Should an organisation join a purchasing group?

Abstract

Purpose

The article deals with issues such as the size of a purchasing group, the types of benefits aimed for, and the real beneficiaries of purchasing groups.

Design/methodology/approach

The observations are based on the literature, as well as on interviews, mostly with Canadian and US health‐care managers.

Findings

Although often associated with the public sector, purchasing groups are also an alternative considered more and more by managers of the private sector. A purchasing group increases volume consolidation, making it possible to have only one negotiation, in order to increase the purchasing group members' power vis‐à‐vis that of its suppliers. However, a purchasing group also constitutes an additional link in the supply chain and its objectives could go contrary to those of some of its members. This is why organisations considering joining a purchasing group should analyse this option strategically, in order to assess correctly the potential long‐term benefits.

Originality/value

This article suggests key questions and an analytical framework to help managers assess the potential benefits and drawbacks of joining a purchase group.

Citation

Nollet, J. and Beaulieu, M. (2005), "Should an organisation join a purchasing group?", Supply Chain Management, Vol. 10 No. 1, pp. 11-17. https://doi.org/10.1108/13598540510578333