5 Reasons Cooperative Purchasing is on the Rise
National cooperative sales continue to grow year after year. (GovWin projects sales to grow from $45B in 2019 to $61B in 2025!) In this blog, we take a look at the reasons why.
Cooperative purchasing is growing like crazy. In GovWin’s recent report “Top 3 Strategies for Optimizing State and Local Government Sales,” they project national cooperative sales to grow from $45 billion in 2019 to $61 billion in 2025. That’s a massive jump over a short amount of time, but it’s not exactly surprising. Not only have sales through cooperative contracts grown at a similar rate over the last five years, but the benefits of cooperative purchasing are impossible to ignore. Let’s take a look at some of the main reasons cooperative purchasing is rising.
1. Procurement is time consuming
Contracts are especially time-consuming to put together. Putting together terms, negotiating, and communicating between parties takes a lot of time and energy. There are often hard deadlines for procurement, meaning professionals have less time to conduct market research and ensure all their ducks are in a row before making a purchasing decision.
With cooperative contracts, the terms are often already in place, allowing agencies to skip ahead in the process. Goods and services are obtained more quickly and with less operational overhead. Agencies have more time to research the market and land on a contract that best meets their needs.
2. Cooperative Purchasing Allows For Better Pricing
When multiple parties come together on a cooperative contract they increase their buying power rather significantly. For example, if one school is ordering laptops for the new school year, they may only need a few hundred units. With an entire school district, however, they may need a few thousand units. Upping the volume of an order to such a high degree allows for more leverage during negotiations, resulting in a lower price per unit.
3. Companies Have Smaller Teams With More Responsibilities
We’ve all worked jobs where something slightly outside of our purview fell into our laps. This happens all the time with regard to procurement. Whether a school or organization simply doesn’t have a dedicated procurement specialist on staff, or it’s one responsibility folded into a much larger, more demanding job, procurement can often become overwhelming for teams. According to a 2014 Study by NASPO, “40 percent of state central procurement offices described their offices as understaffed” after the great recession—a trend that has not yet rebounded fully in 2021. Agencies are definitely looking for ways to make procurement easier for their teams. We built CompareCoOps with that in mind.
Cooperative contracts are perfect for overworked teams since so many of the most time and effort-consuming parts of the process are already covered by the lead agency. This has led to cooperative contracts rising in popularity among understaffed organizations.
4. Cooperative Contracts Help Agencies Meet SocioEconomic Initiatives
The last decade or so has seen an increased effort by both public and private entities to focus more on certain social and economic causes. Whether it’s committing to buy from more minority-owned suppliers or buying sustainable products whenever possible, there is an undeniable trend across many industries to be more socially conscious. In some cases, state and local governments even offer incentives for supporting minority and women-owned businesses. It can be easier to find women and minority-owned businesses through cooperative purchasing marketplaces that allow users to search based on those parameters.
5. It’s Easier to Remain Compliant Using Existing Contracts
One of the most overlooked (but still extremely important) aspects of public procurement is state and local compliance. The last thing an organization needs is to get to the finish line of a deal and find out that they missed something in the contract that goes against a particular regulation. Cooperative contracts have often already been tailored to meet those state and local guidelines, allowing agencies to sign with confidence.
At CompareCoOps, we not only allow agencies to experience the benefits of cooperative purchasing, we actually enhance them. We even further reduce the time spent reviewing cooperative contracts, Book a demo with CompareCoOps, or learn more about the platform here.
