PurchTips edition #256

“Collaborative procurement” can refer to at least four different initiatives, all of them worth considering.

Collaborating With Internal Departments. The ideal sourcing situation for an organization happens when a cross-functional team collaborates on all aspects of a sourcing project. This includes the procurement department being involved in early stages of a project, such as specification writing or product design. And it also includes internal departments being given a voice in supplier selection decisions. Benefit: Cost, delivery, quality, service, and source flexibility objectives are balanced rather than one being sacrificed for another.

Collaborating With Suppliers. Most procurement departments have a mission like “acquire the best quality goods and services at the lowest cost.” But more advanced procurement departments make collaborating with suppliers on process improvements and innovative business ideas an equally high priority. Benefit: A competitive advantage in the market.

Collaborating With Other Procurement Organizations. Some organizations are too small to have enough spend in a category to warrant large supplier discounts. To increase their leverage, these organizations can form an alliance with other similarly sized organizations, combine their requirements of certain products or services, and buy those products or services at a presumably lower cost than any individual organization could obtain on its own. A variation of this model is when an organization joins a buying consortium of other organizations where that consortium is coordinated by a third-party Group Purchasing Organization, such as Corporate United. Benefit: Lower costs with less time spent “reinventing the wheel.”

Collaborating With Mission-Driven Organizations. Though usually orchestrated by senior management, procurement departments can often find opportunities to collaborate on socially responsible initiatives with mission-driven organizations, such as those who seek to reduce animal cruelty or increase the use of locally sourced products. Benefit: more recognition for the organization as a “good citizen.”

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