Are you interested in cooperative purchasing but don’t know where to start with it? The good news is that there are ample resources out there!
Don’t have the time to sift through it all?
We’re here to highlight the basics for you with this handy guide on cooperative purchasing essentials (and potential benefits).
In this blog, you’ll get an understanding of what cooperative purchasing is all about, how it can be beneficial to your business, and what you may want to look for in a cooperative purchasing group.
What Is Cooperative Purchasing?
Let’s start with the basic definition of cooperative purchasing. It’s a model for pooling resources in order to obtain better pricing.
Companies and organizations come together, essentially combining their buying power. Another term commonly used is “purchasing cooperative,” or “co-op” for short.
Groups give members access to competitively procured contracts with quality vendors and offer assistance with the purchasing process.
Who Participates in Cooperative Buying?
The National Cooperative Business Association (NCBA) estimates that there are 65,000 cooperative purchasing organizations in the United States.
You may even know some of these groups in your own community because the co-op model is common across many industries and sectors:
- Counties and municipalities
- Veterinary services
- Government agencies
Long story short, if you’ve sensed that cooperative purchasing is helpful to industry-specific buying, then you’re on to something. This model is a powerful tool!
Benefits of Buying with a Purchasing Cooperative
Savings is certainly the name of the game when it comes to cooperative purchasing. When your company or business joins a co-op, you benefit in a few major ways.
1. The Power of a Group
As a member of a buying cooperative, your gain strength in numbers. The savings you can achieve and the knowledge you have access to, as a part of the group, is significantly higher than if you were to go it alone. (And that’s simply because you’re pooling your resources with others, which puts you in a more powerful buying position.)
2. Deep Discounts
As a member of a purchasing cooperative, you have access to the best prices. You benefit from the group’s ability to leverage negotiations for lower rates and even up-front discounts.
We’ve all heard the phrase that time is money. And as a member of a buying cooperative, you’ll save both. The time and effort involved with contracts and purchasing agreements are simplified.
Instead of shouldering all the burden with negotiating pricing and getting quotes, you can rest easier knowing that the cooperative is putting everything in motion.
Challenges Facing a Cooperative
Depending on the industry, it may be difficult to sustain the cooperative’s momentum, especially through rough periods.