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Working with a group purchasing organization (GPO) helps suppliers achieve economies of scale. Instead of having to submit customized RFPs for multiple organizations and negotiate individual contracts, suppliers can dramatically reduce their acquisition costs by entering into cooperative agreements with GPOs.
By reducing the cost of sales and generating a larger volume of sales, suppliers can offer lower prices to buyers and still maintain their margins. This works across a range of industry sectors, including education. Working with an education purchasing cooperative can increase revenue and help develop stronger buyer relationships.
Let’s start with an education purchasing cooperative definition. Education purchasing cooperatives are collaborative groups that bring together schools, colleges, and universities to pool their purchasing power. Coop members benefit from volume discounts and access to suppliers that might not respond to individual RFPs. While the main attraction is lower prices, academic institutions also know they can streamline procurement and access a wide variety of suppliers more easily.
An education cooperative example would be E&I Cooperative Services. E&I is the only nonprofit and member-owned sourcing cooperative that focuses exclusively on the education sector. With category experts who understand the unique needs of schools, colleges, and universities, E&I can work with suppliers to craft contracts that benefit both parties—key to lasting relationships.
The cooperative ecosystem is built on collective bargaining, where schools and institutions partner with a GPO to purchase goods and services at negotiated rates. Once an agreement is in place, the cooperative’s members can take advantage of these pre-negotiated contracts without the need to conduct individual procurement processes.
Suppliers seeking to participate with cooperatives typically go through a vetting and approval process, which involves demonstrating their ability to meet the cooperative’s pricing, quality, and service standards. Once approved, suppliers gain access to a large network of educational institutions through a streamlined procurement process.
For suppliers, there are significant benefits.
One of the most significant advantages of working with education cooperatives is the ability to access a broad and diverse market without extensive outreach. Instead of approaching individual schools or districts, suppliers gain entry to an entire network of institutions through the cooperative, which can significantly reduce marketing and sales efforts.
For suppliers offering specialized products or services, cooperatives provide an excellent opportunity to scale operations and secure contracts that they might not have been able to land through conventional sales channels. Cooperatives also tend to include a mix of public and private institutions, which further diversifies the supplier’s customer base.
Education cooperatives simplify the sales process for suppliers by eliminating the need to negotiate multiple contracts with different institutions. Instead of managing numerous procurement cycles, suppliers work directly with the cooperative to establish terms that apply across the board.
This streamlined process reduces administrative burdens and speeds up sales cycles, allowing suppliers to focus on delivering quality products and services. Additionally, cooperative agreements tend to be longer-term, which provides suppliers with consistent demand over time.
When a supplier works with an education purchasing cooperative, it benefits from the cooperative’s established credibility and trust. Educational institutions are more likely to do business with a supplier that is part of a trusted network, as the cooperative has already vetted the supplier for quality, compliance, and pricing.
This association with a reputable cooperative not only makes it easier to secure contracts but also builds trust with new customers. Suppliers that become preferred vendors within the cooperative gain a competitive edge, as schools often return to cooperative-approved suppliers for repeat business.
Another significant benefit of working with an education purchasing cooperative is the guaranteed demand for the supplier’s products or services. Cooperatives often negotiate contracts for goods and services that schools need on an ongoing basis, such as classroom supplies, maintenance equipment, and IT services.
This predictable demand allows suppliers to plan their production and resource allocation more efficiently, ensuring a steady revenue stream. It also helps suppliers optimize inventory management, reducing the risk of either overproduction or inventory shortages.
In the education sector, compliance with procurement regulations is critical. Cooperatives often handle much of the regulatory burden for their members, ensuring that suppliers meet all legal requirements for doing business with educational institutions.
This is particularly beneficial for suppliers, as it minimizes the complexity of navigating procurement regulations, allowing them to focus on delivering products and services rather than worrying about compliance.
While there are plenty of positives, you may also ask, “What are the disadvantages of producer cooperatives?” There are a few you should be aware of.
Cooperatives negotiate on behalf of their members, often seeking the best possible prices. This can result in lower profit margins for suppliers having to agree to competitive pricing to win contracts.
For small suppliers, this pricing pressure may make it difficult to compete with larger, more established companies that can afford to offer lower prices. To mitigate this, suppliers should focus on demonstrating the unique value they bring to the table, such as exceptional customer service, innovative solutions, or high-quality products that justify a higher price point. Smart buyers focus on value and not just price.
In cooperative agreements, suppliers may have less control over contract terms than they would in a direct negotiation with individual schools. To serve their members, cooperatives adopt uniform terms, which can limit the flexibility to tailor agreements based on specific needs or circumstances.
For example, suppliers might be required to adhere to fixed delivery schedules, product specifications, or payment terms, which don’t align perfectly with their typical operations. While these standardized terms help ensure consistency across the cooperative, they can pose challenges for suppliers that need more flexibility.
