What are the best practices and tools for collaborative procurement in the digital age?

I belive collaborative procurement is essential strategy for MSME sector as they are one who are not able to source material from big manufacturers at competitive rates and at fair terms & conditions. Collaborative procurement will help them in a great way to mitiagte this risk to large extent. For example if all the fabricators join hands they can negotiate with mills better prices & terms from steel mills, pipe mills, flanges and valve manufacturers. Even large EPC should drive these collaborative culture within their set of fabricators for greater advantage. However, it is the matter of effective communication and trust building which is very important. Some fabircator may feel they they will loose competitve advantage.

I have always believed that communication is the most important aspect to business. Even when we automate or simplify an approach, it’s critical to continue the communications. People forget that communication requires listening to be an active participant. In my experience I’ve had suppliers where I was the main source of data/ talking and other suppliers were I relied on their data/listening.

In the digital age, collaborative procurement thrives on clear communication, strategic partnerships, data analytics, agile processes, and sustainability. Tools like e-procurement platforms (SAP Ariba, Coupa), supplier collaboration portals (Oracle, SAP), contract management software (DocuSign), and spend analytics tools (SpendHQ) streamline processes and foster collaboration. Communication platforms (Microsoft Teams, Slack) enhance teamwork, while blockchain ensures supply chain transparency. These practices and tools help organizations optimize procurement, reduce costs, and build stronger supplier relationships, leading to a more efficient and responsive supply chain.

Common goals is an important aspect, although I prefer shared. When buyer and supplier share a goal to drive greater value, working the details together becomes a natural consequence. Reducing purchase price is not typically a goal a supplier will find attractive. Many suppliers can and will reduce overall costs if given the opportunity, but it often means the buying organization will have to do things differently. In order to be credible in this role, procurement must have a track record and a credible relationship with the business. So collaborative procurement starts with internal collaboration with the business.

To maximize the benefits of using cooperative contracts, I believe that we should adopt the best practices in public procurement. This includes conducting extensive research, negotiating favorable terms and conditions, monitoring the performance of the cooperative contract provider, keeping detailed records, encouraging competition, building partnerships, continuously evaluating the contract, providing training and support to procurement staff, and seeking feedback from stakeholders. The potential cost savings and streamlined purchasing process that comes with pre-approved vendors can free up valuable time and resources that we can redirect towards other important areas of our operations.

While public sector procurement is one of the most challenging environments, it can also be frustrating. The risk aversion to reputational damage as press and citizens put every decision under a microscope make change and innovation fraught with risk. In collaborating to access new data and derive new insights, the first critical agenda item is to align on data quality and ownership. Data quality is high when the data is accurate, complete and fit for purpose. That means a data syntax must be agreed so that all data is created to an agreed set of meanings across the stakeholders.

In collaborative procurement, goals, scope, governance are so important that it is advisable to have a tentative idea on what they might be, but to leave these open to be defined as part of the collaborative discussions. Suppliers may be better equipped to make certain decisions and manage certain tasks & risks, just as they may be ill-equipped to manage others that the buyer might prefer to not own. Finding the right allocation of work, risk and value is the crux of collaborative procurement.

In my experience in previous roles, Manugistics proved to be a helpful tool for demand forecasting and mass ordering. It would be helpful if information from the various inventory management platforms could sync (SAP, Manugistics, etc.)

Open source tools exist to help define the right business model for each procurement. Collaborative procurement is a lot of work, it does not make sense for every purchase. In the book "Strategic Sourcing in the New Economy," a simple tool solicits the definition of the right economic and relationship models. These map intuitively to the right business model. It is very useful if the buyer and seller have the same business model aspirations. The book also provides insight into the commercial contract artifacts that are best suited to each business model. I suggest you have a professional help you discover and use these tools the first time. Once you have decided what you want to do, which IT tools becomes relevant.

In the digital age, collaborative procurement utilizes cloud-based platforms like SAP Ariba and Coupa, alongside communication tools such as Slack and Microsoft Teams, to streamline processes, enhance transparency, and foster real-time collaboration between procurement teams and suppliers.

We can also talk about digital twins and the benefits we can get from the mapping of our supply chain. Simulating different scenarios to improve process.