When It Is Necessary or Not Necessary to Start Horizontal Purchasing Collaboration in Developing Countries: The Case for Uganda Public Procurement Units
Muhwezi, Moses, Journal of Global Business Issues
PURPOSE OF THE PAPER
The paper is part of the PhD project on horizontal collaborative purchasing in developing countries, and particularly in Uganda.
There is no doubt about the contribution of collaboration to the performance of organizations. The practice has been successful in most developed countries.
However, this significant performance is less for the developing countries, especially Uganda. Besides, the procurement discipline is relatively newer in developing countries than the developed ones, yet it contributes more to the economies. Much as the concept of collaboration is well grounded in other disciplines, there is need to tailor it to procurement, which after all saves more costs for the organization.
This paper recognizes the fact that whereas collaboration has been appreciated as one of the strategies to achieve organizational objectives, and whereas the numerous successes have been witnessed, there are failures that must be deliberately investigated. The paper recognizes causes of collaboration failure as being part of the process and operations of collaboration itself, as well as being associated with the starting phase.
There is relatively enough literature on conditions necessary to start collaboration in the developed countries, which may not necessarily be similar to the case with developing counties. This paper will therefore make an analysis on when to start or not to start a horizontal purchasing collaboration in the developing countries, with particular emphasis to Uganda.
Collaboration cuts across several disciplines. Therefore several literature sources will be considered to get an exhaustive view of the subject. These will include; social theory, networking theory, cooperative theory, alliance theory, transaction cost theory and resource based theory.
Not enough literature has been documented about purchasing. Yet purchasing has a big potential for saving costs for the organization. Most of the constructs used are borrowed from the other disciplines like sociology, marketing, finance, accounting, production etc. These concepts wouldn't be exactly used in the same way when transferred to a different discipline.
The study will identify why some collaborations fail to start, or to be sustained, from the perspective of when it is relevant or not relevant to collaborate, rather than associating the failures with the situations that arise after collaboration has started.
Leaders of purchasing units will be able to appreciate that not all circumstances are right for them to get into collaboration. This will enable them avoid collaboration failures and associated negativities. They will appreciate that first knowing when to or not to collaborate can help them avoid rushing into sub optimal decisions to collaborate.
Horizontal Purchasing Collaboration is an arrangement where two or more independent organizations that join together, either formally of informally, or through an independent third party, for the purpose of combining their individual requirements for purchased materials, services and capital goods to leverage more value added pricing, service and technology from their external suppliers than could be obtained if each firm purchased goods and services alone (Hendrick, 2003). More benefits of collaboration have been well documented in literature; including accurate information, lowered procurement costs, improved asset and capacity utilization, elimination of barriers caused by distance and time, efficient use of scarce human resources in purchasing, increased reliability, and increased ownership of operational policies. Besides, the ever-changing business context (like internationalization, developments in Information and Communication Technology, government regulation and increased public attention to the way business is done) makes the need for collaboration real. …