Collaborate for greater savings
Much investment has been made to centralize procurement and purchasing within organizational boundaries. Yet, much work remains to wring out savings across organizational boundaries.
The challenges with collaborative procurement are not insignificant. One must worry about the selection of appropriate goods / services, demand planning, allocation of risk and liability, establishing acceptable standards / specifications, effect on local economies, etc.
The best way to tackle these challenges is to collaboratively develop and implement a prescribed approach to sourcing, selecting and managing suppliers. This will not only make it easier to evaluate prospective goods and services for collaborative procurement but will also make it easier for new jurisdictions / organizations to join the program.
Now, not everyone is going it alone. In the US, collaborative purchasing is well established. The US Communities Government Purchasing Alliance (www.uscommunities.org) describes itself as such:
“U.S. Communities Government Purchasing Alliance is a nonprofit instrumentality of government that assists local and state government agencies, school districts (K-12), higher education, and nonprofits in reducing the cost of purchased goods through pooling the purchasing power of public agencies nationwide. This is accomplished through competitively solicited contracts for quality products through lead public agencies.
Today more than 32,000 public agencies utilize U.S. Communities contracts and suppliers to procure 1 billion dollars in products and services annually. Each month more than 400 new public agencies register to participate. The continuing rapid growth of public agency participation is fueled by the program’s proven track record of providing public agencies unparallel value.”
Many buying groups, of course, exist in the Canadian public sector as well. Recent research conducted by The Procurement Exchange (www.procurementexchange.com) suggests that the use of buying groups is more common as the size of an organization grows. What is not clear however, is what proportion of spend is accounted for by these buying groups. Given my experience in public procurement, I would venture: very little.
