The Challenges For Public Procurement

on Friday, August 31, 2012


It's amazing how much we have been hearing about the amount of government spending, yet how governments and other public entities spend is never part of the conversation.  It is in everyone's best interest to drive public procurement towards efficiency, measurable performance indicators, and a well-articulated system of accountability.  After all, it is your tax dollars at work.  The trend towards strategic procurement and professional development in public procurement is far behind the private sector.  The ability to innovate and streamlines processes is crucial, yet almost nonexistent in most public procurement systems.

Without getting into politics, there are a number of internal challenges that public procurement systems inherently face including regulatory considerations, communication and political challenges, slow adoption of e-procurement, bureaucracy, and  more.  But at the heart of it, the cause of their inefficiency is the system's suppression of the sorts of decision processes and business relationships that produce results in the private sector. The government makes bad decisions both because it is badly informed and because its procurement officials are encouraged to disregard some of the important information or suggestions from bidders that they possess. The root cause of the problem is the system of full and open competition.  I understand it is designed to thwart corruption, but it is designed poorly.  A government or municipal RFP drives bidders towards a very specific set of regulations and prescribed standards, without allowing flexibility.  Not to mention the number of irrelevant and frivolous RFP questions.

For example, say the Department of Energy is putting together a massive IT system for all of its field offices.  The specifications may be designed to lead the bidding parties to offer a system that all of the vendors know is unusual and expensive. But none of the bidders have any incentive to suggest that its specifications should be reformulated.  The whole process is very impersonal, and demotivating for bidders to do anything other than bid the lowest price they can on exactly what the government has specified.  Governments will never be able to specify contracts that are sufficient to protect them against their own inexperience and lack of information concerning complex systems, especially IT and other tech infrastructure. They must rely on the vendors for information and continuing expertise.  But, given the way government and public entities contract, they are not permitted to consult with vendors informally before contracting, in order to let the vendors tell them what is really needed, nor can they reward vendors for good performance by promising to continue doing business with them.  Flexibility is a key component of the sourcing process that is lost in public purchasing.

With the upcoming election, no matter who wins, I hope that the new (or incumbent) president takes a look at the federal government's procurement  practices and points them in the right direction.
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Education legislation could mean changes for student loans

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Education legislation could mean changes for student loansThe Republican Party has called for education reform and a restructuring in the way student loans are handled.

The party's platform would end the current student loan program, which is handled directly by the federal government. Instead, it would give federal money to private lenders to issue directly to students.

"The federal government should not be in the business of originating student loans; however, it should serve as an insurance guarantor for the private sector as they offer loans to students," the platform states. "Private sector participation in student financing should be welcomed."

While students can currently still receive private student loans from banks and other lenders, private loans may be seen as riskier, because they often require a cosigner, have flexible interest rates and strict repayment terms. However, some students find taking on private loans necessary after they've maximized their federal loan limit, because tuition has become so expensive.

The cost of college has skyrocketed in recent years, making it impossible for some students to afford a higher education without student loans. Many students worry about the possibility of not being able to pay their loans back, and some drop out of school completely to avoid additional debt. A decrease in students means universities often raise their costs to cover lost revenue, making tuition rates even less affordable for many students.

Private universities recognize the need to attract students in order to boost revenue. Some of these schools are freezing tuition for the years a student is enrolled, so they won't enroll for a year or two and then suddenly face an exorbitant tuition increase. Many schools are dropping tuition rates, hoping that their low costs will attract more pupils than they are losing.

An increasing number of institutions are developing three-year undergraduate programs, so students can finish their degree faster and pay for fewer semesters in school.

While some schools are trying to increase revenue and balance their budgets by reducing tuition costs and enrolling more students, others are taking a different approach. Staff cuts and fewer pay increases have become more common, while some schools save big by making their processes more efficient and streamlining their suppliers. As universities continue to endure financial hurdles, the need for procurement best practices becomes even more pressing.
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Republican platform calls for new education legislation for student loans

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Republican platform calls for new education legislation for student loansThe Republican Party has called for education reform and a restructuring in the way student loans are handled.

The party's platform would end the current student loan program, which is handled directly by the federal government. Instead, it would give federal money to private lenders to issue directly to students.

"The federal government should not be in the business of originating student loans; however, it should serve as an insurance guarantor for the private sector as they offer loans to students," the platform states. "Private sector participation in student financing should be welcomed."

While students can currently still receive private student loans from banks and other lenders, they are seen as riskier, because they often require a cosigner, have flexible interest rates and strict repayment terms. However, some students find taking on private loans necessary after they've maximized their federal loan limit, because tuition has become so expensive.

The cost of college has skyrocketed in recent years, making it impossible for some students to afford a higher education without student loans. Many students worry about the possibility of not being able to pay their loans back, and some drop out of school completely to avoid additional debt. A decrease in students means universities often raise their costs to cover lost revenue, making tuition rates even less affordable for many students.
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Smartphones Ruling Our Worlds

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As smartphones have become more powerful and easier to use over the last few years, they have left a path of destruction. Home land lines – gone. PDA’s – kaput? GPS units – see ya! Point and shoot cameras – ehh, not using them anymore. The list goes on and on.

Well soon instead of using traditional debit and credit cards, we will be able to pay at many retailers using our phones. Many major retailers got together and created a network call Merchant Customer Exchange (MCX). This network will be available as an app and will allow users to pay at check out with their smartphones.

The retailers involved in this joint venture include Wal-Mart, Target, Best Buy, 7-Eleven, Sears, Lowes, CVS, Olive Garden, Red Lobster, Shell, Sunoco, and many others. These initial retailers that are a part of MCX account for about $1 trillion in annual sales. Even more retailers plan to be added within the next few months.

