TY - JOUR
T1 - Co-procurement
T2 - making the most of collaborative procurement
AU - Rezaei, Jafar
AU - Pourmohammadzia, Nadia
AU - Dimitropoulos, Charalampos
AU - Tavasszy, Lori
AU - Duinkerken, Mark
PY - 2020
Y1 - 2020
N2 - While the procurement decision is generally made by individual buyers, this study investigates how a group of buyers can make a shared decision. We call this collaborative approach, co-procurement. A mathematical model is formulated for the decision of procurement from multiple suppliers. The model is solved for individual buyers. The outcome shows the optimal number of items a buyer should buy from different suppliers such that the total cost is minimised for that buyer. Next, it is investigated how a group of buyers could make this decision together. The proposed model takes into account transaction costs of collaboration, to determine the optimal size of the collaboration and the involved parties. The idea is new in the old direction of procurement and it introduces the concept of transaction costs in this area and analyses its impact on the optimal collaboration size and mix. A case study from Dutch Food Valley is provided to investigate the benefits of co-procurement and validate the developed structure. The results indicate that co-procurement can bring considerable cost-savings through consolidation of orders and more efficient transportation schedules. A sensitivity analysis is conducted to determine the impact of changes in the transaction cost in favour of the co-procurement.
AB - While the procurement decision is generally made by individual buyers, this study investigates how a group of buyers can make a shared decision. We call this collaborative approach, co-procurement. A mathematical model is formulated for the decision of procurement from multiple suppliers. The model is solved for individual buyers. The outcome shows the optimal number of items a buyer should buy from different suppliers such that the total cost is minimised for that buyer. Next, it is investigated how a group of buyers could make this decision together. The proposed model takes into account transaction costs of collaboration, to determine the optimal size of the collaboration and the involved parties. The idea is new in the old direction of procurement and it introduces the concept of transaction costs in this area and analyses its impact on the optimal collaboration size and mix. A case study from Dutch Food Valley is provided to investigate the benefits of co-procurement and validate the developed structure. The results indicate that co-procurement can bring considerable cost-savings through consolidation of orders and more efficient transportation schedules. A sensitivity analysis is conducted to determine the impact of changes in the transaction cost in favour of the co-procurement.
KW - collaboration
KW - pricing
KW - procurement
KW - Supply chain management
KW - transaction cost
UR - http://www.scopus.com/inward/record.url?scp=85086880904&partnerID=8YFLogxK
U2 - 10.1080/00207543.2020.1770355
DO - 10.1080/00207543.2020.1770355
M3 - Article
AN - SCOPUS:85086880904
SN - 0020-7543
VL - 58
SP - 4529
EP - 4540
JO - International Journal of Production Research
JF - International Journal of Production Research
IS - 15
ER -