Collaborative buying is not new to the workplace supplies channel – resellers doing this through buying groups have a long and successful history. However, a growing number are exploring informal collaborative sourcing, working together to pool their volume to deliver better commercial results. The aim is straightforward: move closer to source, unlock better pricing and gain more oversight of the supply chain. That said, the upsides extend far beyond cost.
Currently, global and UK supply chain disruption is squeezing margins. This is forcing resellers to address control and competitiveness in core categories. As a result, they are increasingly seeing informal partnerships as a viable solution.
Why do it?
The primary benefit is access to pricing that resellers cannot achieve on their own. The ultimate aim is moving up the supply chain and closer to the manufacturer. However, the combined volume can deliver gains from opening up a new source or a more efficient logistics solution, or simply crossing an existing supplier pricing threshold. The most successful collaborations treat the cost price as the start point, not the end, while secondary benefits should not be underestimated.
Collaboration shares some of the key activities and risks, such as stock commitment, freight, buying resources, compliance costs and even artwork costs. Working together also gives greater control over the supply chain and availability, which is critical to business performance. Finally, a partnership creates broader and deeper procurement intelligence, adding value to product development and sales execution.
Where do you start?
The best – and easiest – start point is an existing relationship based on mutual trust and common ground. However, once you start, don’t rely on the past to get you through the challenges ahead. Here are five steps to take you through the journey from idea to reality:
- Create strategic intent and agreement.
- Establish trust and transparency.
- Ensure operational compatibility.
- Agree governance and decision-making.
- Document a clear commercial framework.
The resellers that progress through them shape a working relationship that is resilient and scalable, and that consistently delivers results.
1. Strategic intent and agreement
Early alignment is essential. Senior leaders must agree on objectives, approach and attitude to risk. The objectives are relatively straightforward: better pricing, wider range and supply resilience. The approach can be trickier and requires honesty: how each business values service and price; how it treats suppliers; where it compromises; and what the commercial red lines are.
Risk appetite also matters. Are both parties comfortable with new sources, global sources, longer contracts or larger commitments? Once agreement is found, go deeper.
2. Trust and transparency
You’ve done each other favours in the past, but now you intend to make joint financial commitments. It is important that senior figures set the working relationship style between teams and use rules to support that common approach. Establish a positive culture early, as existing teams can sometimes see threats in pooling data and divesting some control.
Consider the communication rules around speaking to suppliers between both businesses and how decisions are signed off. This provides internal reassurance. Be explicit about who has access to the respective organisation’s data, sign NDAs and exchange volume and pricing information.
3. Operational compatibility
Operational incompatibility is where most joint ventures fail, so it must be tackled from the outset. Key questions to focus on include:
- Do you run similar logistics platforms
- Can you handle the same types of deliveries (pallets, full trucks, containers)?
- Do you have conflicting restrictions (pallet sizesand heights or barcoding)?
- Do you have the capacity to commit to the project?
- What will be the solutions and costs for inter-company logistics?
- Can you align product specifications (pack sizes, quality level, packaging, key features and compliance)?
This validation process goes a long way towards mitigating risk when you start buying.
4. Governance and decision-making
It is best practice not to rush this part of building the relationship in a race for a financial benefit. Any tie-ups will have hiccups, but governance makes them manageable. Focus on role allocation (tender lead, QA lead), decision-making rules, the escalation process and exit conditions before you need to solve them.
5. Commercial framework
With common alignment, operational capability and a shared approach, the commercial framework is where collaboration meets money. This needs to be made clear at the start, along with how it can evolve and change over time.
A critical decision is contract ownership with the supplier and how that is mirrored by the other party. Decide how contract risk should be shared, including how pro forma payments, faulty stock, third-party payments (logistics), insurance, demurrage and failed deliveries should be addressed. The mechanism for operational cost allocation should be documented and review dates set. A well-designed framework will protect both parties and support a lasting alliance.
Ready to go
Now it is time to prove that the model works and deliver the benefits:
- Choose a pilot category – ideally, high-volume, low-risk and easy to standardise.
- Continue to review the assumptions against reality.
- Keep a focus on the culture and communication.
- Track performance across savings, service and operations metrics.
A successful pilot builds confidence, yields lessons and creates the ability to scale. Informal collaboration isn’t for every reseller and it takes commitment to sustain the benefits over time. However, it can significantly change your competitive position in a category. Therefore, start small, build capability and focus on creating mutual advantage. Done well, it enables independent dealers to create leverage, enhance competitiveness and win business that they couldn’t have won alone.
Simon McLoughlin is Director at B2B Product Consultancy