The network will initially focus on allowing the retailers to send offers and promotions to app users. “MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience while eliminating unnecessary costs for all stakeholders,”, said Mike Cook, Wal-Mart’s corporate vice president.

World wide mobile payment transactions will total $171.5 billion in 2012, which is a 62% jump from last year. According to the research firm Gartner, this could reach to $617 billion by 2016.

The network relies on a technology called “near-field communication” or NFC. This enables radio communication between phones, tablets, and other devices that are close to the checkout area. Advocates claim the technology is completely safe and secure and that “lost” credit card info can be erased quickly.

A launch date for this has not been determined yet. However, Verizon Wireless, AT&T, and T-Mobile will be jointly launching a competitor to MCX called Isis. This will work like a digital wallet in your phone and will be swiped at retailers’ contact-less terminals. This is set to launch this month at national large retailers in Salt Lake City and Austin.

What other parts of our lives will we be able to control through our smart phones?
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Corn - Do we need food or fuel?

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It has been one hot and dry summer, especially for the Midwest where corn and soybeans are suffering from drought which causes the price of these commodities to soar. This causes 2 problems: 1- Animal producers are struggling to afford to feed their livestock and number 2 – Ethanol.  The government requires gasoline companies to purchase a certain amount of ethanol.  The ethanol industry has a significant impact on corn supply, “roughly half of the nation's corn supply this year will go to producing ethanol, that ethanol will make up only between 5 and 6 percent of the nation's fuel consumption”. 
In a good year, you probably won’t hear many complaints about whether to use the corn for food or fuel, but in a bad year, like this one, it’s a popular topic.  Animal producers are upset and feel that the gasoline companies are dictating the market.  While the farmer who is growing the corn or soy may not feel the pinch as much since the costs for these commodities are so high.  However, farmers producing corn are still upset because they are not getting the yield.  The corn yields are expected to be two-thirds less than what was planted this year. This causes yet another problem, lower yield results in ethanol plants not producing at capacity.  In some cases, ethanol plants are not even operating.
So now we have to figure out how to fix these issues.  The government will buy up to $170 million in surplus meat which will alleviate some of the pain for animal producers.  However for some farmers, especially small producers, it may be too late.  Also, some farmers may use byproduct from the ethanol plants to feed their animals.  If their ethanol plant is not running at capacity or has closed, these farmers are going to have to incur additional costs or go to another plant to feed.  If the price of corn continues to increase, gasoline companies may not want to buy the ethanol. From the consumer perspective, this means our food costs increase too. 
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Fantasy Football Craze...At Work

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“Should I start Michael Vick or Aaron Rodgers?” Yes, it is that time of year again, fantasy football. Although, I am not a participate in fantasy football, I attempted to persuade my father or brother to let me select their first round pick, which my offer was of course denied.

Based on a study and survey done by Challenger, Gray & Christmas, they estimated that during the season of fantasy football, it could cost a large employer $6.5 billion in lost productivity.

So just how did Challenger, Gray & Christmas come up with this estimate? Here is how they did it:

“It assumed that 8.2 percent of the 24.3 million fantasy football participants (as estimated by the Fantasy Sports Trade Association) are unemployed, leaving about 22.3 million employed team managers. The latest Bureau of Labor Statistics data show that weekly earnings for all Americans in the second quarter averaged $773 or $19.33 per hour. Assuming on the conservative side that fantasy football participants spend one hour each week researching stats and tweaking their rosters, the firm multiplied the $19.33 figure by the 22.3 million employed participants. That results in a dollar amount of approximately $430.9 million each week in unproductive wages paid by employers to fantasy footballers. Multiply that by 15 weeks and the total reaches $6.46 billion.”

Although the above equation might not actually apply to your business, the fact behind this is that with the football season approaching quickly, the fantasy football craze has been on the rise over the past several weeks. Each week individuals are battling for the win and spend all week researching and/or “guessing” who on their team will have the best performance during the upcoming games. During the 17 week football season, the average person may spend up to two hours at work managing their football lineup and determining their statistical performance compared to others in the league (that is if your company does not already have these sites blocked). Based on the above equation from Challenger, the loss of productivity can add up quickly over the course of the season.

There is also the idea that creating a company-wide fantasy football draft may actually increase the morale in the workplace. For example, having a workplace fantasy football draft may encourage relationship building between employees. From a strategic sourcing sense, fantasy football offers the ability to brush up on your negotiation skills. There is always that chance that someone in your league presents you with a trade that requires in-depth consideration and negotiation to get the most out of the trade. If you are a true fantasy footballer, you may take the time to spreadsheet player statistics, keep track of points and create formulas to determine which player you should play each week.

As long as you keep your priorities straight and don’t get too carried away with the fantasy football craze while at work, I see no reason why fantasy football should be eliminated from the workplace.

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Pell Grant changes may hurt universities

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Pell Grant changes may hurt universitiesFor years the Pell Grant program has been helping low-income students afford college. In the past, these federal grants covered a significant portion of a needy student's tuition. In recent years, the cost of college has dramatically increased, while the amount a student can earn from a Pell Grant has been reduced.

Pell Grants were initially created in 1972 to help a growing number of low-income students obtain a degree. The amount of money received by a pupil depends on a variety of factors, such as income and family size. Many recipients cannot rely on the grant alone - they often take out student loans to cover the additional cost of attending a university.

The Huffington Post reported that in 1980, the maximum funds from a Pell Grant covered the entire cost of a two-year degree and 77 percent of a four-year degree. Since then, tuition has skyrocketed, and Pell Grants now cover only 62 percent of a two-year diploma and a mere 36 percent of a public university four-year degree.

Pell Grants have been the subject of controversy as the government struggles to get its finances in order. President Barack Obama increased the grants in a stimulus bill, but his second proposal to increase them was shot down by Congress. In 2011, the House of Representatives passed a bill that cut several billion dollars from the program, but the legislation was never implemented. During the debt ceiling crisis in 2011, the House got their way and were able to cut money from the Pell Grant program. Funding was boosted again when the debt ceiling was raised, but the length of time a student could receive the money for was cut last December.

