Everyone wants to get the most bang for their buck, especially when it’s the company’s buck. While every dollar may have the same inherent value, a dollar strategically spent can procure much more.
For example, a child takes a dollar to a bakery and leaves with one cookie. Another child comes to the same bakery with a dollar and a two-for-one coupon and leaves with two cookies. The dollars’ inherent value was the same, but the strategy and resources doubled the takeaway worth.
The purpose of this blog post is to make sure your company leaves with two cookies when it comes to purchasing power.
No matter what industry you’re in, it takes money to make money. There are things you need to buy so that your company runs efficiently and effectively. If you are going to spend money regardless, you might as well have a strategy in play that will allow you to maximize that buying potential!
Start by running an inventory of your current spend. This can be a daunting process, but it’s necessary to see where your company’s starting point is. Honestly assess all the areas your company is spending, down to the candy in your candy dishes.
Once you have an idea of where money is going out the door, step back and ask your team two questions:
1.What needs to stay for the company to reach our goals?
2.Where can we make cuts?
Leaning out your company spend should filter what is essential for your company and may even reveal reoccurring spend with saving potential. That filtered list will be a baseline for your vendor requirements.
The next step is to research who out there offers what you need and what contract options are available for corporate purchasing.One approach is to plant yourself in front of a computer. If you are willing to spend a significant amount of time, you can manually search and email vendors based on available information from websites.
An alternative approach is to partner with a group purchasing organization (GPO) who has access to pre-negotiated contracts and programs for your spending needs with top quality vendors.
After you have found your vendors, you need to make sure you are getting the lowest available discount. Please understand that when you are buying corporately, you do not have to take pricing at face value. Many times vendors will offer group discounts for corporate partners or nationally pricing if you request it and qualify. Negotiation is an option to lower prices for your company.
If you need some handrails for how to negotiate prices with big suppliers, The Harvard Review wrote a helpful article with some negotiation tactics and examples.
An alternative option to negotiation is to increase your purchasing volume by combining your orders with other companies, as mentioned in the Harvard Review. This is called collective buying. Buying through a buying group or GPO ensures a greater discount on goods. However, the chance of having billions of dollars in indirect purchasing needs is very unlikely for most companies. This is where that partnership with a trusted GPO and building group buying power can again come in handy.
A GPO can combine your purchasing needs with the needs of thousands of other companies to secure a discount for the high volume purchasing, guaranteeing that low price without the hassle of negotiation and the potential loss of time.
Lastly, document and establish a strategic process for purchasing. Setting the standard for your company’s purchasing can ensure you continue to get the most for your required spend.
If you have any questions or need a partner in the procurement process, please reach out to one of our procurement experts at UNA Purchasing. We can help you become a two-cookie company!