Buying On A Budget
Over the last several years there has been a proliferation of purchasing cooperatives in the education space, and it’s easy to see why. Procurement professionals continue to face the daunting challenge of spending less and getting more. Be it through increased efficiencies, aggregated knowledge or leveraging resources, cooperative purchasing contracts can help.
Strength in Numbers
The sheer volume of purchasing power aggregated by the size of the cooperative provides individual members with economies of scale they would likely not be able to achieve on their own. Add to that the considerable time savings associated with researching new product categories, sourcing competitive quotes and negotiating pricing. By eliminating time spent on these tasks, resources can be reallocated to focus on more strategic projects.
Cooperative contracts can also represent a revenue generating tool. On top of exclusive savings and rebates, a true member-owned cooperative typically shares its profits with its members in the form of “patronage” refunds, which are based on a member’s annual purchases.
“Resources are tight and are likely not going to improve in the future,” says Barry Swanson, chief procurement officer at the University of Kentucky. “Cooperative contracts require less time to develop and implement, while offering competitive prices under terms and conditions that meet our needs. Savings are achieved more efficiently, freeing up these limited resources for use in protecting the individual institution’s core mission of teaching, research, and service.”
According to Swanson, the combined spend of the cooperative creates an opportunity to attract quality suppliers, in addition to providing the leverage to negotiate the best possible pricing and terms. And then there’s the pool of knowledge created by a cooperative community.
“Cooperatives create a community that learns from each other as it works together,” he said. “Innovative processes, benchmarking, problem solving, and case studies are examples of valuable tools shared among cooperative members.”
This article originally appeared in the November 2017 issue of College Planning & Management.