While Republicans and Democrats have sparred over the program, students and universities have struggled to deal with the cuts. Since the summer Pell Grant program has been eliminated, colleges are seeing fewer students in summer classes because they cannot afford the tuition.

A drop in enrolled students who can no longer afford college combined with less state university funding could mean disaster for students and schools alike. When students cannot pay for school and cease to attend, institutions are sometimes forced to raise tuition even more. 

Education legislation may change how many students receive Pell Grants. Republican vice presidential nominee Paul Ryan proposed a federal budget that would retain the maximum amount of money a needy student could receive, but would also adjust eligibility requirements for the program. This would keep the program sustainable for a longer period of time, but could still mean that universities may suffer with less revenue in the near future and fewer students paying their way with Pell Grants.
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For-profit colleges scrutinized by government

on Thursday, August 30, 2012

For-profit colleges scrutinized by governmentFor-profit higher education institutions are being viewed skeptically lately, especially as the Obama administration attempts to force these universities to make additional disclosures to students.

If the Department of Education has its way, for-profit schools will be required to reveal statistics indicating if future students will be forced to take on massive student loans they will not be able to repay upon graduation. For-profit university groups are fiercely protesting this proposed requirement, fearing it will shed a negative light on their schools and drive down enrollment.

The government argued that this requirement will simply allow students to make educated decisions about the financial benefits of enrolling in a program at a for-profit school, since many graduates take on huge loans to pay for tuition and are unable to find careers that allow them to pay off their student debt.

Unveiling student debt statistics is not the only education legislation Obama has supported in regards to for-profit schools. He has also proposed rules that will punish universities that release misleading advertisements, and ban them from giving out raises or bonuses to recruiters who enroll the most students.

For-profits are under further scrutiny after a scathing report released by U.S. Senate members slammed the institutions. The report followed a two-year investigation of 30 for-profit schools, and revealed statistics that are raising eyebrows throughout the higher education community. More than half of students enrolled in these schools did not complete a degree, and of that group, another half left the school within the first four months.

The report also revealed that of the 30 schools followed, an enormous portion of revenue was spent on marketing, advertising and recruiting. While nearly 23 percent of revenue was spent to attract new students to campus, only about 17 percent of revenue went to instruction.

Even more surprising was the fact that taxpayers finance a great deal of the loans that keep for-profits in business. They supplied these schools with $32 billion in 2009. While a quarter of the Department of Education's student aid goes to for-profit universities, a mere 13 percent of college students enroll in these schools.

However, the report did reveal that for-profits play an important part in educating non-traditional students. While for-profit schools tend to come with high tuition costs and little regulation, they tend to take those who are underserved by traditional universities and give them the opportunity to earn a degree.

While Democrats tend to favor regulating for-profits and Republicans see them as an additional option for students, it is now up to a federal judge to decide if regulation can require the schools to disclose the debt and repayment abilities of graduates.
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iPhone 5 and More This Fall

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Whether they plan this deliberately right before the holiday season or not, tech companies are preparing to present several new fun gadgets to consumers within the next few months.  I’m sure it has a little to do with the holidays and all of the children, young and old will be wanting for the next best thing.  Here is a preview of the next generation of the “better, faster, stronger”, according to cnn.com.

·         iPhone 5 – anticipated to be introduced September 12th and in stores shortly thereafter for purchase.

·         iPad mini – Apple is announcing a smaller version of their iPad to compete with the Amazon Kindles and the like sometime in September or October.

·         Surface – Microsoft is unveiling its first PC, this tablet will have a built-in stand and the cover will double as a keyboard.  From the picture in the article it appears to be quite sleek.

·         Windows 8 – October 26th marks the date that Microsoft will introduce its new touch enabled operating system.  In an effort to spark interest they will be offering an upgrade from XP, Vista and 7 for only $40 through January.  Speaking as a miserable Vista user, I know I will be taking advantage of that!

·         Wii U – Nintendo anticipates launching its upgrade to the popular Wii gaming console sometime during the holidays, I’m sure this will land on quote a few holiday shopping lists.  Competing with similar consoles, the Wii U will stream content from media apps like Netflix, Amazon, and Hulu.

·         Kindle and Kindle Fire – On September 6th Amazon is expected to announce newer versions of its Kindle and Kindle Fire with some tweaks like higher resolution and a rumor that it may contain a backlight.

·         Apple TV – There is a bit of speculation about whether Apple will introduce newer upgraded options for their television devices already on the market today.  Word around town is that they are looking to add live cable to the devices but are having difficulty working it out with the cable companies.  So TBD on that one.

I hope you found this peek into what is expected this fall to be useful.  Again, some of these announcements are merely anticipated and naturally with all new devices there are likely delays.  Happy shopping!
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Cost Savings at Any Cost

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Sometimes I like a nice flatbread sandwich for lunch.  It’s at those times I will visit the local chain restaurant that specializes in making that type of sandwich.  That makes sense.  Within the last year or so –I’m not sure when, exactly- I noticed the cozy little restaurant no longer provided paper napkins that customers could access themselves and instead started providing only two napkins with your meal.  Of course, I suppose if you have a mishap prior to receiving your meal, you could ask and they would give you more.  No matter what, it always seems like what they give you with your meal is too little and too late. I am unsure if all of the chain has reversed this napkin rationing policy, but the one I most recently visited appears to have.  I am also unsure if this policy was related to cost savings, but it seems to me like it could be.  So in the spirit of hearsay and conjecture, I decided to utilize it as an examination of cost savings goals during strategic sourcing initiatives.

