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Purchasing Consortium
A purchasing consortium is a group of two or more independent organizations that join together, either formally or informally, or through an independent third party, for the purpose of combining their individual requirements for purchased materials, services, and capital goods to leverage more value-added pricing from their external suppliers than could be obtained if each firm purchased goods and services individually. By combining purchasing power into a central purchasing point, smaller organisations can often obtain discounted pricing on all sorts of products that would normally only be extended to much larger organisations.
Advantages of purchasing consortium:
- Significant reductions in prices of original goods and services;
- Allows for fewer overheads and reduce duplication of staff efforts and resulting costs are negated and all activities are standardized.
- Volume purchasing means that better prices, greater discounts and more agreeable terms can be obtained.
- Computerized systems can be used to automate much of the work as well as integrate the purchasing systems with accounting and stock control.
- Increased purchasing power for the centralised agency;
- Encouragement of good transparency provisions such as efficient recording and reporting of
- Procurement contracts and transactions, effective management controls, clearer audit trail.
- Specially trained staff and Centralized records.
- Transportation costs can be reduced because bulk quantity of materials purchased.
- Purchasing consortium can help to reduce duplications of efforts, maintains standard purchasing policies and better planning.
