Prime Advantage Blog

3 Ways Truck Equipment Manufacturers Benefit from GPOs

Mike McDonald on Jan 12, 2016 7:00:00 AM

Location.  Location.  Location. You’ve probably heard this phrase a few times when talking about why a restaurant, gas station, or video store (ahem, I’m dating myself) didn’t make it. And it’s true. In the world of retail, excluding the internet, where you are matters a lot. So what does this have to do with why GPOs make sense for truck equipment manufacturers? Well, because GPOs can boast a similarly easy-to-remember and spot-on mantra: Resources. Resources. Resources.

Truck-equipment-manufacturer

In trying to do more with less while enduring shrinking budgets, purchasing departments at truck equipment manufacturers are being squeezed. Having command of key strategic spends is imperative, but what about all the categories you can’t truly manage? How do you know parameters such as price, terms, quality and value-added services, are being met? With unlimited budgets and resources, this wouldn’t be an issue. But, that’s not the world we’re living in.

Through much interaction with purchasing professionals who manufacture truck body equipment, we’ve identified three main reasons group purchasing organizations (GPOs) serve as the ideal resource:

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 aggregating 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 cost. 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 organization, as a member you’ll be able to better manage the majority of your spend categories, not just the strategic spends.

2. Consistency of Supply

Very few people like surprises at work, especially procurement professionals at manufacturing firms. Surprises from your vendors make you, well, unpopular. Members tell us that quality and consistency of supply is as important as cost savings. Again, finding the right buying group is key, 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 next to impossible. 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 every now and then we run across one that is custom-built for a GPO, pun intended.  Truck equipment manufacturers fit that bill. And if you ever forget why, just remember, when it comes to GPOs, it’s all about: Resources. Resources. Resources.

Truck Manufacturer interested in a Group Purchasing Organization (GPO)

Topics: Buying Groups and Group Purchasing Organizations

Mike McDonald

Posted by Mike McDonald

Mike is the Executive Vice President of Business Development for Prime Advantage, a Chicago based Group Purchasing Organization for mid-market manufacturers. Responsibilities include managing business development, marketing, and the GPO's Healthcare Cost Containment program. He’s been a featured speaker, published author, and recognized award winner within the supply chain community.

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