During costs savings initiatives, the focus is on the numbers: timeline, resource allocation, one-time and ongoing costs, etc. It is easy during this analysis to lose focus on what will actually work for the organization and more importantly, what can be sustained.  This is particularly important the more granular you get.  It’s simple to become pennywise and pound foolish, as they say.  So saving that extra one percent of cost at the expense of quality or even usefulness is often not worth it.  For example, sometimes I need more than two napkins.  And sometimes I need napkins before my meal arrives (I can’t help it).  And sometimes, I even need more than two napkins before my meal arrives (It was an accident!).  So sometimes, being rationed napkins is annoying.  In this case, probably not annoying enough that it decreased the frequency at which I visited the restaurant, but for some people it might have been.

So on paper napkin rationing seems great.  Let’s say an average customer uses five napkins per meal and rationing limits consumption to two and a half.  Fifty percent savings!  But what if this new policy really is annoying enough to keep customers away, even a little bit?  It is probably not worth it.  In the same way, suppose there are corners to be cut, or quality requirements that can be overlooked in order to improve savings.  The risk of foregoing those requirements is an unhappy internal customer (not enough napkins) or an internal customer who does not have what they need to be productive (no napkins before the meal).  Not only can this impede process, it can bleed into other areas in a sort of “butterfly effect” manner, snowballing into a much bigger issue.  Not only is there a potential for issues in process, the cost of change to adopt these changes along with the cost of change to “go back” or move to a different approach to solve the problem can sometimes negate savings or end up costing more in the long run.  

A careful balance between quality and cost needs to be established during any strategic sourcing initiative.  In order to ensure the initiative is successful, and that decisions around cost savings make sense for the organization, quality concerns and process changes need to be evaluated carefully and factored into the overall analysis for consideration before making a decision.   For help identifying areas for potential cost savings, building requirements, and strategic sourcing to obtain savings and improve process, visit www.sourceoneinc.com
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FDA approves new pill for HIV treatment

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FDA approves new pill for HIV treatmentAccording to the U.S. Centers for Disease Control and Prevention, there were more than 1 million Americans living with a diagnosis of the HIV infection in the country in 2008, and that figure has continued to grow in the following years.

During 2009 there was an estimated 42,959 new diagnoses of the HIV infection in the country, calling for action to be taken against the deadly virus that attacks the immune system. Considering a significantly large number of Americans are affected by HIV, the U.S. Food and Drug Administration recently approved a drug that will treat HIV-1 infection in adults who have never been treated for the illness.

The drug is called Stribild and is required to be taken once a day by HIV patients to treat the virus.The pill contains two drugs that were previously approved by the FDA and two new drugs called elvitegravir and cobicistat. The older drugs are emtricitabine and tenofovir disoproxil fumarate.

Elvitegravir is a drug that interferes with an enzyme that the virus needs to multiply, slowing down the process in some users. Cobicistat is a pharmacokinetic enhancer that allows an enzyme that metabolizes certain HIV drugs and is used to make the effects of elvitegravir last longer.

“Through continued research and drug development, treatment for those infected with HIV has evolved from multi-pill regimens to single-pill regimens,” said Edward Cox, director of the Office of Antimicrobial Products in FDA’s Center for Drug Evaluation and Research. “New combination HIV drugs like Stribild help simplify treatment regimens.”

The approval of Stribild by the FDA is just the latest action that was taken by the organization to combat HIV. The FDA also approved the first over-the-counter rapid HIV test that can be used at home. The FDA also approved use of the first drug of pre-exposure prophlaxis in combination with safer sex practices.

According to research, 1,408 adult patients were evaluated when taking Stribild for safety and effectiveness. The patients tested were not previously treated for HIV, but were evaluated in a double-blind clinical trial. Participants of the study were separated into two groups. One of the groups was assigned Stribild to take every day and the other group was required to take Atripla, an HIV drug that contains Truvada and efavirenz.

The results of the study showed that between 88 percent and 90 percent of patients treated with Stribild had an undetectable amount of HIV in their blood compared to 84 percent who were treated with Atripla and 87 percent who were treated with Truvada.

FDA approves pain relieving drug
The FDA also recently approved wider use of the painkiller Nucynta ER, which is used to treat the pain associated with (edited for clarification) nerve damage brought on by diabetes.

"Pain from DPN can be difficult to manage, leaving some patients and healthcare professionals looking for alternative treatments," said Keith Candiotti, professor of Anesthesiology and Internal Medicine at the University of Miami School of Medicine. "NUCYNTA ER is a different option than currently approved medications for the management of painful DPN and may be an important new choice for these patients."

A note came in from this manufacturer with further clarification:
" We wanted to clarify that the FDA approved Janssen’s NUCYNTA® ER for the management of pain from diabetic peripheral neuropathy. 
Below is  link to the press release http://www.multivu.com/mnr/57705-nucynta-er-diabetic-peripheral-neuropathy-tapentadol which provides some additional information." 


The expanded approval for the FDA gives Janssen Pharmaceuticals a chance to market the drug for diabetic peripheral neuropathy, which affects almost 8 million Americans and can cause stinging or burning sensations, pain, numbness or weakness in the hands and feet. The supply chain of Janssen Pharmaceuticals might be busier soon with the large number of Americans that the company's new drug could help.
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Massachusetts hospital saves $2 million

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Massachusetts hospital saves $2 millionA recently released case study from Craneware showed that Beverly Hospital in Massachusetts managed to save $2 million in cash flow over the course of the year, proving to be a model for other hospitals around the country.

The hospital was aware that it needed to make changes to its revenue cycle in order to save money and form a more seamless process.

Beverly Hospital implemented software solutions to deliver the cost savings to the facility, identifying invalid claims before submitting them to Medicare or other companies.

