WHAT IS COLLABORATIVE PURCHASING?
If you look at your Charity’s spend profile, you will probably find there are numerous common areas of goods and services that the majority of Charities are contracting for – all individually. These usually include things like insurance, IT, buildings maintenance, Print, recruitment, telephony, fundraising, vehicles, fire safety, travel booking and so on.
According to the Charities Commission numbers there are an estimated 200,000 Charities in the UK – higher if you include those with charitable status like schools, churches and the likes. Imagine the greater leverage that you would have in negotiations with suppliers if some of these came together to go to market? Not to share single Contracts or have any shared liabilities but just to be able to use the bigger ‘carrot’ for suppliers to be able to negotiate better rates, better T&Cs, better payment terms and still have your own individual Contract at the end of the process as you have always done.
Collaborative procurement is simply a means to deliver greater efficiencies through the combined purchasing power, and with charities increasingly dealing with reducing income, working in small groups on common requirements can help mitigate this.
By working with other charities, as well as driving better pricing collaborative procurement can result in fewer tendering exercises, which leads to lower administrative costs and allows the organisations to spend more time focusing on their specialised services.
WHAT ARE THE BENEFITS OF WORKING TOGETHER?
Buying Power
Partnering with other charities on goods or services you all need can save you time and money. Not only are you offering a larger pot of business to suppliers, but you represent a larger slice of the market, giving you more leverage for negotiation. By collaborating with others, you’re maximising your purchasing volumes and achieving benefits from economies of scale that could not be enjoyed alone.
Savings for the Suppliers
Alongside the benefits for your organisation, there are benefits for the market too. When organisations collaborate, instead of having to tender five times for the same contract, suppliers only have to complete one set of documents and go through one single process. Less work involved in winning business means fewer resources are needed – generating savings for them that are passed on to you!
Process Efficiencies
Most Charities recognise that competitive procurement processes are necessary to ensure compliance and achieve Value for Money. So, why not save time and resources by doing these together? As well as avoiding the duplication of five separate tenders for the same goods or services (giving you time to spend on your frontline activities), collaboration will help reduce the risk of non-compliance & greatly reduces instances of duplication of efforts.
Sharing Best Practice
Probably the simplest benefit – by working with others, we can all utilise their expertise, gain new ideas for our own organisations, and build our knowledge and capabilities.
Better Data
As with most things, in Procurement, knowledge is power. Using your own data can give you an idea of the purchasing landscape within your own organisation. But combined with others, you paint a broader picture of the markets and sectors you are working in and identify key areas where real benefits could be gained.
FREQUENTLY ASKED QUESTIONS
So, we’re in a collaborative mode and want to lead joined up buying. Our Trustees and Board want savings, everyone wants better Contracts, where do we start?
In reality, when it comes to people tasked with placing orders from different charities having been steered to work together, there’s a more or less a standard set of concerns;
“We do it fine already.” We’ve been fulfilling our Charity’s requirements for a long time already working with another organisation could lower our standards.
There’s always a better practice out there – why not take free advantage of it?
“We’re already locked into Contracts” – Why invest in something we don’t need yet?
Tenders can be run such that the successful supplier picks up each Charity’s business as & when any existing contracts come to an end. Suppliers know and understand this and bid accordingly. This allows you to take advantage of the cumulative leverage now ready for when current Agreements expire.
“They have different processes.” Everything they do is complicated and will slow us down.
All individual needs & requirements are laid out in the tender documents with all KPIs and SLAs included in the specifications. No single party’s processes take precedence over another’s and the collaborative process is facilitated, run and driven by a third party to the timescales agreed by the group.
“We want our own Contract”. There isn’t any appetite here to ‘share’ any legal Agreements.
There is no ‘sharing’ of Contracts – each Charity will contract directly with the supplier in the same way as if you’d tendered alone but with the advantage of the bigger pot of business as leverage.
“We don’t have time for that.” I’m already overworked and underpaid, so why would I take this extra work on?
If it’s done properly it will result in less work than you currently need to do. Absolutely no control over processes or decision-making is lost but the legwork involved is done by a third party and the results brought back to the participants at various gateways for decisions.
“They only mind their own interest.” We’re custodians of our charity’s best interests, as much as they are so we’d end up having to accept their specifications.
Again, because there is no ‘sharing’ of Contracts each Charity contracting with the supplier will have their own best interests at the heart of their own Agreements in exactly the same way as had they contracted directly themselves once more.
To get past these hurdles there is considerable value in using a third party to facilitate and administer the process. Partly so no one charity has to pick up the resources required for this and partly as the third party have no axe to grind in terms of affiliations to any one of the participating charities – so helping get past the idea that any outcomes would be more in favour of one charity than the others.
A third-party specialist Procurement organisation like ProVantage Procurement can facilitate the specification writing, market sourcing, tendering, shortlisting, negotiating and contracting with you, ensuring you get not just the Best Value you need to demonstrate for your money but also take away the drain on resources that fulfilling your requirements demands.
MAKING IT WORK
Where there’s 2 or more Charities wanting to look at the potential benefits of working together to increase their leverage with suppliers, ProVantage Procurement would bring the experience and provide the resources to gather all the relevant information, lead on the process from end to end and bring the results along the way back to the group of participants to make decisions at the agreed milestones.
All of the control and decision-making stays with each charity throughout. The steps that we would normally follow would be along the lines of:
- Agree which charities wanted to trial the tender(s) & agree points of contact
- Carry out a (free) detailed spend analysis for each to identify common areas of spend
- Agree areas to review & agree timescales/priorities
- Agree on a small set of KPIs – objectives, savings, efficiencies, processes etc
- Agree tender list with the Charities, raise & run tender process, liaise with suppliers, collate all the responses then bring results back to the group for discussion & next steps, if any
- If proceeding to Contract, ProVantage will also help negotiate the T&Cs to ensure they’re in the charities’ favour
SEE HOW PROVANTAGE CAN SAVE YOU MONEY
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