Strength in numbers: collaborative procurement and competitiveness of craft breweries

Abstract

Purpose This article aims to investigate collaborative procurement as a sourcing strategy amongst competing small enterprises in an effort to reduce their material supply costs through increased efficiencies, bargaining power and economies of scale. Design/methodology/approach A case study approach is applied to a network of breweries that are regionally clustered. Interview data from producers, suppliers and industry experts is inductively interpreted to understand the viability, organisational impact and benefits/limitations of joint procurement activities. Findings The craft brewing industry follows a market place strategy of differentiation to achieve competitive advantage. This has supply chain implications that promote raw material diversity, which is in conflict with standardisation – a necessary factor for collective buying. Competition impacts information sharing and governance mechanism, while the structural factors of size asymmetry along and across the supply chain influence returns. These issues impact the potential economic benefits of collaborative procurement. Research limitations/implications The research propositions have been developed in a specific industry but are generalisable to other companies with a differentiation strategy, especially in the consumer packaged goods sector. Practical implications Enabling conditions and constraints are captured in a framework and capability matrix, which can be used by practitioners to assess industry and product feasibility for collaborative procurement. Originality/value Previous studies of collaborative procurement have been in the public sector amongst large organisations. This work focusses on coopetition in the context of small businesses to identify the viability and cost-benefit of this strategy.