Unfruitful cooperative purchasing

Abstract

Purpose– The purpose of this paper is to understand the impact of cooperative purchasing on buyers’ purchasing power. Purchasing in the humanitarian sector has traditionally been characterized by a low level of coordination due to inter-agency competition for funding, diverging mandates and other organizational differences. Relationships with commercial suppliers have also remained arm's-length and often dormant due to high levels of uncertainty and strict public procurement rules and regulations. However, recent pushes for increased efficiency and effectiveness are driving humanitarian agencies toward cooperative purchasing – a purchasing strategy that is claimed to be highly beneficial for members of the purchasing consortium not least for its ability to increase buyers’ purchasing power. In reality, the effectiveness of the strategy in increasing purchasing power is unclear.Design/methodology/approach– The authors study a single case of several humanitarian organizations aiming to increase their leverage in buying freight forwarding services by joining forces.Findings– Following several incidents during the process, the cooperative purchasing initiative did not contribute to increased power in the case. It was found that in addition to increased volumes, the effect of the strategy on other sources of power such as interconnections is also of importance.Research limitations/implications– The research is limited to the boundaries of a single case study including the perceptive view of respondents interviewed.Practical implications– The findings of the study provide insights for organizations aiming to practice cooperative purchasing.Originality/value– The findings of the study provide insights for organizations aiming to practice cooperative purchasing.