What to Do When You Have Limited Buying Power
By Anna Duin | August 19, 2019
Have you ever tried buying a nice car from a dealership? You’re fully aware that you’re overpaying, you know the markup is immense, and they don’t really need your business. Even if you stick to your guns and try to negotiate, you’re limited. Unless they’re desperate to get rid of the vehicle, you only have so much power.
That’s what it’s like when medium-sized businesses try to get a good discount from a top tier supplier.
As a procurement professional, you may have also struggled with the following scenarios:
- You don’t have enough volume in a particular category to get the discounts you want
- You’re managing a category you’re not an expert in
- You can’t get your selected suppliers to play ball
- Your RFP/RFQ goes ignored
- You want below-industry-rate increases and inflation
Whether it’s not being able to get a raise or an indirect spend discount, you know that feeling of helplessness. Here’s what do when you have limited buying power.
The plight of the mid-sized business
Maybe you’ve approached a big dog supplier and tried to get an agreement – only to be dismissed. On the other hand, perhaps you haven’t even had the conversation yet because you’re afraid of being laughed out the door.
You could also be juggling multiple providers within a particular category. If your team travels a lot, for example, you don’t have time to negotiate a corporate hotel agreement with each place you stay. Even if you did, you wouldn’t have enough volume with each hotel chain to guarantee significant savings.
Whatever the case, for most procurement professionals, there comes a time when you need more buying power.
Buying power is especially needed if you’re managing several indirect spend categories like shipping, MRO & JanSan, travel, or office supplies. Because you’re not necessarily an expert in each category, the lack of buying power only makes your job more complicated and overwhelming.
It’s the plight of the mid-sized company. You’re big enough to be scaling and have growing procurement needs, but you don’t have a fully developed procurement team in place yet. The more your business grows, the more your costs increase, but you don’t have the contract negotiation power of a Fortune 500 company.
In other words, you’re expected to save more, but you don’t have a lot of options for making it happen. Sound about right? Don’t panic. Help may be closer than you think.
How GPOs increase your buying power
For categories where you want to decrease spend, but you have few resources, a Group Purchasing Organization (GPO) could be a perfect fit.
Since most businesses need limited indirect spend supplies, you end up paying more because you don’t qualify for bulk discounts. When you join a group of other similar buyers, you create group buying power. The GPO then uses this membership base to negotiate volume-based discounts with their suppliers.
Una members, for example, spend a couple of million dollars on office supplies alone. Because of this volume of spend, top suppliers like Office Depot give our members deep discounts on the items they’re buying, which equates to savings our members could not achieve on their own. (See our most popular suppliers here.)
Working with a GPO like Una is a risk-free, no-cost way to increase your savings.
Download our free whitepaper: The Complete Guide to Group Purchasing
Benefits of partnering with a GPO
Increased buying power is a definite perk but other benefits of working with a group purchasing organization include:
- Increased savings in multiple categories – Una saves companies an average of 22% per year.
- Access exclusive contracts that aren’t available to the general business community.
- The ability to leverage pre-negotiated agreements that you wouldn’t be able to obtain on your own.
- Increased supplier accountability. Group purchasing organizations help monitor supplier partners and ensure they remain compliant.
- Reduced workload – since GPOs negotiate the agreements, you’re freed up to focus on more complex categories and contracts.
- Access to top-notch suppliers. You’ll finally be able to work with your industry’s best.
- Work with category specialists who will provide the expertise you need, and help you make the most of your contracts.
- Better customer service. GPOs help mediate conflicts with suppliers and make sure you get what you need
Simply put, working with a group purchasing organization helps your business scale and grow.
If you want better contracts, with less work, we can help. Una is a free buying solution that provides billions in purchasing power, and a vast portfolio of contracts. You’ll never pay admin fees, and you can pick which suppliers you want a la carte. You’re not required to use any agreements, and you can cancel any time.
Ready to get started? Contact us to learn more.