“By not having the burden of editing claims,  researching and investigating new, unpublished edits and resubmitting denied claims, I was able to save over $100,000 a year in labor costs alone,” said Marsha Raim, director of patient accounts at Northeast Hospital Corporation.

The hospital also reduced its total days in accounts receivable by up to three days, which resulted in the $2 million in cash savings.

Another Massachusetts hospital also saved money by going green recently. Beth Israel Deaconess Medical Center in Boston has saved close to $1 million since 2010.
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Regulations stifle healthcare supply chains

on Wednesday, August 29, 2012

Regulations stifle healthcare supply chainsAccording to a yearly UPS survey, most healthcare executives plan on utilizing global markets and investing in new technology over the next several years. They hope their businesses will remain competitive while increasing supply chain efficiency while still providing high quality products.

Despite their plans to invest in and enhance efficiency, many executives in the industry are concerned about the future. High level employees listed their top concern as complying with increasing regulations. Fifty-two percent of healthcare decision makers said new regulations may impact their business in the next few years. Healthcare reform and legislation changes were also a major worry, with about half percent of respondents citing them as detrimental to their businesses. Along with regulatory changes, healthcare executives are also concerned about keeping supply chain costs under control and intellectual property protection.

Ranking lower on the list were concerns over increased competition, patent expirations and industry consolidation.

The majority of executives said country regulations provided a significant barrier to their ability to do business. Intellectual property rights and quality control were also listed as top barriers to these companies.

As the concerns of healthcare companies change, they must come up with new ways of doing business to ensure they comply with regulations while still providing quality products. Effective supply chains will assist these corporations in ensuring they remain efficient and profitable.
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Supply chain center to open in Asia

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Supply chain center to open in AsiaIBM recently partnered with the Singapore Economic Development Board to develop a center to help corporations better manage their supply chains.

The IBM Supply Chain Analytics Center of Competency will be launched in Singapore and will increase knowledge of supply chain optimization in the area. The center will use big data to gather information and develop solutions for companies that may be missing out on the most efficient and effective ways to do business.

The CoC will collaborate with IBM's U.S. operation as well as its centers in India to better utilize company data to conduct business in a way that will result in cost savings and more customer satisfaction.

"With the explosion of big data, enterprises across all industries are looking for way to gain greater, more accurate insight into their businesses," said Fran O'Sullivan, IBM's Integrated Supply Chain general manager. "We look forward to collaborating with the Singapore EDB to develop innovative technologies to advance the supply chain industry worldwide."

Big data is quickly becoming an important way for suppliers to gain valuable knowledge of how they can improve their procurement strategies. The CoC will be IMB's first venture into supply chain analytics in Singapore.
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TPC Group merges with First Reserve and SK Capital

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TPC Group merges with First Reserve and SK CapitalTPC Group recently announced that it has entered into a definitive merger agreement with First Reserve Corporation and SK Capital Partners.

The company is one of the leading fee-based processor and service providers of value-added products and First Reserve is a global investment firm that is catered toward the energy industry. SK Capital Partners is a private investment firm that aims to assist the chemicals sector.

"In late 2011, the Board of Directors formed a special committee in order to conduct a comprehensive review of the strategic and financial alternatives available to the Company," said Michael Ducey, non-executive chairman of the TPC Group Board of Directors. "Acting in consultation with our advisors, our Board of Directors determined that this transaction with First Reserve and SK Capital, two companies with strong reputations and proven records of successfully completing comparable transactions, appropriately recognizes the value of TPC Group's business and prospects and provides our stockholders with an immediate cash premium for their valued investment."

The transaction between the companies is valued at approximately $850 million, which includes net debt.

Hudson City Bancorp recently announced a merger with M&T Bank Corporation that is valued at approximately $3.7 billion. The deal will reportedly expand the premier banking community franchise in the eastern United States.
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University revenues slow as students spend less on college

on Tuesday, August 28, 2012

University revenues slow as students spend less on collegeSallie Mae recently released a survey of college students that revealed universities may see a decline in revenue from student tuition. Due to a struggling economy and the rising cost of college, students and their families are spending less on higher education.

The report noted that spending on college dropped 13 percent over the past two years. This large decrease signals that students are saving money by taking steps such as choosing public or two-year institutions over private colleges and living at home rather than in dormitories.

Most families are not foregoing college completely, despite the cost. The survey revealed that many families still see college as an investment and most agree that a degree is needed more than ever to pursue a career.

Community college attendance is up, as students take advantage of low tuition costs before transferring to another school. While 23 percent of students attended two-year colleges two years ago, 29 percent of students do so now. While many of these students may have attended four-year universities from the start several years ago, families are beginning to make more cautious financial decisions. A community college offers a more affordable alternative as tuition rates at four-year public or private schools become increasingly expensive.

The way students are paying for school is also changing. Public universities are seeing an increase in students paying their way with grants and federal student loans. Less of the tuition they charge is coming from parents. This only increases concerns about student loan debt, which have recently surpassed $1 trillion nationwide.

This decrease in tuition dollars will greatly affect universities that depend on the revenue to balance their budgets. As university funding also declines, it is more difficult for some colleges to make ends meet without raising tuition. States have limited the amount they are giving to state schools, and private institutions have found that it is increasingly difficult to fundraise in the current economic environment.

Because colleges have received less funding, many are raising tuition to make their budgets viable. Even though these schools may still attract some students, more pupils and families are increasingly concerned about the cost of school. Sixty nine percent of families eliminated certain colleges because the costs were too high. In order to attract more students and increase the tuition dollars they receive, some universities are keeping tuition rates steady to attract prospective students.
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Hertz close to acquiring Dollar Thrifty

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Hertz close to acquiring Dollar ThriftyHertz Global Holding, a car rental company based in the United States, is close to terms to acquire Dollar Thrifty, one of its rival companies, Reuters reported.

