Question

Module 11 

Cooperative Procurement & Shared Services 

Assignment 

In this module we examined Co-operative Procurement and Shared Services. Your assignment is to provide your opinion on whether or not you feel that these models of procurement are good, bad or indifferent. 

Explain you reasoning for this opinion, using where possible information from the module lecture/slides

Answer 1

There are both pros and cons of Co-operative procurement and shared services. Let me explain the both. But I think it's better to use cooperative procurement.

The Benefits of Co-operative Procurement:

1. Economics can be –or maybe we should claim–by uniting various entities with their buying criteria. That is the direct source of constructive joint efforts in the mass media and policymakers. "Why should any government agency have a different copy paper deal? We would get a much better offer if we had just one contract, "is what we say. When we put together many entities to invest in this aggregated obligation to enter the business, we need to create more purchasing capacity, more bargaining leverage, and more strategic cooperation.
2. The total commitment and the expense to carry out the procurement tasks; from early business participation to tenders and contract awards, the whole procurement cycle will be that. In brief, teamwork ensures that in 10 organizations, instead of 10, each undertaking a different procurement, we perform a common procurement exercise. This will offer a strong edge as far as the services available for this are concerned.
3. The benefit in production is often repeated on the producer side, which contributes to lower selling prices. The possible suppliers will do so not always, but just often, full multiple PQQs or ITTs, both of which will require specific replies, details, and feedback. (A strong annoyance of many manufacturers is the issue of lack of standardization in procedures such as pre-qualification!) 4. Especially where the contract involves fairly specific goods, facilities or functions, it provides incentives for the coordinating entity to build procurement experience such that any particular company considers it impossible to do its own. Then it is doubtful that every city hall would be able to afford a genuinely professional energy supplier, so a company that buys 50 or 100 cities can afford to invest in the skill, which will help the users of the contract.
4. You should often allow the use of the group method in order to facilitate standardization and therefore provide specific advantages. Such advantages may involve a smaller overall inventory cost (the supply may be split between multiple entities) or a decreased workforce preparation obligation. Therefore, if multiple police forces cooperate on security equipment (for example) and adhere to similar standards, separate police forces can use this equipment so there is no need for practice as a police officer travels between powers.

These advantages may be critical. Most people assume that the case on an economic basis as a method of collegial recruitment is the most important one. Over the years, we disagree with conclusions. We would argue that the advantages of standardization and strong organizational experience always overshadow the economical advantage.

The Negatives of Collaborative Procurement:

Now we are going to dig into some unpleasant or complicated problems. We would say that not all of them are as successful as the most optimistic.

1. In Part 1, we addressed in our previous article regarding the possible advantages of scale which can be obtained through the accumulation of spending duration. Nevertheless, we agree that joint initiatives (in reality, procurement people generally, even in the private sector) are still overestimating these ecosystems! In reality, it is not impossible to conceive of industries and circumstances in which there are also disappointments of size, yet even when they occur, the greatest advantages of size gain in a fairly small sum may be accomplished in many expenditure areas. It is a big topic alone, but we saw little of the public sector analytical research to understand the economic presumption of scale which sometimes underpins the business case for cooperation.
2. Collaborative deals can have very adverse market consequences. The best way to gain policy jobs is in certain situations to sign a joint deal. When they are not willing to find a position to get a career, they will be shut off the workforce for years by the public sector. Long-term contracts can discourage competition and render it impossible for new companies to reach the sector because spending becomes heavily concentrated. The criticality of certain collaboration arrangements with vendors makes the determination and method of the procurement of dissatisfied bidders more possible. And when the effect of loss is serious, you'll want to win something! Indeed, the possibility of corruption could also increase.
3. Collaborative transactions can result in a disconnection between the purchasing method and the purchased feature and its actual consumer. The selection is well away from the internal consumer (or the external consumer for most policy "commissioning" work). Although private contracting members are seeing such stakeholder control gradually as crucial for their performance, it's quite interesting where we are going towards the public sector, with more concentrated contracting still distant from the end company.
4. Collaborative acquisitions can contribute to organizational capability loss. There is a chance. Sure, the traditional joint purchasing areas do not apply, but they might contribute to the frontline company lacking vital procurement resources to aim towards better executing in terms of the acquisition of products and services that would have to be done separately, i.e., not purchased together. That can be seen in the United Kingdom from the policy of centralizing specific divisions of expenditure, with' hollowed out' procurement roles in many government agencies.
5. Regardless of their scale and scope, joint transactions and contracts can not be handled. The issue may also be separated into many parts. This can be a major challenge to determine and decide on specific specifications. Due to the amount of documentation, the volume of tenders, the whole selection phase, etc., the bidding method will then be extremely complicated. The "only game in the region" in its investment field (see the "impact on the sector" above) is a huge exercise if the joint deal. So the administration of contracts may be similarly complicated.

Such adverse consequences don't mean the group sales are a poor one. (An example of cooperation that functions well primarily is the London Universities Purchasing Group, whose conference is discussed here). Across several industries and countries, we have countless instances of strong teamwork practices.

The intensity of the negatives indicates that some due attention is required, and that attempting to centralize or coordinate overweight any of these negatives. Where the difference exists between good and poor coordination will be sorted out on a case-by-case basis, but this would be one of the main strategic issues for European public sector procurement members.