegotiating contracts at lower prices across categories and vendors; benchmarking indicates, that currently university purchasers pay higher prices than other industries—from office supplies and computers to maintenance repair and operations

Eliminating Contract Overpayments
Regular three-way price reconciliation between the PO price, invoice price, and contract price is an important means to identify unprincipled overpayments

Increasing Contract Compliance
Through a combination of greater oversight and incentives, universities can encourage individual purchasers across the university to buy items from existing low price suppliers

Changing End-User Product Choice
Assuming good access to information and data, university procurement directors may share information with end-users to allow them to consider purchasing functionally equivalent items from preferred vendors at a lower cost

 

University Spend Collaborative

Since 2006, The Advisory Board has been working with hospitals and health systems confronting similar challenges in reducing supply costs. Our Hospital Spend Collaborative has grown to nearly 120 members who have saved over $150 million in cumulative costs savings. Due to this success, The Advisory Board has launched a similar collaborative within the higher education space designed to aid procurement executives in gaining greater visibility and access to information around current vendor spend performance and in implementing targeted best practices.

The University Spend Collaborative provides chief financial officers and supply chain executives with measurement and analytics to improve performance on managing supply cost. Through best practice research, performance improvement analysis, data categorization, and a unique Web-based analytical tool, the program hardwires optimum performance in negotiating lower vendor prices, eliminating contract overpayments, increasing contract compliance and changing end-user product choice.

Methodology

Our business intelligence programs merge innovative technology with our world-renowned best practice knowledge and experience. This combination of tools drives the identification of key performance variances, isolates root causes and provides solutions to capitalize on opportunities for improvement.

Our Technology Platform

By combining high-level dashboards and the ability to easily perform analyses by clicking into account-level detail, our technology platform allows for immediate diagnosis of the root causes driving each member’s supply chain performance and the opportunities to improve contract compliance and enhance cost savings.

 

Our Educational Services

It is our firm belief that information alone provides limited value. It takes ongoing training, support, and an understanding of how to capitalize on opportunities to drive true change for the organization. Therefore, the Advisory Board provides substantial services in conjunction with our technology to ensure that our members maximize their performance and integrate these tools into the cultural and operational fabric of their organizations.

Customized Services

Maximizing the Value for Each Member

The Advisory Board provides each member organization with a Dedicated Advisor. These Dedicated Advisors are part of a team at the Advisory Board that focuses on each member site to help maximize opportunity identification and realization through the following services:

Training and Onboarding
Dedicated Advisors train hospital staff not just on how each tool functions, but more importantly on the analytics that allow each member to identify and realize opportunities independently.

Proactive Opportunity Identification and Realization
Dedicated Advisors proactively identify additional opportunities for their member hospitals. By tapping into our 20 years of health care research, the advisors can not only probe each site to identify areas for improvement, but also provide our members with tactics that other organizations have used to realize specific gains.

Ongoing Site Customization
Dedicated Advisors customize our members’ sites to better serve them as their reporting needs change over time. Because Dedicated Advisors are part of a large team of analysts at the Advisory Board, they have unfettered access to other organizations that have customized their sites, which allows the advisors to provide advice on how to change reports to best fit all member needs.

Performance Tracking and Benchmarking
Dedicated Advisors assist each member hospital in benchmarking and tracking their own performance over time to not only demonstrate the value of specific interventions but also to help our members realize the opportunities surfaced over time.

Providing Access to Advisory Board Experts
Dedicated Advisors help member hospitals answer pressing and difficult questions by providing access to the Advisory Board’s researchers and terrain experts.

 

Cohort Services

Enhancing the Experience Across a Group of Organizations

At the Advisory Board we believe that there is tremendous power in a network of members working toward common objectives. As a result, we facilitate quarterly teleconferences and annual summit meetings in each of our membership cohorts. On an ongoing basis, our Dedicated Advisors poll our membership to identify issues that are most pressing for each cohort. These issues are then addressed through the following services:

Annual Summit
Each year, our team of researchers and Dedicated Advisors provides a “State of the Union” for our members to discuss the most pressing issues they are facing, illustrate successful interventions, and maximize the value of the technology’s continuously expanding capabilities. These sessions also provide an ideal opportunity for our members to learn from each other and to extract further value out of their participation in the program.

Quarterly Teleconferences
Each quarter, our team of researchers, Dedicated Advisors, and members gather to share specific tactics and highlight opportunities for discrete areas of improvement.

Advisory Board Library of Best Practices
With over 20 years of experience publishing cutting-edge health care strategy, management, and operations best practices, the Advisory Board is able to leverage our proprietary research library, containing more than 33,000 proven strategic and operational tactics, to aid each of our members in improving their performance.

Case Studies of Client Successes
Our team of Dedicated Advisors continuously identifies members who have successfully tackled difficult issues and highlight those successes for the other participants in the cohort. Our users also demonstrate, for the benefit of our other members, how they achieved that success.

Benchmarking Across the Cohort
Dedicated Advisors assist members in tracking their performance relative to the rest of the cohort by demonstrating benchmarks across key performance indicators.

Networking with Like-Minded Peers
The quarterly teleconferences and annual summits present ideal opportunities for cohort members to gather and learn from each other, further enhancing their improvement opportunities.

Access to Industry Experts
To provide maximum value to our members, the Advisory Board leverages our deep expertise and relationships to the benefit of the cohort by facilitating interactions with industry experts.