How to Manage Risk Using a Group Purchasing Organization
A play-by-play for mitigating risk within your procurement function and the wider organization by utilizing the power of group purchasing.
Manage Risk Using a Group Purchasing Organization
Procurement and supply chains carry risk for an organization, ranging from spiraling costs to reputational, operational, and compliance risks. In today’s uncertain economic environment, it only takes one poor decision to place an organization in a dire position. Instead of seeing procurement as a source of risk, however, we prefer to see the function as protectors against risk.
Procurement heroes are experts at identifying and mitigating sources of risk, and what’s more, they’re well-equipped to do so. One of the risk-busting weapons at procurement’s disposal is their ability to join a group purchasing organization (GPO).
GPOs can help mitigate risk by providing their members with access to vetted suppliers who have been thoroughly screened for quality and reliability. In turn, members can be confident they’re getting high-quality products and services from trustworthy, diversified vendors. Additionally, GPOs can leverage massive bargaining power when negotiating with suppliers, which can help to secure better prices and terms for their members. This can help to mitigate the risk of overpaying for goods and services.
By pooling their resources and buying power, members of a GPO can often achieve economies of scale that would be difficult or impossible to achieve on their own. This can help to lower costs and increase efficiency, which can ultimately reduce the risk of financial loss.
Una Can Help
The right GPO partner won’t just respond to the effects of risk. Your group purchasing organization should proactively play a strategic role in procurement planning to mitigate risk and ensure success for their members.
In other words, your GPO should find ways to reduce the likelihood of a risk event taking place, and if it does, have strategies in place to help reduce its impacts on your business.
Una’s strategy for mitigating risks includes taking the time to identify the true potential threats facing your organization and establishing a course of action to minimize any impact those risks may have. Our team continuously monitors our members’ spending to identify other opportunities to diversify the supply chain and circumvent any new challenges that may arise.
By partnering with a GPO like Una, organizations are able to achieve increased cost savings, reduce procurement and supply chain risks, and formulate plan for procurement success.
- An in-depth examination of the risks impacting procurement and supply chains
- Tips for understanding and mitigating those risks
- How GPOs can be an effective tool for reducing procurement and supply chain risks
- An inside look at Una’s process for mitigating risks for our members
How to Mitigate Risk in Procurement & Supply Chain
No matter what sort of risk your organization is facing, the following strategies will help lower their impact.
While consolidating suppliers can result in immediate cost savings, it also poses a risk of sourcing all critical goods or services from a single supplier. Diversifying the supply chain can mitigate this risk by having alternative suppliers, ensuring that the organization can function even if the primary supplier is unable to fulfill their obligations due to financial stress.
Develop contingency plans
To prepare for any potential disruptions, procurement can develop contingency plans for critical goods or services. This may involve shifting to a Just-in-Case supply chain model, creating a stock buffer, and identifying alternative suppliers.
Cost-saving initiatives can also be explored without sacrificing quality, such as redesigning processes to eliminate waste and leveraging money-saving technology.
Build strong relationships
Working collaboratively with suppliers and fostering strong relationships can help minimize disruptions and ensure a reliable supply chain, and supplier risk can be monitored by tracking financial health and analyzing the impact of economic conditions.
The Una Difference
By joining Una, businesses can leverage the collective purchasing power of the group to negotiate better deals with suppliers. This will help reduce costs and improve the financial stability of your organization – ultimately creating a financial buffer against potential risk impacts
Una can also help mitigate risk by diversifying the supply chain. By pooling resources with other businesses, you can access a wider range of suppliers – that have already been vetted and held to high standards – and reduce your dependence on any one supplier.
This can help ensure a reliable supply chain and minimize disruptions in the event of a recession or other economic challenges.
Download a copy of the full playbook to learn more.