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Fleet cards in the public sector: Sourcewell and WEX
Fleet cards help small businesses save money in a variety of ways, but there’s another economic segment benefitting from fleet card use: government entities. Today we’ll learn how local governments, nonprofits, schools, community colleges, and universities can access fleet card programs through an agency called Sourcewell, and how WEX’s competitively solicited and awarded contract with Sourcewell can benefit government entities.
Cooperative purchasing helps organizations save money
In the late 1970s, Minnesota state representatives recognized that their public schools were facing numerous challenges. These challenges included providing their students with critical services in part due to many financial constraints schools were facing. Minnesota created a cooperative shared services program for schools to pool resources and save money. Through an act of legislation by the State of Minnesota in 1976, called the Regional Cooperation Act, Educational Cooperative Service Units (ECSUs) were formed. Minnesota was divided into nine geographic regions, and a centrally located service cooperative was formed in each of these regions. Each hub was a local unit of government and funded by tax dollars from the region the hub served.
Sourcewell, a public agency founded in 1978, and named ECSU #5 at the time was one of those service cooperatives. Over the next several decades, service cooperatives in Minnesota charged membership fees to school districts within their borders and provided services that the schools otherwise would not have been able to administer or afford.
In 1995 Minnesota amended and expanded the service cooperatives so these nine hubs could serve all forms of education, government agencies, and nonprofits in addition to public schools. During that time, Mike Hajek became Director of Cooperative Purchasing for the organization, landed its first contract with Sharp Copier Machines, and launched the cooperative purchasing division at Sourcewell.
As Sourcewell’s cooperative purchasing program began to grow within the state of Minnesota, the decision was made to market it nationally. In 1998 Sourcewell began to slowly add more and more national contracts. Sourcewell’s national customer base grew significantly during the 2006–2009 recession, due to declines in tax revenues. Mass job losses resulted in a decrease in spending, and government agencies rely on tax revenue as a large portion of their budgets. With those tax revenues declining cities, counties, and other government agencies were forced to reduce staff. Purchasing departments that used to take up multiple floors of government buildings were reduced to four or five cubicles within one floor. The needs of the communities these government agencies served didn’t change, however. The problem was they now had a fraction of the headcount responsible for doing the buying. This is where cooperative purchasing started to expand even more nationally, and Sourcewell built their cooperative purchasing arm simultaneously. Between the mid aughts and 2018, cooperative purchasing continued to grow.
“Our cooperative purchasing department serves the dot govs, the dot edus, and the dot orgs with our competitively solicited and awarded purchasing contracts, which creates a lot of efficiencies for our clients, and gives them more choices. It also gets them the supplier that they want with the compliance that they need,” shares Andy Campbell, Director of Cooperative Contracts at Sourcewell.
With contracts all over the U.S. and Canada, Sourcewell has been on a significant hockey stick trajectory in terms of year-over-year growth ever since then. Campbell attributes this to a unique and strong business model. “What Sourcewell does is help each nonprofit, school, and government organization get the solution they want while at the same time helping each entity’s procurement team experience a seamless process in terms of compliance requirements. What you end up with is a win for both sides.”
A company driven by its mission and values
A company’s culture has a direct impact on an organization’s bottom line, as John Coleman reported in a Harvard Business Review article, “Culture can account for 20-30% of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors.” Sourcewell shaped a strong culture from its inception, dictated by a clear mission. “Sourcewell’s values are to seek, impact, and empower. Everything that we do is about seeking to help others, impacting others, and empowering others. Our values drive everything we do. Any initiative, any project, any process improvement, everything is done through the lens of those values,” shares Campbell.
As Campbell articulates Sourcewell’s mission, it’s also apparent how closely that mission is tied to who and what they serve. “Our mission is succinct. It’s to be a force multiplier. We’ve been blessed in the fact that the people that we hire have a sincere desire to serve others. It’s what drives them. It’s what motivates them. It’s what gets them up and out of bed in the morning and there isn’t a single department within Sourcewell that does not operate from the foundational platform of ‘What are we doing for others today?’”
