2014 QUESTNet workshop collaborative procurement
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Collaborative procurement involves multiple entities working together to purchase commonly used goods or services. It allows organizations to leverage their combined purchasing power to achieve economies of scale and secure better terms from suppliers. The key benefits include aggregated demand that ensures competitive bids, reduced costs through labor efficiencies and standardized processes, and an improved negotiating position. While there are initial setup costs and a loss of some flexibility, collaborative procurement can generate savings through bulk purchasing if the basic rules and objectives are clearly defined and participation remains optional. Success requires open communication between organizations and a shared mission to procure goods and services in a smarter, more efficient manner.
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- 1. Collaborative Procurement Mark Noonan Manager, IT Procurement, QUT
- 2. Some Definitions • Simplistically, it can be the collaborative purchase by several entities of commonly used goods or services. • Collaborative procurement is about achieving value for money through building partnerships between buying institutions and suppliers. By drawing on expertise, skills and knowledge in procurement to leverage combined needs and secure benefits from economies of scale through harnessing sector wide purchasing power. • Collaborative procurement is when two or more groups of people, or organisations, engaged in procurement, work together for mutual benefit.1 1 Cram C. Two Heads: Always Better Than One, Government Opportunities, September 2003
- 3. Benefits • Better terms and conditions for the sector • Aggregated demand ensures competitive bids • Reduction in labour costs – buyers & suppliers • Reduction in legal risks and costs • Standardization will aggregate demand • Increased levels of collaboration • Improved logistics
- 4. Advantages & Disadvantages • Economies of scale • Stronger negotiation position • Initial set-up overheads • On-going commitment • Reduction in flexibility • LOSS of control • Supplier resistance • Longer timelines
- 5. Success Factors • Basic rules and operating principles • Participation is optional but encouraged through cooperation and communication • Common objectives and mission • Remove the demographic problems and organisation size limitations
- 6. Objectives • Competitive/improved procurement opportunities and efficiencies • Buying smarter • Use best practice methodology • Vendor management – remove the divide and conquer mentality – Win/win • Share the load and the skills/knowledge
- 7. Discussion Topics • How to build a team of trusted colleagues – Similar goals – Its their job and it helps to phone a friend • Share the load – Document – Communicate – Meet
- 8. Final Comment Organisations of the future must be flexible and adaptable and able to respond to change using new innovations and collaborative techniques to achieve their strategic objectives. – CIPS 2013 • http://www.rcc.gov.pt/SiteCollectionDocuments/ProcServe_Collaborative_Procur2010.pdf • http://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/6-Efficiency/Collaborative- Working/POP-Collaboration_Between_Organisations.pdf • http://www.pprc.eu/wp-content/uploads/Collaborative-Procurement-A-Relational-View-of- Buyer%E2%80%93Buyer-Relationships.pdf • http://doc.utwente.nl/74069/1/choosing.pdf