Finding the best group buying organization for manufacturing
In recent years, group purchasing organizations (GPOs) have gained popularity for one big reason - cost savings. We understand that this is especially crucial for procurement teams at the moment, as they navigate unreliable supply chains and the increased costs of goods and services as a result.
What is a group purchasing organization?
Group purchasing organizations (GPOs) are entities that leverage the collective buying power of a group of businesses to negotiate discounts on products and services. Whether the group is made up of several companies within the same industry or various companies coming together to purchase similar products, the advantage remains the same. They partner with suppliers to provide their members with exclusive, discounted pricing on the products they need to run their businesses.
GPOs are commonly used in various industries, especially manufacturing, healthcare and agriculture, to purchase raw materials, supplies and equipment. GPOs can benefit enterprise manufacturing companies by helping them achieve cost savings, streamline procurement processes and gain access to a wider range of products and services.
Benefits for enterprise manufacturing companies
For enterprise manufacturing companies, GPOs can offer several benefits, including:
Cost savings: By leveraging the purchasing power of a group, enterprise manufacturing companies can achieve significant cost savings on raw materials, supplies and equipment.
Streamlined procurement processes: Some group buying platforms can help streamline the procurement process as well as putting the supply base in place, making it easier and more efficient for enterprise manufacturing companies to purchase the necessary supplies and equipment.
Access to a wider range of products and services: Through GPOs, enterprise manufacturing companies can gain access to a wider range of products and services, allowing them to source everything they need to run their operations more effectively.
How to find the best GPO for an enterprise manufacturing company
When looking for the best group purchasing organization for an enterprise manufacturing company, it's important to consider the following factors:
Industry expertise: One size doesn’t fit all. Look for a GPO that has expertise in serving the needs of large manufacturing companies, as they will be better equipped to understand your specific requirements and source the right products and services for your business.
Supplier network: Evaluate the GPO's supplier network to ensure that it includes reputable suppliers who can provide high-quality products at competitive prices and timely delivery.
Cost savings potential: Assess the GPO's track record in delivering cost savings to its members and compare the potential savings with your current procurement costs. Pay attention to how savings are being measured. “Discount off list price” isn’t the same as measuring savings against your last paid price.
Procurement support: Consider whether the GPO provides ongoing procurement support and resources such as daily transactional buying support, tail spend management, payment to the supplier, spend analytics and other services.
Although it’s a fairly simple purchasing concept, it’s amazing how many organizations make a conscious decision to go it alone or not put forth the effort to seek out opportunities in lower-value categories.
But what if you went beyond a group buying organization?
Source to pay services are another, value-add option
Spend management organizations such as DSSI go beyond the standard GPO. Our services don’t stop at strategic sourcing with an aggregated advantage, but rather provide the ongoing transactional support necessary to optimize the full source-to-pay process. DSSI becomes an extension of your sourcing, purchasing, payables and IT team.
After an initial competitive bidding process of your high-use items, we provide ongoing category management, including negotiating market and supplier price changes. We put a dedicated buying team in place, led by experienced purchasing managers, that handle new catalog requests and tail spend purchases through the RFQs and spot buys process. This team also assists with critical activities such as urgent orders, expediting and delivery follow up.
To optimize the P2P process, we work with your IT and operations teams to design and implement seamless transaction processing for transmitting POs, including building interfaces with your ERP and IM systems. DSSI then takes on PO transmission to the suppliers and provides standard, and even consolidated, invoicing to you in return, under standard payment terms.
We actively manage the supply base on your behalf while providing on-demand spend analytics and more to help you maximize savings and provide greater control and transparency over your costs.
Each organization has unique requirements in terms of supply base, ERP and IM systems, site-level services and more. DSSI’s holistic approach is built to be flexible and scale across hundreds of sites in North America and the EU.
Conclusion
If your manufacturing organization is looking for ways to save an average of 13-17% on MRO and other indirect materials, consider combining your spend with that of DSSI's customers, a group of billion-dollar organizations. Our cyclical bidding events are category-specific, supplier-agnostic and conducted using our industry-leading mass bidding tools that lock in pricing at an item level to ensure ongoing supplier commitment to the pricing agreement.
To understand what your organization's cost savings opportunity is, use our Dynamic Procurement spend analytic tool or contact us directly to discuss how your manufacturing organization can take advantage of this group buying opportunity - and drive greater efficiency and savings in your supply chain operations.