How a partnership with WEX has helped Sourcewell
Sourcewell has over 70,000 member agencies using their contracts and began working with WEX in 2011. Approximately 6,700 government organizations with approximately 316,000 cards are currently using Sourcewell’s WEX fleet card program. “Our relationship with WEX and why we’ve been a WEX customer for as long as we have boils down to the people who we work with at WEX. Sourcewell is entirely relationship-driven, and WEX operates very similarly. It’s almost like it never even has to be said but when you take care of people, the business takes care of itself. That has been the feeling that comes out of the vast majority of strategic conversations that I’ve been a part of with WEX.”
Why it’s important for Sourcewell to contract with the best vendors
When you boil it down, Sourcewell provides products supplied by vendors. As Campbell puts it, “We serve the client by providing contracts for them to use but our suppliers are the ones supplying the goods and the services through those contracts.” This makes choosing vendors who will provide the very best customer service paramount.
“We have this three-legged stool that if one of those legs disappears the stool tips over. And all three of us (vendor, Sourcewell, and customer) working in conjunction with one another just really is what makes this so successful.”
As Janet Parker, Strategic Relationship Manager at WEX shares, “Our partnership with Sourcewell has been marked by a shared belief in putting the customer first, which has allowed for a seamless operation providing best-in-class service to Sourcewell’s customers.”
How fleet cards benefit Sourcewell members
For Sourcewell’s participating agencies, the top features that many fleet card programs offer include a comprehensive network of fueling stations, telematics, and access to data. As Campbell shares, “WEX has positioned itself as a one-stop shop for all of your fleet fueling needs.” His participating agencies love the ability to set controls, track use, take advantage of rebates, and the exemplary customer service they get through their WEX fleet card program. “Where WEX makes my job easy is I just don’t have to deal with customer complaints. In fact, I can’t even think of one off the top of my head that I’ve ever had to deal with. WEX handles its business and takes care of its clients and so from that perspective I’d say WEX makes my job easier because my time is freed up to now focus on other strategic initiatives in my work.”
The push to transition to a mixed energy fleet and WEX’s role
EV sales surpassed 10 million globally for the first time in 2022, and then in Q1 of 2023, over 2.3 million electric vehicles were sold worldwide. This represents a roughly 25% year-over-year increase. As EV adoption continues to grow, Sourcewell’s customers have expressed interest in how to best move toward a mixed-energy fleet.
“EV is at the tip of everybody’s tongue now. Certainly, our current administration in the White House, the EPA, and the dollars flowing down from the federal government have been huge drivers to that conversation. There are a lot of communities in this country that are committed to electrification and want more access to charging stations and I think this is again where WEX is proving to be a key partner in this area,” shared Campbell.
As Campbell started to hear from customers who were looking for guidance on EV adoption, he approached WEX and asked for their expert advice. WEX’s Janet Parker shared her perspective: “The timing was fortuitous –– as we built our EV product, Andy came to us looking for ways to help his participating agencies make the mixed-fleet transition. We were so happy to be able to provide their participating agencies the tools they needed to build out their mixed-energy fleets in the most efficient and effective manner, and provide guidance on best practices for making the transition to EV.”
Campbell was able to go back to Sourcewell clients with solutions available in the same WEX products and services they were already using. “In the whole EV space, there’s not a lot of unification across platforms for payment methods or even the charging interface with the vehicle. There are a lot of people working towards bridging the gap between ICE vehicle management and EV management and WEX is right at the tip of that spear in leading those efforts.”
WEX speaks the language of small business operators. Whether you’re looking to modernize your insight and reporting efforts, save on fuel costs or take advantage of the latest GPS tracking technologies, WEX offers solutions to simplify the business of running a business. To learn more about WEX, a dynamic and nimble global organization, please visit our About WEX page.
Learn more on how to better manage your small business:
Resources:
Market Watch
Harvard Business Review