Trends in Cooperative Purchasing for 2018
A discussion with Tammy Rimes, executive director for National Cooperative Procurement Partners.
BY: EDITORIAL STAFF, SUPPLY & DEMAND CHAIN EXECUTIVE
MARCH 26, 2018
Cooperative purchasing—defined broadly as multiple agencies or government buyers making purchases off of a single contract—continues to attract attention as one of the fastest growing or most dynamic parts of the procurement landscape. An ONVIA 2018 Forecast report found that cooperative methods of purchasing have risen from 12 percent of all procurement spend in 2011 to 18 percent to 20 percent in 2017. Its strong growth and higher awareness as an accepted buying option has led some to wonder if we are at a kind of “tipping point” or transition from an “emerging” phase into more of a “mature” phase in this trend.
Tracking the Maturing Co-op Trend
Given the broad usage of co-ops within cooperative purchasing, we asked Tammy Rimes, executive director for National Cooperative Procurement Partners, to share her views on whether this trend was still “emerging” for these local and national organizations or is in fact becoming “mature.” She explained that, “Adoption of the concept and use of cooperatives has become more of the ‘norm’ in recent years.” She added that as part of this maturing process, co-ops have expanded to cover more types of purchases than ever before, helping reduce barriers to use.
“Where cooperatives had once been primarily used for commodities—such as office and maintenance supplies or auto parts, they are now becoming more service and construction oriented. For example, their offerings may include services (i.e., landscaping or janitorial); an installation component (new gym floor or HVAC installation); or job order contracting for repetitive small construction or repair projects,” said Rimes.
An ONVIA 2017 government procurement survey stated that nearly 40 percent of agency buyers and procurement staff are overworked and their No. 1 specific challenge was “pre-bid research and planning.” This desire to free up staff time by reducing the need to put out time-consuming new competitive bids has had a profound impact on buying strategies and practices.
According to Rimes, “Procurement professionals are becoming more strategic. They are proactively determining if it really requires that their agency conduct the bid process, or if the solicitation can be completed by another agency or cooperative, so they can quickly garner commodities and services for their customer departments. It often makes better sense—both in time and value—to use an already solicited cooperative contract.”
One of the other key benefits to purchasing from a cooperative contract is to let agencies select from among the very newest technologies—which may not have been available if they were limited to ordering only from a single vendor on a long-term contract.
Rimes noted that, “Some cooperatives have a wide range of options that allow for new technologies and interoperability. For instance, if an agency goes out to bid for a certain brand of computers and software, and then awards that contract for a 3- to 5-year term, it may limit their ability to take advantage of new technology. If a cooperative offers several IT vendors or pieces of equipment with upgrades, it may provide a greater capability to purchase new software that wouldn’t have been included in a more structured and limited long-term contract.”
Profiting from the Co-op Trend: Advice for Contractors
We asked Rimes to share her advice for vendors interested in working with a co-op. She recommends that companies first appreciate the strategic benefits in terms of marketing efficiency.
“Being awarded a cooperative contract does save a company time and resources from having to research and submit proposals in response to multiple bids and RFP’s across the country. Cooperatives can be a great resource, and they can be seen as an additional marketing arm for your company and its contracts,” she said.
Rimes emphasized that the ability to successfully and profitably fulfill a cooperative contract requires that the bidder does their homework and factors in issues of capacity and flexibility.
“When a supplier decides to submit a proposal response for a cooperative contract, they need to be fully aware of and able to rise to the challenge and expectations of having many different customers across the defined region. This includes providing customer service, deliveries, uniform pricing, invoicing and support. If a contract becomes highly successful, they need to be prepared for this type of expanded use and still maintain all the standards, terms and conditions of the contract,” she said.
Read the article online