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Joint procurement of complex products: actual price savings, perceived nonmonetary advantages, disadvantages and impediments

Pricivel Carrera (Technical Medical Center, University of Twente, Enschede, The Netherlands)
Sükran Katik (Department of Health Technology and Services Research, University of Twente, Enschede, The Netherlands)
Fredo Schotanus (Department of Economics, Utrecht University, Utrecht, The Netherlands)

Journal of Public Procurement

ISSN: 1535-0118

Article publication date: 14 June 2021

Issue publication date: 8 July 2021

127

Abstract

Purpose

Little is known about actual price savings generated by cooperative purchasing and nonmonetary advantages, disadvantages and impediments for the cooperative purchasing of complex or high-risk purchases. This paper aims to explore these topics by studying joint purchasing of pacemakers in The Netherlands.

Design/methodology/approach

To evaluate the magnitude of price savings, data on individual and collective prices for 18 hospitals was analyzed. In addition, 16 interviews were carried out with representatives of hospitals that participated and did not participate in the joint purchase.

Findings

Based on quantitative and qualitative data, the authors found large differences in price savings which can be attributed to scale, but mostly to knowledge of the group and renewing a contract in a technology-driven and developing market. Limited product choice – because of an organization joining a cooperative – constrained the attractiveness of cooperative purchasing, as end users may have specific product preferences. The consideration of preferences of end users is important toward successful joint purchasing of complex items.

Social implications

The authors argue that price savings because of scale are about 7% for smaller organizations and 4% for larger organizations. For smaller organizations with low specific knowledge and capacity for buying complex products, economies of process and knowledge are more important reasons for joining a purchasing group than scale. For large organizations with high specific knowledge and capacity, scale is the most important reason.

Originality/value

This study combined qualitative and quantitative perspectives, using actual spend data, to investigate cooperative purchasing of high-risk or complex purchases. On the one hand, more insight into the magnitude and reasons for price savings is provided than in earlier literature. On the other hand, more insight is given in qualitative reasons for joining a group and challenges for cooperative purchasing of complex items.

Keywords

Acknowledgements

The study was funded by GPO Intrakoop. The study was conducted independently of the study funder. There was no sponsor involvement in the design; collection, analysis, and interpretation of the data; in writing of the report; or in the decision to submit for publication. The funder was allowed, nonetheless, to review an earlier version of this manuscript and correct for factual mistakes.

Citation

Carrera, P., Katik, S. and Schotanus, F. (2021), "Joint procurement of complex products: actual price savings, perceived nonmonetary advantages, disadvantages and impediments", Journal of Public Procurement, Vol. 21 No. 2, pp. 167-182. https://doi.org/10.1108/JOPP-07-2020-0057

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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