Navigating the public procurement process can be challenging enough then add in Buying Groups, GPO’s or group purchasing organization, collaborative procurement initiatives, purchasing networks, collaborative sourcing partners, they go by so many names. They can be government agencies, not for profit organizations, or private companies. Some are membership based, national, regional, or sector specific. How are public procurement professionals to wade through the options to know if engaging with a collaborative procurement group is right for them and their organization? Firstly, what is collaborative procurement? A quick google search garners results that feel cold and transactional.
Collaborative procurement is defined as the ‘centralisation of the procurement of goods and services which are repetitive and common to multiple organisations‘.
And what is a group purchasing organization, a collaborative procurement organization?
In the United States, a group purchasing organization (GPO) is an entity that is created to leverage the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members.
Although that is obviously a private business, American reference, the general idea remains true here in the Canadian public sector.
Those general definitions are great and simple, but questions remain, is collaborative procurement good for my entity? Why should I work with a collaborative procurement organization, what do they have to offer and how do I choose who to work with. And maybe most importantly to what’s in it for me and my entity?
Collaborative procurement and working with a collaborative procurement organization can be a great opportunity to obtain goods and/or services through a procurement vehicle established by other procurement professionals that fits the needs of your entity. It can also streamline the procurement process, reduce your administrative activities and responsibilities, contract costs and open your network up to other like-minded procurement professionals. Some may offer or facilitate procurement courses or procurement webinars or other related purchasing consulting services to their members. Finding the right group purchasing organization to engage with is critical to the success for you, your entity, and your stakeholders.
When considering engaging with a collaborative procurement organization do your homework, here are a few questions to ask or areas to contemplate:
Find out what the collaborative procurement organization is doing to ensure they are compliant with relevant trade agreements, as well as provincial requirements that may apply to your area. For example, in the province of New Brunswick, the Procurement Act section 8 requires buying groups to be approved by the minister and there may be other restrictions or requirements in other provinces to be considered and evaluated. You may also have internal policies to review or revise to allow participation.
Are there restrictions or requirements to be a member or their group? Some collaborative procurements organizations restrict their membership to specific sectors, like municipalities or education, your entity may or may not be eligible. Some collaborative procurement organizations have open memberships that also includes private sector members or suppliers, you should consider how that impacts your decision to participate with that group. Are there other services they offer such as procurement courses or procurement webinars or other related purchasing consulting services are those services provided by qualified certified procurement professionals are they available free to members
There are different funding models related to collaborative procurement organizations, some are not for profit organizations that rely on membership fees, these group tend to be member led and directed, and usually have a more finite focused membership base. Others, still not for profit operate on a rebate structure, they receive a small percentage from the supplier for every dollar spent, there is little to no cost to the members related to this structure. Groups of this nature tend to have a broader membership base. Finally, there are for profit businesses in the space who often use the rebate structure for funding. Each funding structure has advantages and disadvantages, and collaborative procurement organizations should be open to potential members as to how they are funded with the decision left to your entity to align with a group that fits your needs and values.
Involvement / Process
What level of involvement can you anticipate as a member? Are there opportunities to provide input to the procurement process and or the resulting contract. Are there committees or working groups that allow subject matter experts to input the deliverables of an RFP that enables them to have oversight to the process. How is the contract managed post award throughout the life of the contract. What are the procedures to resolve concerns that may arise, are they there to support you and your stake holders and at what level? Consider what are the touch points with the supplier and how are the key performance indicators reported back to members to demonstrate contract value and success.
Priorities and Value
Finally and maybe most importantly, what are the priorities of the collaborative procurement organization? Do they have clear policies related to sustainability, human rights, socio economic considerations, can they demonstrate their success? Are those policies aligned with your entities goals and the expectations of your entity to your procurements and contract management, essentially will involvement with a collaborative procurement organization assist you achieving your goals and contribute positively to your procurements. How do they define value to their members? Is there consideration for more than financial value in participating with the group, what other factors do they identify as value to their membership?
There are some tools and road maps available online to help make your decision easier, but the most important thing is to ask questions. Talk to your internal customers/stakeholders, find out what they need and discuss how involvement in a collaborative procurement organization can help be part of meeting those needs. Meet with collaborative procurement group representatives share your thoughts, concerns, and expectations, learn about what they have to offer and explore the details around working with them, their expectations of the members and how that fits into your procurements. Create an open dialogue, working towards a partnership that will help foster a successful mutually beneficial relationship. Top tier collaborative procurement organizations are proud of what they do, they are happy to share with you their processes, provide you testimonials or connect you with their members to demonstrate to you their success, their commitment to their members and as such providing value.
Trish Rafuse is currently Senior Contracts Manager at Interuniversity Services Inc. with over 15 years experience working exclusively in public procurement. In her spare time you can find her coaching and training at her local CrossFit gym.
Disclaimer: The views and opinions expressed in this article are those of the Subject Matter Experts and do not necessarily reflect the official policy or position of The Procurement School.