While sitting at lunch at an ISM (Institute for Supply Management) conference, there was a common theme in the conversations among the purchasing professionals at my table. It didn’t seem to matter what industry they represented, nor how large or small their organization, the one thing each person cited wanting more of was: resources.
We’ve all become accustomed to trying to do more with less and to reference an overused phrase: it’s become the “new normal.” But does it have to be? The interactions at my table mirrored the same feedback I’ve heard from confectionary companies over the years. Having a firm grasp on your company's most important spends is vital to its success, but what about all of the categories that seem next to impossible to manage? How do you know company standards for price, terms, quality and value-added services are always being met? With budgets being tight and resources often constrained, handling these areas proves to be a difficult undertaking.
But through many discussions with procurement professionals in the confectionary space, we’ve recognized three main ways group purchasing organizations (GPOs) can help them step up to this challenge.
1. Cost Reduction
You’ve heard the expression of striving for “1+1=3”and it can be achieved for members of buying groups. The premise of buying groups involves channeling more volume to fewer suppliers to drive cost out of the system. Simply put, more volume enables suppliers to do more for you, including reduce your costs. The key is to find a GPO that addresses enough of your spend categories to make it worth your while. If you choose the right GPO, as a member you’ll be able to better manage the majority of your spend categories, not just the strategic ones.
2. Quality and Consistency of Supply
One thing purchasing professionals don’t want from suppliers is surprises. Surprises from your vendors make you, to say the least, unpopular at work. Members tell us that quality and consistency of supply is as important as cost savings. Again, finding the right buying group is important, as it enables you to build quality and consistent depth of supplier partners across a broad spectrum of categories. The built-in supplier evaluation and audit systems that GPOs offer will make sure you stay popular at work.
3. Expanded Knowledge
A buyer’s days are already full enough with building supplier relationships, adjusting lead times based on moving production schedules, and ensuring parts arrive to meet quality and delivery parameters. Finding the time to learn more about procurement best practices, macro issues that may impact your business, how peers address certain issues, and the latest supplier product developments that could impact your business, is a daunting task. Tapping into a GPO provides a resource to easily access this knowledge gain, which benefits you and your company.
We’re fortunate to work with many different manufacturing sectors and it's apparent when we discover one that is a perfect match for a GPO. Confectionary manufacturers indeed check every box. They are one segment that can truly take advantage of all of the resources GPOs can provide.