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Budget constraints. Limited resources. Rising prices. Supply chain risk. There are plenty of challenges in procurement and supply chain management. Sourcing and procurement leaders have a significant job to do and are being asked to provide strategic solutions to optimize value. At the same time, there is a growing list of policies and initiatives to balance while always looking for optimal pricing on high-quality goods and services.
Procurement teams often fly under the radar and get little recognition for the important work they do. However, they are playing an increasingly important role in education today, ensuring the smooth flow of goods and services at competitive rates and helping school systems adhere to stringent cost controls.
Procurement leaders are increasingly turning to cooperative purchasing organizations as strategic partners to save time and money.
If you are meeting urgent equipment or service needs, trying to balance flat (or shrinking) budgets and limited resources, or trying to streamline your procurement and supply chain management, cooperative purchasing organizations may be an ideal fit. Cooperative organizations conduct a lengthy solicitation process to produce awarded contracts on behalf of their members. This eliminates redundant cost and administrative overhead vs. school districts, colleges, or universities handling sourcing, solicitation, and negotiations on their own.
Cooperative purchasing organizations leverage the bulk buying power of their members to solicit bids from top manufacturers and suppliers with proven track records. This produces significant savings in time and money.
Key benefits of partnering with a cooperative purchasing organization include:
Combining spending across multiple organizations increases purchasing power. These economies of scale produce savings that educational institutions would likely not be able to achieve on their own.
Cooperative purchasing organizations are generally able to negotiate lower prices for goods and services by leveraging this purchasing power. Also, some suppliers offer additional incentives or rebates to members participating in cooperative contracts.
Another benefit of procurement through a cooperative contract is saving time. Procurement professionals are often asked to carry a significant workload and may not have the time or resources to research new product categories, source competitive quotes, and negotiate fair market pricing. Using a competitively solicited RFP process managed by the cooperative can significantly accelerate buying.
This time saving can help alleviate some of the commodity buying, empowering procurement teams to work on more labor-intensive and strategic tasks.
Cooperative purchasing allows institutions to connect with industry-leading suppliers that might offer better products, services, and pricing models. You can generally get the best contracts at the most competitive pricing available.
With the combined knowledge of members, cooperative purchasing organizations can identify best practices, processes, and strategies to create better relationships with top suppliers and negotiate more favorable terms that are unique to the education sector.
You can compare existing contracts with those offered through the cooperative and use the information to benchmark other negotiations or switch to lower-cost contracts if applicable.
E&I Cooperative Services offers a no-cost Strategic Spend Assessment for its members to identify which suppliers, goods, and services can yield additional savings. For example, they can evaluate potential savings generated by switching suppliers or consolidating purchasing to get larger discounts.
A non-profit cooperative purchasing organization may offer patronage refunds based on annual contract purchases to member organizations. E&I Cooperative Services distributes net income in the form of patronage refunds and certificates of equity (COEs) to members, allowing procurement to be a revenue generator for educational institutions. We’re able to do this because we’re a true non-profit cooperative, while most GPOs are for-profit.
Any list of purchasing programs will include these three types of cooperative purchasing organizations:
Here are examples of purchasing programs, along with a breakdown of each’s biggest advantages and disadvantages.
TYPE OF COOPERATIVES | ADVANTAGES | DISADVANTAGES |
National/Regional Cooperatives | · Leveraged buying power due to a large membership base · Diverse contract offerings across multiple categories · Potential for deeper discounts and better pricing | · May be challenges in complying with specific state or local regulations · May not take into account individual, institutional needs and requirements |
STATE-LEVEL COOPERATIVES | · Contracts tailored to state regulations and requirements · Localized supplier relationships and market knowledge · Increased control over contract terms and conditions | · Smaller membership base limits buying power · Limited contract options and category coverage · Potential duplication of efforts across states |
LOCAL COOPERATIVES | · Customized to local needs and institutional preferences · Direct control over cooperative operations and decision-making · Fosters collaboration among local institutions | · Limited resources (staff, funding, expertise) · Potential conflicts of interest among member institutions · Lack of leveraged buying power due to smaller scale |
If your goals are cost reduction and the broadest base of suppliers, national cooperative purchasing organizations will offer the greatest opportunities.
