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Archives of Business Research – Vol. 11, No. 5
Publication Date: May 25, 2023
DOI:10.14738/abr.115.14540.
Ning, Y.-Z. (2023). Factors Affecting the Cost Savings Rate of University Procurement. Archives of Business Research, 11(5). 21-27.
Services for Science and Education – United Kingdom
Factors Affecting the Cost Savings Rate of
University Procurement
Yi-Zi Ning
Central University of Finance and Economics, China
ABSTRACT
The procurement function is an essential part of a university’s operations, as it
provides the necessary goods and services for academic and administrative
activities. This paper explores the impact of different demand channels on cost
savings rate in university procurement. Through surveying and analyzing the
demand channels used in university procurement, this study finds that the use of
multiple demand channels can improve procurement efficiency and performance,
and help reduce procurement costs. Moreover, the quality of communication and
information sharing between universities and suppliers, as well as the level of
competition among suppliers for procurement contracts, affect the cost savings
rate. The findings of this study will also provide important implications for
university procurement practices, by helping universities make more informed
decisions regarding the selection of procurement demand channels. Ultimately, the
goal is to improve the efficiency and effectiveness of university procurement
practices, which can lead to cost savings, improved procurement outcomes, and
increased value for money.
Keywords: Demand release channels, University procurement, Procurement efficiency,
Cost reduction, Purchasing behavior, Supplier management, Procurement performance.
INTRODUCTION
The procurement function plays a crucial role in the operations of universities, enabling them
to acquire the necessary goods and services for academic and administrative purposes
[1,2,3,4,5,6]. For universities to achieve efficient and effective procurement, they rely on
various communication channels to connect with potential suppliers [1,2,6]. These channels
can range from electronic procurement platforms to traditional tenders, supplier conferences,
and other means [2,3,4,5].
The choice of procurement demand release channels has a significant impact on supplier
responsiveness, which, in turn, affects the cost savings rate [3,6]. Effective communication and
information sharing between universities and suppliers are essential for achieving optimal
procurement outcomes [4]. The quality of communication influences the ability of suppliers to
bid on relevant projects, which affects the level of competition among suppliers for university
procurement contracts [5].
The responsiveness of suppliers is also influenced by the design and accessibility of the
procurement demand release channels used by universities [7]. Poorly designed channels or
those that are not easily accessible can lead to reduced competition, higher prices, and delays
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in the procurement process [3]. Conversely, well-designed and accessible channels can
facilitate quicker and more effective responses from suppliers, leading to improved
procurement outcomes [8].
Despite the significance of cost savings rate in university procurement, there is a dearth of
research on this topic. The primary objective of this study is to investigate the impact of
different procurement demand channels on university procurement. Specifically, this study
aims to examine how the choice of demand release channels influences supplier responsiveness
and identify the factors that contribute to supplier responsiveness. Effective communication
and information sharing between universities and suppliers is a critical factor that influences
the cost savings rate in university procurement [9]. Moreover, the level of competition among
suppliers for university procurement contracts has a significant impact on the cost savings rate.
By investigating these factors, this study will contribute to a better understanding of the key
drivers of cost savings in university procurement.
The rest of the paper is organized as follows: Section II reviews the existing literature. Section
III describes the research design and methodology used in this study. Section IV presents the
data analysis results, and Section V discusses the results and their implications. Section VI
provides the study's conclusions and limitations.
THE EXISTING RANKING METHODS
University procurement is a critical function that ensures that the institution has access to the
necessary goods and services. To achieve efficiency and effectiveness, universities use various
procurement demand release channels to communicate their needs to suppliers. These
channels can include electronic procurement platforms, traditional tenders, supplier
conferences, and other means. Several studies have examined the impact of procurement
demand channels on supplier responsiveness. Fatorachian and Kazemi (2021) identified how
Procurement 4.0 and digital transformations are related and how digital transformation
impacts the intention to optimize the procurement process in the circular economy [8]. The
study found intention of buyers to optimize business processes plays a key role in enhancing
circular economy performance [8]. Ning et al. (2023) conducted a study on the impact of
procurement demand channels on supplier participation in university procurement [7].
In addition to procurement demand channels, several other factors can influence supplier
responsiveness and procurement. Lăzăroiu et al. (2020) reviewed green public procurement in
terms of environmentally responsible behavior and sustainability policy adoption [10]. Cohen
et al. (2021) conducted a systematic review on universal school meal procurement and their
associations with student participation, attendance, academic performance, diet quality, food
security, and body mass index [11]. AlNuaimi et al. (2021), explore the impact of leadership
styles and innovation capability on green procurement [12]. Cutcher et al. (2020), examine how
shifts in political discourse can reconfigure the intent and effect the outcomes of public
procurement policy [13].
