The Concept

By wielding more purchasing power than individual buyers, a collaborative procurement model provides significant benefits to all the participants of the network. Putting spend volumes together to achieve more buying power is perhaps the most obvious way of driving savings. Bigger projected purchase volumes provides a stronger position to negotiate lower prices.

Aggregation also produces other benefits, such as reducing the administrative cost of multiple buying processes or events, driving best practice adoption and compliance (including standardization), which in turn may produce certain knock-on benefits such as greater operational efficiency. It also facilitates supply chain management at a strategic level – for example, (i) it enables buyers to discern patterns and raise issues in a coordinated way at senior level in companies, (ii) it simplifies stock management and logistics, (iii) it allows capacity constraints in the market to be identified, (iv) it provides good data for cross-enterprise benchmarking, and (v) it provides a complete, structured record of procurement (including detailed supplier profiles) to facilitate proper governance, risk and compliance management of the buying organization's supply chain.