Hertz is expected to acquire the rental car company for around $2.5 billion, according to source familiar with the deal, the source reported. The acquisition would end years of competition between the two rental car companies.

Reuters reported that its sources said Hertz will purchase Dollar Thrifty for $87.50 per share. Hertz is the No. 2 car rental company in the United States and has tried to acquire Dollar Thrifty before, along with third-ranked Avis, but the deals fell through as a result of disagreements over price and it being unlikely that its larger rivals would be able to get clearance for the merger.

Following the proposed acquisition, Hertz, Avis Budget and privately-held Enterprise Holdings, which is the No. 1 car rental company in the country, will control an estimated 95 percent of the car rental market in the United States.

U.S. futures recently increased, gaining 1.8 percent in the market, following the announcement that the company would possibly acquire Dollar Thrifty.
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Higher education budget cuts hurt colleges

on Monday, August 27, 2012

Higher education budget cuts hurt colleges The Center for the Future of Higher Education recently released a report detailing the university employment trends that are hurting both institutions and their students. As adjunct and part-time professors become a common sight on college campuses, they sometimes struggle to be effective educational leaders with the limited resources they are given.

Partially because of university funding cuts and lower enrollment, many colleges are no longer hiring the best professors they can find and granting them tenure after they have been a part of the university for a certain number of years. Lately, it is not uncommon for schools to hire adjunct professors and fixed-term faculty members at the last second in order to save money.

As the cost of college becomes more expensive, students may be getting less than what they paid for. Even though an adjunct professor may be an excellent teacher, bringing many of them on at the last minute is detrimental to the schools. Assigning teachers to instruct classes just a few weeks before the semester begins does not allow ample preparation or time to order textbooks, and students may end up taking a class with a professor who has no clearly outlined lesson plans or course materials.

Many part-time professors have restricted access to educational resources, such as library materials, an office and copying privileges. Because some professors lack basic resources, students could suffer the effects of not having the advantage some of their peers in a different class section may have.

Hiring last-minute part-time professors does quite a lot to save universities money. More than half of adjunct teachers said their salaries were low, and only about a quarter reported receiving benefits, according to a report by the American Federation of Teachers. The stressful working conditions many adjunct and part-time professors face can lead to a tense or less-than-ideal learning environment for students, who are often paying thousands of dollars for the course.

This hiring model can be detrimental for a university's reputation, leading it to see an additional slide in enrollment. By hiring professors just days before the start of a semester, the colleges hurt themselves as well as the students they serve. At a time when university funding is hitting a low point, some schools are avoiding this trend and striving to keep a qualified, tenured and satisfied faculty that will attract more students and bring in more tuition money.
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Sony cuts jobs for supply chain

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Sony cuts jobs for supply chainSony recently announced that it's cutting 1,000 jobs in an effort to streamline its supply chain management.

The electronic manufacturing company is currently going through a restructuring phase that will also result in the its headquarters being transferred from Lund, Sweden, to Japan. Competition from other industry giants, like Apple and Samsung, has forced the company to look for ways to improve its operations.

"Sony has identified the mobile business as one of its core businesses and the Xperia smartphone portfolio continues to gain momentum with customers and consumers worldwide," said Kunimasa Suzuki, president and CEO of Sony Mobile. "We are accelerating the integration and convergence with the wider Sony group to continue enhancing our offerings, and a more focused and efficient operational structure will help to reduce Sony Mobile's costs, enhance time to market efficiency and bring the business back to a place of strength."

The majority of cuts are expected to occur in Sweden, including 650 staff and 300 consultants. The cuts are expected to occur over the next 18 months.

Sony also recently announced that it's ending its optical disc business drive by March, which is also part of the restructuring process.
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Qualcomm completes acquisition

on Friday, August 24, 2012

Qualcomm completes acquisition Qualcomm, which creates chips for mobile devices, recently completed an acquisition of Israeli start up DesignArt Networks.

The mobile software company reported that DesignArt Networks, which is located in Raanana, has a design that allows system-on-chip platforms that can boost wireless data capacity in mobile networks, which could increase business operations in the mobile supply chain.

"DesignArt offers system-on-chip (SoC) and software products that enable the design of indoor and outdoor small cell base stations and remote radio heads, which allow operators to expand the data capacity of their networks in a simple and cost-effective manner," a Qualcomm representative said. "DesignArt's technology also offers integrated line-of-sight and non-line-of-sight wireless backhaul to reduce the cost of outdoor small cell deployments."

Globes reported that DesignArt Networks will become a part of the Qualcomm Atheros Division. This marks the first acquisition for Qualcomm in Israel. The company acquired a mobile web company in 2010 for more than $50 million.

This acquisition comes after Qualcomm recently announced its support and confidence in the economy of Israel.
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Chartered Institute of Purchasing and Supply Publishes Review of "Managing Indirect Spend"

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A review of "Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing," authored by executive sourcing experts at Source One Management Services, LLC, was published by the Chartered Institute of Purchasing Supply on www.SupplyManagement.com.  The author of the book review, Bode Tijani who is an Indirect Buyer for The Wrigley Company, had this to say about the book's content:

"This book is a professional resource, written to provide knowledge and essential tools for success in buying with clear focus on strategic sourcing methodologies. An obvious product of invaluable practical experience, it presents a holistic review of strategic sourcing practice across industries while providing insights, tools and guides to best practices."
 Written for veteran procurement professionals as well as newcomers to strategic sourcing, this how-to sourcing guide details the entire process from start to finish with real-world examples from experts with over two decades of experience.  Specific case studies and applications with practical tips on how to solve difficult sourcing situations provides readers with tangible knowledge they can apply in their own profession. 

As a result of reading the only sourcing book of its kind, Tijani stated:

"I am able to immediately take advantage of market intelligence, flexibility in the RFx process and clear specification to deliver improved savings."



