PURCHASING

Purchasing



Purchasing in local authority

Introduction

Local government has obligations to local communities. The most important obligation includes promoting local economic development. Local business should be able to compete for work alongside contractors from outside the area. Local authorities can promote the local economy in various ways. One of the way in which local authorities can promote the local economy is by maintaining profitable relationship with the suppliers and performing the function of purchasing. This paper revolves around the phenomenon of purchasing by local authority.

Purchasing From the Local Authority Perspective

Purchasing by local authorities represents around £50 billion of public expenditure (£6.9 billion in the North West of England). This is almost a third of the total £170 billion of annual expenditure in procurement in the UK. Delivery of services and impact of local authority on economy is notable. In today's environment local authority has to face many challenges to provide better public services. Local authorities find it difficult to create balance between the efficiency gains and better quality public service under strict financial control.

There are a number of advantages that one can get by practicing consortium-buying approach. The first and foremost advantage this type of buying practice allows is of cost saving. It reduces operation cost and makes the operation efficient and effective. This approach shows the prospect for the organisation to add new members or customers. It also improves the efficiency of the buying process continuously. This process fosters team culture within the organisation. In public organisation, to solve various issues related to legitimacy employees have to work closely with the jurisdiction to solve various issues. To solve these matters team members work together and closely. This enables them to develop team ethos. In consortium buying, an organisation can get the advantages of using the latest technology and approaches by consolidating services (Gelderman 2000, 26).

Relationship between the Purchaser and Supply Market for Services

A positive and profitable relationship between the purchaser and the supply market is of utmost importance for local authorities. If a firm is to achieve success in maintaining its customers it is important for the firm to maintain the relationship with the suppliers. It is vital for the local authority to have certain extent of influence on suppliers if the competitive advantage for the local authority relies on the network of suppliers (Ellegaard et al 2003, 347).

There should be a win-win relationship between supplier and purchaser. This sort of relationship works in a way that that addresses problems of both of suppliers and purchasers.

Different Models of Purchasing

Local authority can adopt different models to perform the task of purchasing. These different purchasing models are discussed below:

Centre-led-action network CLAN

CLAN is a purchasing model that suits the need of business unit and special characteristics of special goods and services. In CLAN approach employees who deal with the purchasing process deal with the key stakeholder. This model is good for the organisations that are under the control of local authorities (Stephen 2005, 22).

In the CLAN approach, the purchasing process takes place with ...