Consortium to leverage on economies of scale

Consortium procurement is a
technique of mixing requirements into a collection in efforts to leverage on
economies of scale (Burt et al., 2010). The
collective procurement efforts find its power in aggregating expenditure on the
way to realize volume discounts. The trend became historically limited
particularly to non-profit entities, inclusive of schools, hospitals and local
government; however, in recent years many procurement officials in the private
sector use it and call it the collaborative model (Burt et al., 2010). The
consortium can procure objects inclusive of stationery, meals, IT, journey, and
laboratory system. In South Africa, the purchasing Consortium (PURCO) is a
properly-established consortium for higher education institutions. Consortium
procurement has the potential to significantly increase efficiency, accordingly
minimizing costs for the customer and the supplier (Rudzki et al., 2006). it
really works better if the pooled requirements are similar for all the members.
The purpose of the purchasing consortium is to add value to its members by (Burt et al., 2010):

·   
providing
them with access to group purchasing contracts with favorable pricing and terms
which might be based at the buying power and leverage of a much larger organization
than a single institution;

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·   
using a
reduced number of quality suppliers with member input on identification,
qualification and the selection of successful suppliers;

·   
reducing
staff and administrative costs and saving time for procurement employees to
make their skills and resources available to attend to matters of strategic
importance;

·   
developing
opportunities which are to be had at different member institutions to
contribute to the structuring of a common beneficial business transaction;

·   
creating
an environment for the interchange of ideas, sharing of new developments and
benchmarking of activities;

·   
that
specialize in and focusing on specific goods and services contracts which might
be common to the majority of member institutions;

·   
making
sure that an objective and transparent tender process is followed.

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