Prime Advantage Blog

Suppliers Alleyoop Rebates to Procurement Teams for a Slam Dunk

Mike McDonald on Aug 20, 2015 9:00:00 AM

What do the greatest teams in NBA history and the top procurement organizations have in common? Synchronization. How in the world does this relate to rebates? Dribble up the court with me for a minute and I'll explain.

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For those of us who remember, the Lakers of the 80s had a roster of talent the NBA hadn’t seen before, although Celtic fans might disagree. While there’s no denying that Magic Johnson, Kareem Abdul-Jabbar, James Worthy and Byron Scott were elite players, it was their offensive synchronization -- simultaneous action towards an outcome -- that won the Lakers titles. “Showtime” was a fast-paced style of basketball, described as a mix of no-look passes off the fast break, pinpoint alleyoops from half-court, spinning feeds and overhand bullet passes under the basket through triple teams. Each player had a role in that system, and it was virtually unstoppable.  

The same could be said of the Chicago Bulls in the 1990s. Once Phil Jackson and Tex Winter implemented the triangle offense, Michael Jordan, Scottie Pippen, and the crew eventually became arguably the best team ever to take the court. The offense was built on creating good spacing between players that allowed each one to pass to four teammates. Every pass and cut had a purpose, and every play was dictated by the defense. The combination of talent and a synchronized offensive system was overpowering for the completion.

So how does this walk down NBA memory lane relate to the world of procurement and volume-based rebates? What made the Lakers and Bulls great is no different than what makes a great procurement team. It’s important to surround yourself with the right talent, including selecting the necessary role players. But personnel is only one piece of the puzzle. Putting together a structure that allows you and your vendor base to mutually benefit from a relationship is the “Showtime”, while your supply chain's adaptability is the Triangle offense that makes the whole system work.

Interested in giving your supply partners incentive to drive down your costs? In our world, we put together volume-based rebate programs with our Endorsed Suppliers, and our Membership has access to those programs. It’s important to note that when we’re crafting these programs with Suppliers, part of that conversation addresses what they can afford to give and at what volume levels. If you view a supplier as a true partner, as we do, giving them an economic reason (more volume) to justify deeper savings (higher rebates) enables everybody to profit from the relationship.

There’s only so much margin in the supply chain, and when a procurement organization and suppliers drive cost out of that chain in a collaborative effort, all of a sudden they’re as synchronized as the most dominant teams of any kind in history.

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Topics: Procurement

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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