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A Hidden Benefit of Cooperative Purchasing: Vendor and Contract Management
Author: Fred Tillman, Interim CEO, BidSync
There has been a lot of discussion about how cooperative purchasing and co-ops help the public sector save time and money. However, one little known advantage of purchasing through a co-op is vendor and contract management. Well-run cooperative purchasing organizations are active in managing contracts and vendor performance.
“We are seeing our members making contract and vendor analysis a priority,” said Michael Lucas, program manager, Purchasing Solutions Alliance. “There is a growing emphasis on supplier relationship management.”
Public safety agencies and government organizations spend a great deal of time managing the performance of their vendors throughout the contract lifecycle. Gathering required certification and documentation, analyzing performance vs. spend and conducting pricing reviews take significant expertise and time. When an agency purchases through a co-op, it takes the contract lifecycle management (CLM) off its plate.
“Using best practices to oversee the contracts we carry is an important aspect of the service we provide to our members,” said Lucas. “We feel that good contract and vendor management is an integral part of our ability to remain compliant and transparent on behalf of our membership.”
When evaluating which co-ops are the best fit, agencies should look beyond price to other, more strategic considerations. They should review how many members a co-op has, how many contracts it carries and also what practices and guidelines are in place for strategic sourcing and vendor management.
Co-ops, like agencies, should be conducting regular analysis of spend, contract reviews, pricing reviews and contract performance audits. Agencies are increasingly aware of this vital aspect of CLM and are evaluating co-ops based on their performance in this area.
When evaluating a co-op, it is important to look at whether the co-op does multiple awards in a category or single awards. If vendor and contract management is an important consideration, then a co-op that does single awards may be the better fit. Multiple award co-ops may dilute the process, leading to less rigorous contract and vendor management.
BidSync, a company that provides e-procurement solutions for agencies and governments nationwide, said that they are seeing more emphasis on strategic sourcing from their clients. Procurement in the public sector is evolving! Governments and agencies are getting smarter and more strategic in their management of procurement from solicitation to settle. We are seeing more and more clients put greater emphasis on CLM.
Strategic sourcing takes into account not only the price of goods and services, but also the total cost of procurement, which includes institutional time, internal processes, policies and procedures and demand drivers. It seeks to put procurement into a collaborative, constantly improving environment that goes beyond supplier source negotiation.
“Organizations that have an emphasis on strategic sourcing are finding that relationships with the right cooperative purchasing organizations are a real asset,” Lucas said. “As procurement best practices and priorities evolve, so must the co-op.”
Purchasing via a co-op can have a deep impact on the overall cost of procurement. It can not only beneficially affect the cost of goods and services, but can also manage the time consuming process of CLM. Agencies that are implementing strategic sourcing initiatives or are looking to streamline their procurement processes will want to ensure that the co-ops they join have the same priorities.
Fred Tillman is Chief Information Officer and Interim CEO of BidSync, an industry-leading provider of bid notification services for companies looking to do business with the public sector. More than 800,000 businesses use BidSync for bid-notification services. BidSync is also a leader in end-to-end, cloud-based e-procurement solutions for governments and agencies. For more information, see www.bidsync.com