The benefits of cooperative purchasing
It’s a question plaguing communities all across the United States: How can we do more with less?
According to Chris Penny of The Cooperative Purchasing Network, municipalities hampered by ever-shrinking budgets are turning to purchasing cooperatives to get the biggest bang for their buck and to boost their buying power. By partnering with organizations that have vetted a variety of vendors and suppliers, small to mid-sized communities gain the ability to enjoy the same discounts and advantages as their big-city counterparts.
“Excluding the federal government, there are about 87,000 public agencies nationwide. I would say that somewhere in the vicinity of 60,000 have considered or tried a cooperative,” he said. “It’s a big movement.”
That movement continues to grow. Penny said entities with small purchasing departments do not have the time or the personnel to conduct retail price studies or negotiate discounts that meet their needs, which makes cooperatives critical during this period of recovery.
“One of our recent contracts for print management — including copiers, toner, ink, maintenance, etc. — took nearly 11 months to hammer out. A contract revision that involved office supplies took 70 man hours to conduct. They had to go line by line over all of the prices to make sure that they were in line with the contract’s specifications,” he said. “It’s a cumbersome process for us, let alone entities that are strapped for resources.”
Mike McDonald of Prime Advantage noted that cooperative purchasing can help municipal departments band together to pool resources and streamline purchases. The trick is getting everyone to work together for the common good.
“There’s a lot of brand loyalty out there,” he said. “We have found that the most success comes from the categories that people have the least amount of loyalty to. No one cares where their office supplies come from, but when you get to something like welding equipment, we find that our members have tremendous preferences about the masks and helmets that they wear.”
In addition to vetting companies and working to find the best member/supplier match, purchasing co-ops also keep their eyes on emerging trends in purchasing in order to learn what their clients are looking for. Penny said one of the most critical avenues of cooperative purchasing is incorporating local and more diverse businesses. Municipalities and other entities like putting their dollars back into the community and building a symbiotic relationship between the public and private sector that is mutually beneficial.
“This is something we are working on with a number of states, and we are creating contracts that allow local vendors to partner with larger corporations in order to meet our clients’ needs. The point is that no matter if you are Arkansas or California, there is a cooperative purchasing contract to meet your needs and it’s worth checking into,” he said. “The savings can be very significant.”