Sourcing and procurement are interdependent functions that play crucial roles in the procurement lifecycle. Sourcing focuses on identifying, evaluating, and selecting the best suppliers, while procurement is responsible for purchasing goods and services. By working collaboratively, these functions can produce significant benefits.
Sourcing teams bring valuable market intelligence and supplier analysis to the table, which helps uncover negotiation points and benchmarking data that procurement teams can leverage. Conversely, procurement teams are experts in contract management, supplier performance monitoring, and spend analysis, which can inform sourcing decisions.
With today’s high costs of goods and services, coupled with tight budgetary constraints, schools, colleges, and universities must work more strategically to maximize value and control costs.
Here are two examples of how a strategic partnership between sourcing and procurement can create better outcomes.
Sourcing teams can conduct market research and evaluate potential suppliers of IT hardware and software solutions. They can analyze the total cost of ownership (TCO), technical specifications, and vendor capabilities to identify the best fit for the institution’s needs.
Meanwhile, procurement teams can provide insights into existing contracts, historical spend data, and vendor performance metrics. They can also ensure that any new contracts align with the institution’s procurement policies, compliance requirements, and budgetary constraints.
This research helps inform contract negotiations for more favorable terms. Procurement can then streamline the ordering and deployment process, leveraging the negotiated contracts to ensure cost-effective and efficient technology acquisition.
Cooperative purchasing organizations make the process even easier by allowing higher education institutions to opt into existing agreements that leverage aggregated buying power to create best-in-class pricing.
Sourcing teams can research and evaluate potential vendors for various facilities maintenance and construction services, such as HVAC, plumbing, electrical work, landscaping, and general contracting. They can assess vendor qualifications, track records, and pricing structures to identify the most suitable partners.
Procurement teams can provide valuable input based on their experience managing existing facilities contracts, supplier performance data, and knowledge of institutional policies and regulatory requirements.
This collaboration helps shape the contract development process to create comprehensive service-level agreements (SLAs) that define performance standards, response times, and pricing models. Procurement can then manage the contract lifecycle, including invoicing, performance monitoring, and vendor management.
By aggregating buying across institutions, cooperative purchasing organizations have significantly more buying power to negotiate contracts with more favorable terms. Sourcing and procurement teams can compare rates to existing contracts through purchasing organizations and select those that fit their requirements.
National Cooperative Procurement Partners (NCPP) is the professional association for cooperative procurement programs and offers a roadmap to guide the procurement and supply chain management process through your partner cooperative. Following these steps can help you maximize the value of the relationship.
The first step is identifying your needs. To create your roadmap, you need to know where you are going. You also must ensure you have the proper framework in place within your academic institution, providing you with the authority to use cooperative agreements.
Other key areas to investigate:
When evaluating individual contracts, there are a series of questions you must answer to ensure you are making an informed decision, including:
Selecting the cooperative purchasing organization you partner with is an important decision. NCCP suggests you get answers to these questions to make the best decision for your academic institution:
In addition, you want to work with an organization that has specific expertise, including staff and members with significant experience with procurement in the education sector.
The NCCP also offers this short checklist to review:
What is an example of a buyer cooperative?
You can call it a buyer cooperative, purchasing cooperative, or sourcing cooperative. E&I Cooperative Services is the only non-profit member-owned organization focused exclusively on the education sector. E&I leverages the aggregated buying power across its 6,000 members to achieve best-in-class pricing and terms favorable for higher education institutions.
How do you join a cooperative purchasing organization?
Becoming a member of E&I is simple. You can submit a member application for free on the E&I website for institutions meeting these requirements:
You can also become a voting member of the cooperative if you meet these requirements:
Contact E&I Cooperative Services today to save time and money with your educational procurement needs.