Responding to a cooperative’s competitive solicitation process, negotiating a contract, and onboarding can be a time-consuming process. Education purchasing cooperatives typically have stringent requirements for supplier approval, including detailed reviews of pricing, product quality, and service capabilities This can delay the opportunity to start generating revenue through the cooperative.
However, once the approval process is complete, suppliers gain access to a broad network of institutions and the potential for long-term contracts and larger overall sales volume, which can ultimately outweigh the initial time investment.
A collaborative supplier relationship is a partnership built on mutual trust, shared goals, and a commitment to delivering value. With education cooperatives, this means working closely with the cooperative and member schools to meet the evolving needs of educational institutions.
Collaboration goes beyond just fulfilling orders. It requires active engagement with schools to understand their challenges and find innovative solutions that address their needs. Suppliers that prioritize communication, transparency, and responsiveness can establish strong, lasting relationships with cooperative members, positioning themselves as valuable partners rather than just vendors.
You can also increase your odds of long-term success by working with an education cooperative. A McKinsey study showed suppliers that regularly collaborate with partners see higher growth, lower operating costs, and outperform their peers—with revenue gains of 7% to 10% versus their competition.
Gartner research shows that procurement teams are increasingly looking to develop collaborative relationships. In the past two years, 88% of procurement leaders have prioritized such partnerships. Such an approach is no longer a luxury, even for those who engage in traditional transactional relationships. Schools, colleges, and universities today expect a collaborative relationship.
Here is an example of how both parties benefit from working together. In the healthcare industry, many hospitals participate in GPOs to negotiate contracts for medical supplies and equipment. By working with a GPO, suppliers gain access to a large network of healthcare providers while offering competitive pricing and maintaining high standards of service.
For example, a medical device supplier that partners with a GPO can streamline the sales process, secure long-term contracts, and ensure consistent demand for their products. The GPO, in turn, ensures that member hospitals receive quality equipment at a lower cost.
The same principles apply in the education sector.
A supplier that offers technology solutions, for example, can work with an education cooperative to provide schools with high-quality equipment and support services at a negotiated rate. The cooperative simplifies procurement for the schools, while the supplier benefits from increased market reach and long-term contracts.
By focusing on collaboration, suppliers can build strong relationships with educational institutions, ensuring that both parties achieve their goals and thrive in the cooperative ecosystem.
Working and collaborating with education cooperatives and their members can help grow your business. Here are a few best practices that suppliers have used to maximize the value of their relationships.
Suppliers need to understand the unique requirements of schools and universities. Whether it’s providing reliable technology, sustainable solutions, or specialized services, tailoring products to meet these specific requirements can differentiate suppliers in a competitive market.
This is another area where education cooperatives can help. When you work with procurement professionals who focus on the needs of academic institutions, they have a deeper insight into what schools are looking for and what it takes to earn their business. This can help create better contracts that are more attractive to academic institutions.
When entering cooperative agreements, it’s crucial for suppliers to effectively communicate the value they bring. Schools are often looking for more than just low prices. They value reliable partners who can offer training, support, and other value-added services.
This has become even more important in the past few years with the problems caused by supply chain disruptions. Low prices only work if a supplier can deliver what’s needed on time. Many schools learned this lesson the hard way and are evaluating reliability and value even more heavily.
How important is this? The American Productivity & Quality Center (APQC) survey for 2024 shows that 84% of organizations have modified or re-evaluated their supply chain strategies to focus on resiliency.
Success in the education cooperative ecosystem is built on long-term relationships. Suppliers should focus on fostering ongoing partnerships rather than viewing cooperative agreements as one-off transactions.
By staying engaged with cooperative members, suppliers can position themselves as trusted providers for years to come. The more closely you work with member organizations, the better you understand their needs. This cooperative relationship can help guide product and service development to ensure the success of your relationships over the long haul.
K–12 schools, colleges and universities are dealing with increasingly tight budgets, demanding price concessions from suppliers who are also dealing with rising material costs, which can squeeze margins. Education cooperatives enable you to broaden your sales reach and reduce your administrative costs. When you negotiate a cooperative contract with an education purchasing cooperative, you get access to a large number of institutions without having to respond to individual RFPs or RFQs.
You can also build mutually beneficial relationships that can help you scale your business.
What is an education purchasing cooperative?
An education purchasing cooperative is a group of schools, colleges, or universities that pool their purchasing power to secure better prices and terms from suppliers.
How do suppliers benefit from working with an education cooperative?
Suppliers benefit by gaining access to a broad network of educational institutions, streamlining the sales process, and securing long-term contracts and larger sales volumes.
How can suppliers ensure success with education cooperatives?
Suppliers should understand the unique needs of educational institutions, clearly communicate the value they provide, and focus on building long-term partnerships with cooperative members.
E&I Cooperative Services represents 6,000 school districts, colleges, and universities. Competitively soliciting contracts on behalf of its members, E&I facilitates more than $3 billion of spending in the education sector each year. Contact E&I Cooperative Services to learn more about how you can benefit.
