29 March 2007
Would buyers be happy to work with other buyers to secure the best deal? Can collaboration really work? Apparently so, as Paul Snell discovers
Whisper it quietly, but it seems that purchasers are throwing off their adversarial, hard-nosed, fiscally driven image, and are becoming everyone's best friend.
Buyers have been working with suppliers to improve corporate social responsibility, while being urged to work more closely with other parts of the business and build better relationships with marketing.
But what about buyers working with other buyers?
According to the latest SM poll of 100 purchasers, most are willing and keen to collaborate with each other to get a better deal (News)
Ros Aird, chairwoman of Central Buying Consortium, told delegates at its annual conference this month that times were changing. "There was little interest in collaboration 11 years ago," she said. "The landscape is confusing and potentially quite frightening. But we have a remarkable opportunity." She also claimed the suspicion and protectionism among organisations working together was a thing of the past.
Collaboration between public sector bodies is key to making efficiency savings. For instance, 38 government organisations teamed up last year in a £1 billion fleet deal and saved £100 million in the process. "Aggregation and collaboration between organisations can achieve benefits for all the parties involved in terms of cost saving, efficiency and contract performance," says Lee Jackson, corporate procurement officer at Derwentside District Council. "We seek out and capitalise on opportunities for collaboration with our neighbouring authorities."
And while working with other firms may not be as high profile in the private sector, it seems buyers do have the appetite for it.
"Companies should consider this option, but it is key that both parties have a full understanding of the process and share the same goals and objectives," said Nic Massey, senior buyer at Toyota Motor Europe. "Especially for competitors, where they will need to be open with each other to obtain the best results. Otherwise these processes turn into collaborative benchmarking rather than collaborative purchasing."
The benefits of collaboration may be a "no-brainer", as one buyer suggests, but there are risks.
"It takes longer if you want to collaborate," says Elmer Bakker, research officer at the Centre for Research in Strategic Purchasing and Supply at Bath University. "There is also a danger of losing your identity, or that suppliers might resist the process."
Other respondents worried about the effect "mega-procurements" might have on supply bases, especially among smaller firms unable to compete. One buyer suggested the risk of being caught up in competition and anti-trust legislation made collaboration too risky for his firm.
So how can you ensure success? "You have to have a common need," said Bakker. "Otherwise you might as well do it yourself. You need to have powerful users or it won't work. And don't start off on the wrong foot."