By Daria Mathew, VP of XSB
Federal, State, Local, and Educational (SLED) institutions buy tens of billions of catalog-type items (e.g., office supplies, MRO, IT, janitorial and sanitation supplies, electrical parts, medical supplies, emergency supplies, etc.) every year. Public sector buyers purchase these items directly from manufacturers, from distributors, and increasingly from e-marketplaces, such as AmazonBusiness.
Even though these items are relative commodities, comparing prices of these items across vendors has historically been difficult. The sheer number of products (10s of millions), differing nomenclature, package size, and branding used by manufacturers, distributors, and e-marketplaces to describe the identical product make comparisons tricky.
Using artificial intelligence and semantic technologies, along with a massive dataset of products sold to the federal government, XSB has been able to compare the pricing for items in the GSA Advantage program to the prices paid for the exact same items by SLED institutions.
If you have not previously seen such price analysis you may be surprised by the findings:
- Prices for these items are much more variable than one might expect for commodity items typically sold on contracts not requiring a volume commitment. (GSA Advantage and most SLED contracts make no such commitments)
- On average, the Federal Government does negotiate better prices than those typically paid by SLED institutions. However, the average is not a very useful concept. Some SLED institutions buy better than the Federal Government and some not nearly as well. (And this variability does not seem to be related to potential volume!)
- SLED institutions may use the cooperative buying schedules of the GSA for certain purchases (IT Schedule 70 and Law Enforcement Schedule 84). Many SLED institutions would benefit from increased use of these schedules given the substantial savings that could be realized on some items. However, the data also show GSA may have some areas of opportunity to improve their contracted pricing.
If XSB already has your data, you may want to talk to them about how your data compare to federal or SLED pricing. If not, consider working with them to run a benchmarking project. Buyers and suppliers both win when negotiations are based on real data, rather than conjecture.