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Facebook receives green light for Instagram acquisition

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Facebook receives green light for Instagram acquisitionFacebook, one of the largest social media sites in the world, recently received approval from the U.S. Federal Trade Commission to acquire the mobile photo-sharing service Instagram.

The social media giant received the clearance following the U.K. Office of Fair Trading clearing the deal. After receiving the FTC's clearance, Facebook now does not have any antitrust reviews that are pending on the proposal.

"We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook," wrote founder and CEO Mark Zuckerberg in a statement while announcing the proposed acquisition.

Facebook announced that it would be purchasing Instagram for $1 billion in cash and stock in April and recently cleared up that statement, saying it would pay $300 million in cash and an estimated 23 million shares of its common stock, which could result in cost savings for Facebook.

Instagram recently reached the 50 million users plateau, which the company climbed toward at a rapid pace.
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Food waste hurts supply chains

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Food waste hurts supply chainsA new report released by the National Resources Defense Council revealed that up to 40 percent of food in America is wasted.

This huge percentage is estimated to add up to about $165 billion annually. Americans now throw out 50 percent more food than they did in the 1970s.

The waste occurs throughout the food supply chain. Losses may happen at any point in the system: in fields, processing, distribution, retail stores and in homes. Some of this waste is inevitable at many stages of the supply chain. Crops can succumb to pest problems or drought, and products can become inedible due to packaging damage or a technical malfunction.

In spite of some expected losses, much of the waste is avoidable. Produce farmers usually need to have their products comply with certain standards, and a somewhat crooked carrot is often considered unacceptable. This result is a huge amount of perfectly edible but unmarketable food wasted in the early stages of the supply chain. Some farmers are taking advantage of the products that do not meet retailer standards and using them for other purposes to help eliminate food waste. Baby carrots were created by a farmer who cut up his irregularly shaped carrots that retailers would not sell them. Farmers markets are another way for farmers to sell their produce that may not fit retail standards.

The waste continues during the retail stage, when supermarkets overstock their fruit and vegetable bins, resulting in faster spoilage. Retailers are often required to keep a full stock to appeal to consumers, but this results in large amounts of spoilage at this point in the supply chain. As a result, some retailers are refraining from throwing out expired or cosmetically imperfect goods and repurposing them to reduce waste.

Plenty of food is also lost after preparation. Restaurants that serve huge portions see a large amount of waste, as do those that offer extensive menu selections and are required to have extensive ingredients. Unwanted sides that accompany the food are also often wasted, as they are typically undesired by the consumer. Preparation waste also is common in households, when families prepare too much food and neglect to eat leftovers.

Food waste is a serious problem that hurts supply chain optimization. Starting at the beginning of the chain, food waste is rampant and can hurt a company's bottom line. Examining supply chains to determine exactly how much waste is occurring can result in cost savings as well as less thrown-out food.
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Soaring cost of college encourages early graduation

on Thursday, August 23, 2012

Soaring cost of college encourages early graduationAs college tuition rates continue to rise, more universities are encouraging students to complete their academic requirements and graduate before or within the standard four-year time frame.

In an attempt to gain more students by making their schools seem more affordable, some colleges are beginning to offer three-year baccalaureate degrees. This practice shaves off an extra year of tuition a student would be required to pay under the traditional four-year plan.

However, a few schools are finding this to be a difficult practice to implement because university funding has been drastically cut as the economy continues to struggle. Higher education budget cuts make it impossible for some colleges to offer enough sections of courses required to graduate. This forces some students to remain enrolled for an extra semester or two, catching up with classes they were previously unable to fit into their schedules.

Some budget-conscious pupils are beginning the path to early or on-time graduation years before they set foot on a college campus. Taking advantage of Advanced Placement tests and dual-enrollment while still in high school are becoming more common practices. These options drastically cut down on the cost of attending a university, as a higher education increasingly seems out of reach for some people.
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Big data can help supply chains

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Big data can help supply chainsEven though news about big data seems to be everywhere, it is mysteriously absent from the electronics supply chain industry. As companies turn to big data to analyze statistics of all sorts, a recent study found that supply chain managers realize they can use big data to assist them in their businesses.

The problem with using big data in the supply chain business is that some companies simply have too much data to make sense of and manage. Oftentimes, supply chain managers are dealing with multiple systems, making it difficult, if not impossible, to gather and interpret the sheer volume of data collected.

More frequently, companies are realizing that they can use big data to their advantage. All their unanalyzed data has the potential to provide valuable insight into better supply chain optimization and more cost savings. It is difficult for companies to improve their supply chains when they fail to make good use of the data available to them.

As the big data trend continues to grow, companies will need to increasingly utilize it to analyze the data they collect. Using big data to better understand supply chain management will give companies a competitive advantage over those that fail to use their data to its full potential.
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Louisville hospital cutting costs

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Louisville hospital cutting costsIn an effort to deliver cost savings to its hospital, the University of Louisville is cutting back on services, which some people think is for another reason.

A spokesperson for the hospital confirmed to WDRB.com that the hospital is reducing service, aiming to save an estimated $2.5 million. The hospital will stop conducting open heart surgeries and will limit some non-emergency situations for patients with no insurance.

The hospital is also taking steps to officially close down its sleep center, which is located on the 6th floor of the Residence Inn downtown. Over the next couple years the facility is planning to cut $15 million out of their budget, the source reported.

"It's unconscionable, what they're doing," said State Representative Tom Burch. "There's plenty of money wasted there right now on people who do absolutely nothing, that they could apply this to delivering healthcare to the indigent. They're playing games. And their playing games with our lives."

A Boston hospital is also in the process of saving money, but taking a different route. Beth Israel Deaconess Medical Center in Boston announced that it's going green to save money and become more eco-friendly.
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Huge food companies checking out supply chains

on Wednesday, August 22, 2012

Huge food companies checking out supply chainsFour global food producers have made alterations to their supply chains based on supplier environmental sustainability, a new report revealed.

