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Consortium to leverage on economies of scale

Consortium procurement is atechnique of mixing requirements into a collection in efforts to leverage oneconomies of scale (Burt et al., 2010). Thecollective procurement efforts find its power in aggregating expenditure on theway to realize volume discounts.

The trend became historically limitedparticularly to non-profit entities, inclusive of schools, hospitals and localgovernment; however, in recent years many procurement officials in the privatesector use it and call it the collaborative model (Burt et al., 2010). Theconsortium can procure objects inclusive of stationery, meals, IT, journey, andlaboratory system. In South Africa, the purchasing Consortium (PURCO) is aproperly-established consortium for higher education institutions. Consortiumprocurement has the potential to significantly increase efficiency, accordinglyminimizing costs for the customer and the supplier (Rudzki et al.

, 2006). itreally 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):·   providingthem with access to group purchasing contracts with favorable pricing and termswhich might be based at the buying power and leverage of a much larger organizationthan a single institution;·   using areduced number of quality suppliers with member input on identification, qualification and the selection of successful suppliers;·   reducingstaff and administrative costs and saving time for procurement employees tomake their skills and resources available to attend to matters of strategicimportance;·   developingopportunities which are to be had at different member institutions tocontribute to the structuring of a common beneficial business transaction;·   creatingan environment for the interchange of ideas, sharing of new developments andbenchmarking of activities;·   thatspecialize in and focusing on specific goods and services contracts which mightbe common to the majority of member institutions;·   makingsure that an objective and transparent tender process is followed.

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