Cooperative purchasing in a budget crisis
Cooperative purchasing has been around for decades and remains a golden opportunity for purchasing managers to add value to an organization.
During my last five years in public purchasing, our annual budget planning meeting usually began this way: “We need to look in every department for a reduction in expenses. There is no alternative but to freeze hiring, and we need to find a more efficient method of doing business in all departments.” Inventories would be reduced, which meant purchasing needed to find a way to turn around the solicitation process quickly. With fewer employees doing the same amount of work in every department, there was no time to write elaborate specifications for each solicitation. At the same time, we did not want to sacrifice quality of the items we bought and needed to find a way to lower our purchase prices.
It is a golden opportunity to react positively to the budget pressure by utilizing the proven and effective method of cooperative purchasing.
As purchasing manager, both my staff and I were constantly looking for opportunities to lower our prices and save staff time. We began to explore and use contracts authored by other government entities at the national and local levels. We did not sacrifice quality but saved precious dollars in the budget and eliminated the time-consuming task of managing vendor protests.
The practice of using contracts that have already been competitively quoted and are being used by several government entities can increase purchasing volume and result in lower prices. At the same time, cooperative purchasing will reduce the solicitation time and bring the product to the doorstep of your end-user sooner.
The first step is to gain knowledge and experience working with purchasing cooperatives such as U.S. Communities, Western States Contracting Alliance and HGACBuy, to name a few (for many more, Google “government cooperative purchasing”). The next step is to become a leader in your area by contacting surrounding counties, school districts or states to aggregate volumes for the same commodity or service on a more local scale.
There is no better time than now, given our current economic crisis, to jump on the bandwagon or to become a leader in your geographical area.
About the author
Don Olson, president, Professional Purchasing Services LLC, retired after 10 years as purchasing manager for the Metropolitan Airports Commission at the Minneapolis/St. Paul International Airport and 28 years with the State of Minnesota as senior buyer and acquisition management specialist.