Damone, Heinz, PepsiCo and Unilever have created a "code of conduct" to determine if they will do business with certain suppliers, depending on if the supply company utilizes sustainable practices. The other eight largest food producers have not taken the same steps to create environmentally friendly supply chains. This has the potential to lead to resource scarcity and pressure from green non-governmental organizations as well as competing companies using sustainable supply chains.

The report showed that Associated British Foods, ConAgra Foods, General Mills, Kellogg, Kraft, Mars, Nestle and Sara Lee can improve their ranking over time by implementing a long-term plan for sustainable growth that involves using different suppliers and raw materials.

Some of these companies are slowly beginning to adopt policies that will make their supply chains more environmentally friendly, but not to the same extent as the top four companies. Kraft, for instance, is committed to providing sustainable coffee beans, but only in its European markets. While Nestle is not in the top four for creating sustainable standards for its supply chains, it has determined standards for sourcing and supplier training.
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Hospital goes green, saves money

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Hospital goes green, saves moneyMore companies are beginning to go green these days in an effort to save money and sustain the environment. Beth Israel Deaconess Medical Center in Boston recently jumped on board the eco-friendly bandwagon.

Beth Israel Deaconess Medical Center is a teaching hospital at Harvard University Medical School that employs 9,000 staff members and has a million square feet of office space.

“It’s not hard because I work with a lot of people who want to do the right thing, but it is hard because you are changing how things are done at a hospital, and hospitals are all about patient care,” said Amy Lipman, environmental sustainability coordinator at the hospital. “So everything needs to be scrutinized, and for the right reasons.”

The hospital has thrown out more than 15.7 pounds of material per patient per day until Lipman was hired to head the sustainability program, leading to cost savings at the hospital and more eco-friendly practices.

Coshocton Hospital in Ohio also recently saved money in a deal that acquired 14 city lots for the hospital, which is expected to strengthen its financial future.
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Micron selects new vice president

on Tuesday, August 21, 2012

Micron selects new vice presidentMicron Technology, an American multinational corporation based in Boise, Idaho, recently selected a new vice president of global supply chain.

John Waite was announced as the new vice president, and has been placed in charge of all aspects of global supply chain management, which include customer delivery, operational planning, forecasting and inventory management.

"John's track record of successfully managing global supply chain programs will help us advance our global supply chain efforts that have become increasingly complex as the company has grown its operations, product portfolio and focus on market segments," said Micron President Mark Adams. "We are pleased to have John join our team."

Waite brings more than 15 years of executive global supply chain management experience to Micron, previously serving as vice president of the global supply chain and other roles similar at GlobalFounders, Advanced Micro Devices and IBM Microelectronics.

The company recently submitted its restructuring plan to failed Japanese chipmaker Elpida Memory, which Micron recently agreed to purchase.
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Higher education costs continue to grow

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Higher education costs continue to growAs the back-to-school season approaches, most students will see higher tuition rates again this year. CBS News reported that while the cost of attending college has gone up as much as 8 percent in the past 10 years, the average wage has not kept pace with skyrocketing tuition. Bloomberg reported that in the past 30 years, the cost of college has increased 1,120 percent. More and more students and their parents are forced to accumulate debt to afford a college degree in an uncertain economy, and student debt in the United States now exceeds $1 trillion.

The pressure to compete
Universities are quickly raising tuition and fees in order to pay for things that will draw students to their schools. Brand-new facilities like high-tech gyms, state-of-the-art classrooms and modern dormitories are part of student expectations, and these offerings can be expensive to construct. Students are also beginning to expect schools to have the newest technology available to them, such as smart classrooms and tablets. Colleges are passing these costs along to their customers, who may find the incredible amenities worth the hefty price tag. Some schools are also bringing on a few distinguished professors to attract students to a specific department. Combining new construction and the newest technological advances with the salaries of prestigious faculty can break a university's budget.

State funding declining
In addition to their new projects, university funding at many state schools is hitting an all-time low, as state governments struggle to get through the recession. State budget cuts often directly impact public colleges, which are typically much more affordable than private schools, when they are forced to raise their tuition upon receiving less money from the government. The Atlanta Journal-Constitution revealed that proposed budget cuts will eliminate $108 million in funding for the University System of Georgia. The source reported that in addition to losing significant funds, the schools will now also likely see a decline in enrollment. Those who could not afford higher education are now less likely to receive tuition assistance and be able to attend school due to the cuts.

Legislation may be coming
Some politicians have been pushing education legislation to make college easier on the wallets of parents and students alike. The Making College Affordable Act has been endorsed by several members of the U.S. Congress and aims to help families set aside money for college tuition. This will supplement the current government-sponsored Pell grant program, which makes funds available to students in need.

Trying to control costs
Despite their eagerness to attract new students with the best in facilities, technology and professors, most university budget planning is under strict scrutiny. Even though some schools are bringing on the most well-known professors in their fields, others are hiring more part-time professors in an effort to cut costs. More universities are also "outsourcing" their food, medical and maintenance services to eliminate unnecessary spending.

Some green initiatives are helping colleges to save the planet in addition to saving their budgets. Higher education spending is declining while some departments and classes are going paperless to cut back on the cost of paper and ink. Other schools are modernizing buildings so they rely on less-expensive sustainable energy or installing more efficient appliances and systems to save on their energy bills.

CNN reported that more colleges are trying to hold out on tuition increases to encourage students to attend their schools, and others are offering four-year tuition rate guarantees. Less expensive tuition can result in an increase in the number of students who enroll, because they see the institution as a good value. As college becomes less affordable, more students seek out higher education options that fit within their budgets.
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