As a municipality grows in both infrastructure and population, the demands placed on its emergency services organizations grow accordingly. Of course, the demand for increased resources produces an acute need for more financial support for fire, EMS and police agencies.

Unfortunately, that need can be hard to get across to the community, especially if it means higher taxes. The consequence of poor financial support is simple: The organization won't be able to meet expected service demands day in and day out. Community infrastructure may be destroyed beyond the level of protection provided. Residents of the community may not receive a suitable level of fire protection or emergency medical services. In fact, some may die needlessly.

With that in mind, there's a need for an emergency services organization to become creative in its efforts to improve its financial well-being. One solution is direct participation in a geographical purchasing alliance, through which a fire department can reap the benefit of supplier price discounts based on economies of scale.

Benefits to an alliance

While participating in an alliance may not be business as usual for many departments, there's a practical reason behind it. Emergency services organizations make similar purchases such as equipment, consumable materials and vendor services. Supplier discounts based on economies of scale are there for the taking, which can be an even stronger incentive for volunteer organizations.

Consider the annual testing of fire department ground ladders. This mandated testing is performed by a limited number of independent agencies serving the entire country. The inherent costs associated with the service provided by representatives of these testing agencies include lodging, travel time, salary and other miscellaneous items.

Travel time and salary costs could be directly and significantly reduced if member organizations of an alliance were to schedule their ladder testing during a specific time frame and at a central location convenient to a majority of alliance members. Also, a possible indirect cost reduction could be realized if representatives of the testing agency were to stay at a lodging facility that offers price considerations based on the length of the stay.

Another example of cost-savings would be the development of a centralized vehicle maintenance facility. A shared shop could provide benefits such as better control of vehicle consumable materials and replacement parts, faster turnaround time, improved scheduling of routine maintenance, and vehicle maintenance work performed by personnel dedicated to emergency services vehicles. As an added benefit, maintenance employees would be available during major incidents to remedy any vehicle problems that should occur.

Membership in an alliance not only saves purchasing dollars by making larger quantity purchases, it also saves time and reduces the overall costs associated with developing and distributing requests for quotes. The alliance is helpful to the smaller member organizations that don't have the financial resources to staff a full-time purchasing agency. Redundant efforts such as preparing request-for-quote documents, then printing and mailing them, are reduced to single efforts.

An alliance has a more influential voice with respect to ensuring quality customer service on the part of suppliers, who have more to lose than those vendors who deal strictly with individual organizations. In fact, they're more likely to favorably settle a complaint involving a member organization of the alliance instead of risking their positive relationship with the alliance.

Another aspect of efficiency is improved management of consumable materials. Under the auspices of an alliance, inventories of consumable materials can be better monitored and replenished on a more timely basis. The use of a central depository for these materials would work to reduce overall storage costs as well as provide the opportunity to monitor shelf-lives of various materials.

Alliances in the real world

What about alliances that currently exist? Consider the Tarrant County purchasing alliance, which serves the northern region of Texas. This alliance brings together more than 50 different agencies as participating members, including water districts, municipalities and school districts. The majority of member agencies joined the alliance after hearing positive word of mouth.

Recent contracts negotiated by the alliance have yielded good results. One contract for pager service was negotiated at $1.95 per month per unit, while some similar contracts for other agencies outside the alliance were negotiated at $4.95 per unit per month Another recent alliance contract for police cars was negotiated at $19,148 per fully equipped vehicle. The similar state contract was negotiated at $19,250 for just the vehicle alone.

Something else to consider when looking at an alliance is the use of modern technology, which has helped Montgomery County, Md., reduce overall purchasing costs and improve purchasing efficiency.

During the early 1990s, the procurement administrative staff was reduced from six people to one, and the total budget was drastically cut. The cuts posed a problem for the long-standing practice of mailing requests for quotes to more than 400 separate vendors for each bid solicitation, especially as the typical return from one of these mass mailings was usually less than 5%.

Faced with rising postage, printing and materials costs, the county turned to an interactive procurement tool. While the Re-engineered Automated Procurement Information Delivery system, or RAPID, began as a bulletin board accessible via fax machine or modem, the advent of the Internet has transformed the system into a typical Web site.

More than 20 independent agencies have adopted the system. The agencies either submit their solicitations to the RAPID system administrator for inclusion or post a link to their respective Web sites. Suppliers then can download all current bid solicitations at their leisure from numerous organizations, which eliminates the need for suppliers to make frequent visits to procurement offices.

Access is on a paid subscription basis, and annual revenue from supplier subscriptions exceeds $100,000. This revenue is used to maintain the system and promote it to additional vendors. The RAPID system has permitted the county's purchasing office to fully eliminate the outdated mass-mailing process.

This manner of doing business is fast becoming the primary way business is done. It's likely that by 2010 e-business will encompass not only the selling of products but also the management of intellectual capital and the development of business processes. The information systems management field has projected that by the end of 2005, 25% of all consumer spending and up to 70% of business-to-business commerce will be done using the Internet.

How to do it

Of course, organizations can't simply dive in and start reaping the potential benefits of such an alliance. A careful study of alliance participation is a prerequisite to ensure that the change will not undermine member perception, motivation and respect toward the organization.

Typically, a volunteer emergency services organization is deeply rooted in tradition and prides itself on its autonomy. Regardless of what method of financial resource control is put in place, the chosen control probably won't be embraced by all of the department's members. However, support by the majority is desired, and that usually is granted only if the membership fully understands the control while having a say in its implementation.

For the chief to simply join an alliance without first educating the membership about its merits would create an opportunity for failure. Elimination of any potential negative reaction toward the change is paramount. Therefore, before participation in an alliance becomes reality, chiefs should attempt to complete the steps below.

1. Review all facts completely and conscientiously to validate that participation is warranted. The intent is to actively investigate all available avenues that can be used to provide improved efficiency of financial resources.

2. Prepare a detailed and concise information packet defining the correlation between the organization's financial resources and the demand for services placed on the organization. This information must provide members with a solid foundation as to why there's a need to change how purchasing is handled.

3. Allow members to express their opinions relative to the information presented, along with suggestions about alternatives to the purchasing alliance. The opportunity empowers the membership to participate in the decision-making process by researching and reporting on options.

4. Accept and compare all input against the option of joining a purchasing alliance.

5. Base the final decision on merit. Should the purchasing alliance not represent the most efficient manner to deal with financial problems, chiefs have a moral obligation to abandon participation in the alliance.

6. Involve members within the implementation process. The underlying intent is again to empower the membership, this time to develop the operating scope of control.

7. Monitor the control to ensure that it's delivering the level of financial efficiency needed to keep pace with its service demands.

Budgets today are being slashed no matter where you turn, yet the demand for emergency services continues to grow. Membership in a purchasing alliance may be the final means by which an emergency services organization maintains financial integrity to meet the needs of its community.

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Jim Bennett is a former assistant chief of the Windsor (Conn.) Volunteer Fire Department, of which he was a member for 29 years. He has associate's degrees in fire technology and architectural engineering, a bachelor's degree from Empire State College, and a master's degree in executive management.

References

“Purchasing Co-op Stretches Dollars,” American City & County, Sept. 2000.

“Online Purchasing System Improves Efficiency,” American City & County, Nov. 1998.

“Turning E-Business Barriers Into Strengths,” Information Systems Management, Fall 2000.