Cooperative Sourcing combines the best practices of Strategic Sourcing and Cooperative Purchasing, allowing governments to reap the benefits of both.
Strategic sourcing is a procurement methodology that came to prominence in the 1990s in the private sector and a decade later was adopted by many public sector and non-profit institutions.
In a nutshell, strategic sourcing increases an organization’s buying power to maximize the leverage it has with suppliers for the purposes of reducing cost, enhancing quality and improving supplier diversity. Governments accomplish this by aggregating the demand from all agencies and reducing the number of suppliers, oftentimes to a single supplier.
During our time as the chief procurement officers of Pennsylvania, Illinois, Georgia, and Indiana, we ran aggressive strategic sourcing initiatives which saved our taxpayers hundreds of millions of dollars. To read more about those experiences, click here.
The primary downsides to traditional governmental strategic sourcing initiatives are that they can be very expensive and labor intensive. Most governments implemented strategic sourcing by paying millions of dollars to management consulting firms and dedicate a tremendous amount of staff resources for months on end.
Cooperative purchasing is a procurement tool that helps government organizations save time and money. Most state and local governments are statutorily authorized to “piggyback” on contracts that were competitively procured by another governmental entity.
Because there is no need for a government to conduct its own time consuming procurement process, cooperative purchasing allows governments to set up their own contracts in mere weeks with minimal staff time required. Especially in an era of reduced budgets and smaller staffs, cooperative purchasing is a critical tool to help procurement managers accomplish their critical missions with fewer resources.