How does joint procurement optimise costs and enhance performance?

In an uncertain economic climate, organisations are seeking more than ever to optimise their expenditure and strengthen their overall performance. In this quest for competitiveness, procurement departments play a key role. Among the key levers to activate, joint procurement proves to be particularly effective. Far from being reserved for large groups, this strategy adapts to organisations of all sizes, both private and public.

Joint procurement: Definition

Joint procurement, or procurement massification, involves pooling the procurement needs of several entities - departments, companies, local authorities... This approach is based on a simple principle: strength in numbers. In other words, buying in bulk or as a group costs less than buying retail or alone.

This strategy aims at a dual objective:

• Consolidating procurement volumes to negotiate advantageous conditions (discounts, delivery times, payment terms, services...);
• Rationalising procurement procedures, enabling indirect costs to be reduced.

Joint procurement is particularly relevant for recurring or standardised purchases. This therefore covers a wide range of expenditures: office and industrial supplies, IT equipment, safety equipment, packaging, vehicles and maintenance, energy, insurance, regulatory control, works...

Why adopt this strategy?

Joint procurement presents multiple benefits, going well beyond economies of scale.

Reducing costs

The primary advantage of joint procurement remains cost reduction through leverage effects. As mentioned previously, increasing the volume of purchases allows advantageous prices and particularly interesting conditions to be obtained.

Organisations also rationalise "resources by promoting the pooling of skills and support functions to reduce internal costs linked to ordering" as emphasised by Lucile Henriques and Laurent Lequilliec[1] in their work on public procurement. This translates into indirect savings through the reduction of administrative and logistics costs.

Gaining efficiency

Another undeniable asset: saving time and improving efficiency. Joint procurement helps to optimise resources and processes. Organisations benefit from simplified procurement management, best practices and advanced technologies to manage their purchases. Teams can thus concentrate on other strategic activities.

Improving performance

Joint procurement enables the professionalisation of procurement procedures. Specific skills and expertise are mobilised, common frameworks are established, needs standardised, management tools deployed... All this contributes to improving the overall quality of procurement management, tenders and risks.

Fostering collaboration

Lastly, joint procurement strengthens cooperation between different parties. It's an opportunity to share experience, harmonise practices, imagine innovative solutions, integrate new criteria into these contracts... Thanks to long-term partnerships, suppliers are more inclined to participate in innovation processes and the development of new solutions.

Various models of joint procurement

Depending on the needs and resources of organisations, joint procurement can take several forms. Direct joint procurement, purchasing centre or professional grouping, each has its advantages and limitations.

Direct joint procurement

Companies can decide, in complete autonomy, to pool their procurement. They can do this with other companies, but also within their own structure with their own subsidiaries, divisions, etc. In companies, we speak of procurement centralisation. Partners must have internal resources, collaborate together and align on their respective objectives. Whilst this requires certain coordination, it allows them to forge a personalised relationship with suppliers, without intermediaries.

Purchasing centres

Companies can also go through purchasing centres. These specialised structures take charge of negotiation, analysis and monitoring of purchases on their behalf. They thus save precious time and benefit from their expertise. To join purchasing centres, a subscription or membership fee must be paid.

Procurement groupings

Lastly, organisations can also join professional groupings. These are generally professional associations or trade unions that organise their joint procurement. These structures often have a defined scope, linked to a business sector or region. This serves to strengthen experience sharing and professional solidarity.

Some obstacles to anticipate for your project

Although joint procurement presents multiple advantages, it also raises several challenges, both at the operational, organisational and legal levels.

Heterogeneous needs

By definition, each entity has specific needs and priorities, which complicates the definition of common specifications. This can take the form of budgetary constraints, technical requirements, or specific schedules.

Governance to clarify

For such a project to work, it must be managed in a structured way. This involves establishing a governance framework to centralise procurement decisions, but also formalising the responsibilities and commitments of each party.

Overall complexity

Joint procurement is complex at the strategic, administrative and legal levels. This translates into procurement procedures that are sometimes longer and more difficult to implement in regulated environments.

Steps to implement joint procurement

Here are the different stages for implementing a joint procurement strategy.

Step 1: identify needs

The first step consists of identifying your company's needs. This involves a spend analysis to evaluate procurement volumes, determine the categories of products and services that could be grouped together, and thus detect joint procurement opportunities.

Step 2: structure the approach

Secondly, a framework must be established for this approach. This involves defining objectives, governance and key performance indicators to measure its success. In terms of KPIs, we can track savings achieved, service rate or product quality, for example.

Step 3: select partners

The third step focuses on selecting the right partners. It is essential to orient towards suppliers who are able to respond to a certain volume of orders and ready to commit to strategic partnerships. Among the selection criteria, we can find: production capacity, pricing conditions, responsiveness, product quality, etc.

Step 4: measure effectiveness

Based on the defined KPIs, it is important to measure results. This is how we can valorise the project, identify areas for improvement or even extend joint procurement to other procurement categories.

As you have understood, joint procurement is a key lever for reducing costs and boosting procurement performance. However, it is not enough to group volumes together to guarantee the success of this approach. This requires building a shared vision, structuring management, and establishing the approach for the long term.