The limitations of the strategy of systematic distrust often make a strategy of cooperation more advantageous.

A strategy of cooperation is followed in tendering and in contracts by mutual agreement when what is sought are transactions at reasonable prices over a period of several years. The purchaser places a limited confidence in the producers, and verifies that they do not abuse this trust. A certain stability in relations exists between buyer and seller. The list of accepted suppliers is restricted to those known for their good reputation.

If trust is forfeited, the sanction for producers must exceed the gain they have achieved through abuse, such as a boycott of several years. Informing producers of this rule encourages them not to forfeit the trust of buyers. Relations between suppliers and buyers are subject to revision.

Because the aim is to obtain satisfactory transactions, buyers do not need to check continually for the lowest prices. However, buyers need to ensure that suppliers do not abuse the trust placed in them. This can be done by occasionally inviting tenders from other suppliers and by exchanging price information with other purchasers. Above all, buyers should assess suppliers’ approach to settlement of problems.

Table 7. Effect of procurement strategy on indexed price of 47 drugs in six African countries

Source: Frères des Hommes (14)

A refusal to examine complaints or questions immediately results in a complete loss of confidence. The strategy of cooperation may degenerate into systematic distrust if the buyer does not trust suppliers, or into blind confidence if the buyer does not check whether trust is being abused.

The strategy of cooperation has two levels: establishing relations, and making these relations work. Because the cost of making cooperative relations work is very much lower than the cost of systematically searching for the best bargain, this strategy is often considered the most effective. Achieving cooperation requires goodwill, built gradually through experience, on the part of both sellers and buyers.

Table 7 compares the retail prices of drugs purchased by each of the three strategies (14). The differences in price index arise in part from different systems of taxes and distribution margins but they are essentially due to the strategies of procurement.