Material costs remain unpredictable, supply chain disruptions continue to surface, and many manufacturers are still feeling the pressure of tight margins. As a result, companies are rethinking traditional purchasing strategies and exploring new ways to protect their bottom line. One strategy gaining attention is collaborative procurement. This approach encourages manufacturers to work together, sometimes even across industries or with competitors, to reduce costs and strengthen supply chain stability.
This article explores how procurement collaboration works, why it is becoming more common, and how solutions like Frontier ERP help support co-purchasing and shared procurement models.
What Is Collaborative Procurement?
Collaborative procurement, sometimes called procurement collaboration or co-purchasing, is when two or more companies work together to source materials or components. Instead of buying individually, companies combine their purchasing volume to negotiate better pricing, secure stronger supplier terms, and create a more reliable supply chain.
This collaboration can take several forms:
- Co-purchasing raw materials
- Joining buying groups or purchasing alliances
- Working with a Group Purchasing Organization (GPO)
- Sharing supplier contracts
- Coordinating long-term agreements with joint volume commitments
The goal is simple. When companies buy more together, they often pay less per unit and gain access to pricing and supplier capabilities that would be difficult to secure on their own.
Why Manufacturers Are Turning to Co-Purchasing
Material prices are one of the biggest challenges in manufacturing. The Cummings Group found that for Q4 2025, the Commodities Material Price Index, as reflected by the Producer Price Index (PPI) on FRED, showed a continued upward trend in the prices of key raw materials, driven by persistent supply chain constraints and global economic factors. These commodity fluctuations, combined with global supply chain instability, tariffs, and transportation delays, have pushed many companies to rethink how they source materials.
Procurement collaboration is not new, but it is gaining momentum as manufacturers look for reliable ways to control costs and improve supply chain resilience. Although exact participation statistics are hard to find, industry analysts confirm that more OEMs, large manufacturers, mid-market companies, and even small businesses are participating in co-purchasing arrangements.
Collaboration Models Manufacturers Are Using
OEM Partnerships
Many original equipment manufacturers work directly with suppliers to jointly source materials in bulk, then allocate costs among participating companies. The combined order volume helps them negotiate better terms and more stable supply lines.
Industry-Based Buying Consortia
Some companies form alliances with others in the same industry to address shared procurement challenges. These groups may focus on expensive or high-volume items like metals, resins, fasteners, or components that multiple competitors need.
Group Purchasing Organizations (GPOs)
GPOs collect the purchasing demand of many businesses and negotiate with suppliers on their behalf. This makes it possible for smaller companies to access volume-based discounts that they could not secure on their own. GPOs are common in healthcare but are steadily expanding into industrial supply chains.
Regional or Government-Led Initiatives
Governments and regional committees sometimes organize joint procurement efforts for critical materials. For example, the European Union has developed programs to jointly source important minerals needed for batteries and electronics. These models demonstrate how coordinated purchasing can improve cost control and reduce dependency on single-source suppliers.
Can Competitors Collaborate?
In many cases, yes. Collaborative procurement can occur between non-competing companies, but it can also occur between competitors who share the same material or component needs.
Competitors often collaborate on:
- Bulk raw materials
- Transportation and freight consolidation
- Shared supplier contracts
- Common industry components
Companies must consider legal and compliance requirements in line with Antitrust Laws, but as long as pricing, market allocation, and production decisions remain separate, co-purchasing itself is generally acceptable.
Cross-Industry Procurement Collaboration
Companies in completely different industries often use the same materials. This creates opportunities for cross-industry alliances that benefit both sides.
Examples include:
- Construction, cabinetry, and home improvement firms that all rely on lumber, panel goods, hardware, and adhesives
- Automotive and aerospace manufacturers sourcing similar metals or composites
- Furniture makers and retail fixture companies buying the same laminates, fasteners, or finishing materials
Cross-industry partnerships allow companies to increase purchasing volume without collaborating with direct competitors, reducing both risk and hesitation.
Real-World Examples
Construction: Builder Networks
Builders often join networks like CBUSA to pool their material demand. By combining orders for lumber, roofing supplies, drywall, and hardware, members benefit from significant pricing discounts and more predictable supply commitments.
General Manufacturing
Many manufacturers collaborate to purchase metals, plastic resins, textiles, or other high-volume materials by region. Some also consolidate shipments to reduce freight costs or partner on circular economy initiatives that reuse materials and reduce waste.
Automotive Parts Retailers
Automotive parts retailers sometimes participate in buying alliances or purchasing networks to secure better pricing on filters, water pumps, batteries, fluids, and electrical parts. This helps smaller retailers compete with large national chains and improves supply stability during periods of high demand or shortage.
Benefits of Procurement Collaboration
1. Cost Savings: Bulk purchasing reduces per-unit material costs and lowers transportation expenses. Companies also gain access to pricing tiers typically reserved for large national buyers.
2. Stronger Supplier Negotiation Leverage: Suppliers often offer better terms when faced with larger, combined order volumes. This includes lower pricing, improved service agreements, and better payment terms.
3. Improved Supply Chain Stability: Co-purchasing reduces the risk of running out of materials or facing unexpected price spikes. Companies also benefit from shared supply chain visibility and market information.
4. Access to New Suppliers: Joining a group often opens doors to international suppliers or specialized manufacturers that individual companies might not be able to reach.
5. More Predictable Procurement Planning: Collaborative procurement often leads to shared forecasting, improved demand planning, and better long-term visibility.
How Frontier ERP Supports Procurement Collaboration
Frontier ERP includes tools that make co-purchasing and procurement collaboration easier, more transparent, and more efficient.
- Supply Chain Management Visibility: Frontier provides real-time insight into material demand, supplier performance, open orders, and production needs. This visibility helps companies participate in co-procurement with confidence.
- Purchasing Features That Support Collaborative Procurement: Frontier allows users to manage joint purchase orders, track contract terms, compare supplier bids, and automatically allocate material costs across participating locations or business units.
- Inventory Management for Shared Materials: Frontier ERP offers multi-warehouse inventory visibility, accurate forecasting, and lot and batch tracking. These features support shared deliveries, coordinated replenishment, and compliance across multiple partners.
- Data Broker and API Integrations: Collaboration requires clean data movement. Frontier’s Data Broker and API options make it easy to exchange information with suppliers, portals, or third-party procurement systems, including GPO platforms.
Is Procurement Collaboration Worth It?
Collaborative procurement is becoming an important strategy for manufacturers looking to reduce costs, manage risk, and build a more resilient supply chain. Whether it happens through alliances, GPOs, or direct agreements with partners, co-purchasing helps companies access better pricing and more reliable material flow.
With the right tools in place, including Frontier ERP, manufacturers can confidently participate in co-procurement programs and use combined purchasing power to protect margins and strengthen their entire supply chain. To learn more, contact us today!
