Collaboration Strategy Using Pooled Purchasing Model

Collaboration, rather than competition, is becoming increasingly well-known among organizations of similar size. This paper addresses the modeling strategies in purchasing collaboration or pooled purchasing using Common Replenishment Epoch (CRE) for multi-suppliers and multi-buyers. The approach involves integrating five buyers through a third party, utilizing purchasing volume and information sharing. The numerical study revealed that collaboration resulted in a 14% reduction in total operational costs compared to prior collaboration. Potential contribution of this study is to present an overview of horizontal collaboration in pooled purchasing using quantitative methods to minimize the purchasing cost and optimize replenishment time. However, while the benefits of pooled purchasing are obvious, there are also challenges and limitations to negotiate.