A big organization buys paper by the pallet load. I buy it by the case — or less.
Guess which one of us gets the best price per ream…
If you looked down on cities from a satellite image, without all of that map-maker drawing of boundaries, you could not tell when you leave one city for another. Here, in my neck of the woods, you could not see any natural reason on the satellite image to end Dallas and start Richardson, and to end Richardson and start Plano, and…
But, here is a fact. Each city negotiates its own contracts, and the bigger the city, and/or the better the negotiator, the better the price. On countless needed purchases.
Or, maybe not… Maybe there are other factors. But, it has to start with accurate comparison data, somebody who actually knows how to see, and provide, analysis, along with a dose of plain old common sense.
Enter Dr. Jason Cooley, the Director of Innovation for Strategic Government Resources, a company that provides needed services and partnerships — especially innovative leadership — to local governments. (Disclosure – I do some speaking for SGR).
Here’s the story, from one of their publications (I’ve added a little emphasis):
SGR’s first major new initiative led by Jason Cooley will explore new ways to take collaborative purchasing to dramatic new levels through the power of big data analytics. For example, we reviewed actual purchasing data for caustic soda (a highly standardized commodity used in water treatment) in the last 12 months for four cities in the DFW area, all of which currently participate in multiple collaborative purchasing efforts. The prices paid for caustic soda ranged from $536 to $710 per ton – a difference of 32%.
Based on an average quantity of 175 tons, the actual prices paid ranged from $93,882 to $124,250 – a difference of $30,368 that could have been saved just by having better data analytics. And notably, the pricing differences were NOT explained by volume differences or delivery locations. In fact, in one case, a city purchasing a larger volume of caustic soda than an immediately adjacent city paid over 20% more per ton than the neighboring city did and they bought from the same vendor in the same week!
Clearly the potential for fiscal impact on local governments is huge.
In this “how do we save money” era, especially regarding the use of our tax dollars, this is plain old common sense, isn’t it?
It is common sense, plus accurate data, plus someone who knows how to provide good comparison analysis. Someone, in other words, who knows what to look for, and keeps learning what to look for next.
The cities already had “multiple collaborative purchasing efforts.” But something was missed; something was not being seen. It took a fresh set of eyes – very trained eyes, by the way — more and accurate data, and that dose of common sense.
Some innovations require a Steve Jobs. Sadly, he is not all that replicable.
But some innovations can come from trained, smart, fresh eyes.
SGR’s Director Of Innovation, and his formula — (Big) Data + Analysis + A Dose of Common Sense — seems to point us to a story, an initiative, genuinely worth pondering.
The experts remind us that some very important innovation is process innovation. And, this is quite a lesson in practical uses for such innovation.