Despite the existing literature on procurement demand channels and supplier responsiveness,
there is a lack of research on the factors affecting the cost savings rate of university
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Ning, Y.-Z. (2023). Factors Affecting the Cost Savings Rate of University Procurement. Archives of Business Research, 11(5). 21-27.
URL: http://dx.doi.org/10.14738/abr.115.14540.
procurement. This study aims to address this gap in the literature by examining the cost savings
rate of university procurement.
RESEARCH DESIGN
Research Purpose and Questions
The purpose of this study is to investigate the factors affecting the cost savings rate of university
procurement funds. Specifically, this study aims to answer the following research questions:
• How do different university procurement demand channels affect supplier responsiveness?
• What are the factors that influence supplier responsiveness in university procurement?
• How can universities improve their procurement demand channels to enhance supplier
responsiveness?
Hypothesis and Variable Definitions
The following hypotheses will be tested in this study:
• H1: The use of different university procurement demand channels has a significant impact
on the cost savings rate.
• H2: The quality of communication and information sharing between universities and
suppliers affects the cost savings rate.
• H3: The level of competition among suppliers for university procurement contracts affects
the cost savings rate.
The independent variable in this study is the university procurement demand channel,
communication approach, and competitive ratio, while the dependent variable is the cost
savings rate. Other variables, such as communication quality, information sharing, and
competition level, will be used as control variables.
Data Sources and Collection Methods
The data for this study will be collected through a survey of university procurement managers
and suppliers who have participated in university procurement activities. The survey
questionnaire will be designed to collect information on the university procurement demand
channels, supplier responsiveness, and other variables of interest. The questionnaire will be
pre-tested to ensure the validity and reliability of the data.
Data Analysis
The collected data will be analyzed using descriptive statistics, correlation analysis, and
regression analysis. Descriptive statistics will be used to describe the characteristics of the
sample, while correlation analysis will be used to examine the relationships between variables.
Regression analysis will be used to test the hypotheses and determine the extent of the impact
of the cost savings rate of university procurement funds.
Overall, the research design section provides a clear and comprehensive description of the
research design for the study. It outlines the research questions, hypotheses, variables, and data
sources and collection methods that will be used in the study. By providing a detailed research
design, the study can ensure that the research is rigorous and reliable.
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DATA ANALYSIS
By conducting an analysis of 225 procurement projects from a certain university between 2017
and 202, we are able to provide a comprehensive data analysis based on the information
provided in Table1.
Table1. Comprehensive Data Analysis
Publication
channel
Communication
approach
Competitive ratio Savings rate
2017 1 1 4.5455% 0.0000%
2018 1 1 0.0000% 0.0000%
2019 2 2 53.8462% 10.0788%
2020 2 4 50.0000% 8.8453%
2021 4 6 67.3469% 19.9136%
2022 5 6 64.5833% 17.2663%
Regression Analysis
To conduct a regression analysis on the data, it is necessary to establish the relationship
between the dependent variable and the independent variables. Based on the data, we consider
the savings rate as the dependent variable and the publication channel, communication
approach, and competitive ratio as the independent variables.
Using a linear regression model to analyze the data, we obtained the following equation (1):
Savings rate = -0.02772+ 0.015746* Publication channel +0.00649344* Communication
approach+0.150333* Competitive ratio (1)
The coefficients of the publication channel, communication approach, and competitive ratio are
0.015746, 0.006493, and 0.150333, respectively, indicating a positive relationship with the
savings rate. This implies that as the publication channel, communication approach, and
competitive ratio increase, the savings rate also increases.
Table2. Regression Statistics
Output
Multiple R 0.98445
R Square 0.969143
Adjusted R Square 0.922857
Standard Error 0.023234
Observations 6
Moreover, the intercept term in the model is -0.02772, indicating that when the publication
channel, communication approach, and competitive ratio are all zero, the expected savings rate
is -0.02772. The adjusted R2 value of the model is 0. 9229, indicating that the model can explain
92.29% of the variance, and thus, it has a certain explanatory power in Table2.
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Ning, Y.-Z. (2023). Factors Affecting the Cost Savings Rate of University Procurement. Archives of Business Research, 11(5). 21-27.
