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Strategic Sourcing to Enhance Cost Effectiveness in Post-Secondary Education

By Hans Dau - September 15, 2021

Post-secondary education faces both a wide variety of imposing challenges and, potentially, exciting opportunities as the nation moves to a post-COVID economy, forever changed in its social, economic, and education landscape. Counterintuitive to every other serious recession, when enrollments have soared, post-secondary education overall has suffered a remarkable 10% decline in enrollments. We can derive many possible messages from the "market" (consumers of post-secondary education). In the future, almost certainly higher education will need to look at new "market-responsive" education and business models for the "Re-Skilling of America" necessary to meet the needs of millions of individuals re-entering the economy and the changing, longer-term post-secondary education goals of the next generation of both youth and adult students.

At the same time, most public post-secondary institutions have received exceedingly large-scale federal relief funding to support their institutions during the pandemic crisis. The funding has been further enhanced by surprisingly high levels of ongoing support from state governments since revenues were much higher than what they anticipated early in the budgeting process. The result is one of the largest infusions of new money to public and many private post-secondary educational institutions in history. However, a great deal of this money is one-time funding, available over the next 2-3 years.

The opportunity this one-time funding could provide for meeting often long-deferred needs in infrastructure, technology systems, and enhanced automation of the many processes within post-secondary education itself makes the case for a thorough and tightly focused reassessment of all of the spendings in post-secondary education to ensure the greatest value is achieved with those one-time investments.

In light of the steady declines in enrollment and the clear angst over student debt and costs of education, Governors and legislatures in the public sector and the parents and students who pay directly for education are demanding that tuition and other costs be clearly worthwhile. Demonstrating that their money is well-invested with a proven, tough-minded approach to costs and a visible commitment to ongoing commitments of ensuring high efficiency and the best use of the taxpayer's and students'/parents' investment in tuition will be more important than ever.

The Mitchell Madison Group (MMG) has been engaged in the highly sophisticated process of "Strategic Sourcing" for 30 years. Our firm and I have worked with hundreds of organizations and institutions, including those in post-secondary education, to reduce costs significantly both in the near term and over time without the need for automation investments or disruptive HR actions. Based on those 30 years of experience, we believe now is an especially important time to take a fresh and rigorous look at:

  1. The best use of one-time resources made available for one-time needs.

  2. Ensuring the highest levels of efficiency and reduced ongoing costs are in place for recurring expenditures as the one-time funding concludes, to support the institution's commitment to student and payers to provide the lowest tuition with the highest-value education.

As with all enterprises these days, post-secondary education faces a very new world. This new world offers a moment of extraordinary opportunity to meet its obligations to use all of its resources to provide the highest quality and best range of access to education at the lowest possible cost and to secure the highest value for one-time funding.

To this moment of opportunity, the Strategic Sourcing approach brings to bear decades of experience, using proven science and methodologies to ensure the most effective and efficient investments in post-secondary education.

All purchases, be they one-time capital expenditures or ongoing operating expenses, need to be subjected to a rigorous process that not only meets legal and regulatory rules but also maximizes the effectiveness of outcomes. Our approach combines the adherence to public sector procurements rules with private sector efficiency to drive savings of 10 to 15% across all purchases ranging from complex services such as IT services, contingent workforce, professional services, health insurance, legal, etc. to capital investments and "hard" goods such as equipment, medical instruments, laboratory equipment, IT hardware, furniture, office supplies, etc.

Very few institutions have the necessary expertise and analytical horsepower to do Strategic Sourcing in-house. Leveraging external expertise is one of the highest ROI and lowest-risk investments educational institutions can make, especially considering the fiduciary responsibility to spend federal dollars effectively.

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