Horizontal collaboration in purchasing: A successful case from small and medium enterprises (SMEs)

The idea of collaboration instead of competition among business enterprises in a same level has been growing rapidly. Small and medium sized enterprises as well as large ones are in a search to change their relationships with suppliers. Although there is plenty of literature on the vertical relationship between supplier and customer, fresh and comprehensive academic literature is very scare in the debate of horizontal collaboration among competitors. In this context, the implementation of inter-firm collaboration and networks is accelerating among small firms. Group purchasing also known as horizontal collaboration in purchasing is the most common use inter-firm collaboration among small and medium sized enterprises (SMEs) in which the firms join a strategic alliance to gain bargaining power over suppliers. In the first stage, the paper presents a brief overview on the literature of group purchasing, and in the next step a case of horizontal collaboration in purchasing among a group of food SMEs will be discussed. During the methodology progress, data was collected through quantitative questionnaires through direct contact with the SME firms for the pre-implementation time period and the purchasing alliance for the after implementation. Data measurement was done to evaluate the implementation effects of purchasing alliance on both cost effectiveness and lead time aspects. The results illustrate a significant decrease on both purchasing price and delivery time from suppliers.