Cooperative procurement is a method of acquiring products and services that offers organizations opportunities to save money, plus gain operating efficiencies. This is achieved by “piggybacking” on the bidding process.
The technique, a form of strategic sourcing, combines the spend of several organizations with competitively sourced suppliers to reduce procurement costs.
Most often, cooperative procurement is used by governmental entities because they are required to follow laws mandating competitive bidding for purchases above certain thresholds, says Steve Perlstein, sales and marketing manager, Mohawk Lifts (www.mohawklifts.com), a lift technology provider that offers environmentally safe, above-ground garage lifts ranging from 6,000-lb to 240,000-lb pound capacities and many lift accessories.
Cooperative procurement enables the use of a buying contract by more than one government agency, he explains. Typically, larger agencies act as a lead public body and all participating government agencies realize reduced transaction and administrative costs, workload and processing time.
GREATER RETURN
With the large aggregate volume represented by the potential users, cooperative procurement contracts also provide the purchasers a greater return for their expenditure because products and service arrangements are at competitive, “most favored” prices.
Fleets and repair shops have begun getting involved with cooperative procurement as an approach to purchasing vehicles as well as maintenance and shop equipment, notes Perlstein. The leverage that comes from consolidating their procurement needs and group purchasing provides cost savings by lowering the total cost of procurement from a bid process – including expenses, man-hours, writing specs, going to bid and overcoming bid objections.