Choosing the most effective procurement strategy has never been more important. With limited budgets and concerns about future funding, educational institutions must consider more carefully how they purchase goods and services—looking for cost-cutting opportunities while still getting the quality goods and services they need.
Now more than ever educational institutions are exploring the benefits of education cooperatives. Even those with established procurement processes are discovering that cooperative purchasing organizations offer significant volume discounts that can reduce operational costs.
Group purchasing organizations (GPOs) or cooperatives are organizations that aggregate the purchasing power of multiple institutions to negotiate discounted pricing and better contract terms with suppliers.
While there are many GPOs, there is only one nonprofit member-owned cooperative exclusively focused on education, and that’s E&I Cooperative Services. E&I focuses solely on the education sector with a mission to deliver exceptional value by reducing costs, streamlining procurement, and supporting institutional goals like sustainability, supplier diversity, and compliance.
This approach results in significant cost savings, often reducing procurement expenses by as much as 15% to 25% on behalf of its over 6,000 member institutions.
Let’s compare this education cooperative definition with how traditional purchasing works.
Traditional purchasing involves individual institutions managing their procurement themselves. This method includes direct negotiations with suppliers and often decentralized purchasing decisions. Universities that use traditional purchasing have full control over their procurement activities, from selecting suppliers to negotiating contract terms.
However, they can miss out on the benefits of cooperative purchasing. With an education cooperative, you still maintain complete control over your procurement process but have the option to use competitively solicited cooperative contracts.
Universities may face limited negotiating power due to smaller purchasing volumes, resulting in higher costs. Traditional buying often involves complex and time-consuming procurement processes, adding to the administrative burden.
Let’s break down some of the key differences between these two methods of procurement.
Sourcing cooperatives leverage aggregated purchasing power to negotiate volume pricing and pre-negotiated discounts, often producing significant cost reductions.
Independently, institutions have limited bargaining power, leading to potentially higher costs. Without the benefit of volume pricing, an institution may face inconsistent pricing and less favorable contract terms.
Education procurement cooperatives streamline purchasing by providing standardized contracts and establishing supplier relationships. This approach reduces the administrative workload on procurement teams, allowing them to focus on strategic decision-making rather than routine purchasing tasks.
Institutions that use traditional purchasing must navigate complex procurement processes independently, including supplier negotiations, contract management, and compliance checks. These time-consuming tasks require significant internal resources and expertise, potentially leading to inefficiencies and delays.
Sourcing cooperatives typically maintain long-term partnerships with trusted suppliers, ensuring consistent service quality and innovation. These established relationships provide schools with access to reliable vendors to lower risks.
In traditional procurement, schools have full control over supplier selection and contract customization, allowing for tailored agreements that meet their specific needs. However, the lack of standardized contracts can lead to inconsistencies in pricing and service quality.
By partnering with an education cooperative, you get built-in compliance with procurement regulations, reducing legal risks. You can also minimize supply chain vulnerabilities.
In a traditional procurement process, you are solely responsible for managing regulatory compliance and supply chain risks. Managing these risks requires internal expertise and resources, which may be limited in smaller institutions.
Let’s summarize some of the key pros and cons of each approach to education procurement.
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TRADITIONAL PURCHASING |
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Choosing between an education cooperative and traditional buying depends on your institution’s unique needs, goals, and resources. You will want to consider:
Remember, it’s not an either-or situation. Many schools use a hybrid approach, leveraging cooperative contracts within their procurement strategy while maintaining a traditional purchasing approach for certain categories.
To learn more about the benefits of becoming a member of E&I Cooperative Services, talk to one of our education procurement specialists by calling 800.283.2634.
