Top tips for a successful procurement joint venture

Gurjit Degun
3 February 2014

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4 February 2013 | Gurjit Degun

When forming a procurement joint venture with a competitor, companies should assess whether there is a business opportunity, select the right entry strategy and make sure it adds value.

That’s the advice from Salvador Serra de Paz, chief procurement officer at NH Hotels, who was speaking at the Procurement Transformation Summit in London last week.

NH Hotels formed a procurement joint venture with Husa Hotels four years ago to create a new company called Coperama. Through this, the hotel chains buy items such as food and beverages, cleaning supplies, room items and temporary staff.

He offered three top tips for companies thinking about launching a procurement joint venture:

Assess whether there is a real business opportunity. “There are some countries and industries that it will work and others where it won’t work,” said Serra de Paz.

Select the right entry strategy. “You have to find the right partner,” he said. “Usually procurement professionals are reluctant to share their job because we all feel that we are being measured, and if someone gets better prices on common categories we might be blamed for not doing the job properly.”

Show your company that this is a business, and that it is going to create added value.

Serra de Paz added when creating a joint venture parties must create a “really clear and transparent” business model so everyone understands what they are putting in. “I think this is where similar initiatives may fail as one of the partners may think he’s getting less than he deserves,” he said.

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