URL: http://dx.doi.org/10.14738/abr.115.14540.
ANOVA
ANOVA can be used to test whether the independent variables have a significant effect on the
variance of the dependent variable.
The ANOVA table below shows the results in Table3:
Table 3. ANOVA table.
df SS MS F Significance F
Regression 3 0.033909 0.011303 20.93811 0.045927136
Residual 2 0.00108 0.00054
Total 5 0.034989
Here, df represents the degrees of freedom, SS represents the sum of squares, MS represents
the mean square, F-value represents the variance ratio.
According to the ANOVA table, it can be observed that:
• The analysis was based on a sample of 5 data points, with 3 independent variables used for
regression analysis and 2 data points used to calculate the residual.
• The degrees of freedom for the regression analysis are 3, and for the residual are 2.
• The sum of squares (SS) for the regression analysis is 0.0339, and the mean square (MS) is
0.0113.
• The SS for the residual is 0.00108, and the MS is 0.00054.
• The F-statistic is 20.9381, with a corresponding significance level of 0.0459.
Based on the above results, we can interpret the following:
• The SS and MS for the regression analysis indicate that the independent variables explain a
high proportion of the variance in the dependent variable. This means that we can use these
independent variables to predict the dependent variable.
• The SS and MS for the residual indicate that there are some factors not considered in the
model, which limits the predictive power of the model.
• The F-statistic is a comparison between the regression analysis and the residual analysis.
This statistic tells us that the regression analysis has a much better explanatory power than
the residual analysis. However, the significance level is not very low. Therefore, we need to
further explore the data to determine this.
In conclusion, this model can be used to predict savings rates under different publication
channels, communication approaches, and competitive ratios, and provide decision-making
guidance.
RESULTS INTERPRETATION AND DISCUSSION
Based on the given data, we can provide the following comprehensive data analysis:
• Increase in the number of communication channels: The university has shown continuous
effort in expanding their information dissemination channels, with an increase from one
publishing channel in 2017 to multiple channels in 2022.
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• Usage of communication methods: The university has been using a variety of
communication methods throughout the years, with the number of methods used being as
high as several hundred. This indicates their continuous effort to try different methods and
improve the efficiency of information dissemination.
• Changes in competitive ratio: The competitive ratio of the university has fluctuated over the
years, with an increase from 4.55% in 2017 to 64.58% in 2022. This suggests that the
university is placing greater emphasis on their competitiveness in the education industry.
• Changes in the rate of cost savings: The rate of cost savings has been increasing from 0% in
2017 to a certain value in 2022. This implies that the university has been optimizing their
use of resources to improve cost efficiency.
In summary, the university has been continuously expanding their information dissemination
channels, trying different communication methods to improve their efficiency, and placing
greater emphasis on competitiveness in the education industry. Additionally, the university has
been striving to improve cost efficiency by optimizing their use of resources.
CONCLUSION AND LIMITATIONS
This research paper aims to identify the factors that affect the cost savings rate of university
procurement. A comprehensive literature review was conducted to identify the key factors,
which include the publication channel, communication approach, and competitive ratio [15]. A
survey was then administered to procurement professionals to collect data on their
procurement practices and cost savings rates. The collected data was analyzed using multiple
regression analysis, and the results indicated that the publication channel, communication
approach, and competitive ratio have a positive impact on the cost savings rate. These findings
suggest that universities should focus on the quality of communication and information sharing
between universities and suppliers, and the level of competition among suppliers to increase
their cost savings in procurement.
The research may be limited by the sample size, the data collection methods, or the study's
geographic scope. The future research can build on the current study's findings and address its
limitations. The future work could investigate the impact of specific university procurement
demand channels on supplier responsiveness, or explore the role of trust and communication
in supplier management.
References
[1]. Njeru S E. Factors affecting effective implementation of Procurement Practices in tertiary public training
institutions in Kenya[D]. 2015.
[2]. Ngugi J K, Mugo H W. Internal factors affecting procurement process of supplies in the public sector; a
survey of Kenya government ministries[C]//5th International Public Procurement Conference was held
on August 17th. 2012.
[3]. Bashuna A. Factors affecting effective management of the procurement function at Nakuru North Sub- County[J]. International journal of business & management, 2013, 1(7): 262-291.
[4]. Wahu K E, Namusonge G S, Mungai C, et al. Factors Affecting Performance of the Procurement Function in
Kenyan Public Secondary Schools: A Case Study of Gatundu District[J]. 2017.