Everyone wants to get the most bang for their buck, especially when it’s the company’s money. While every dollar may have the same inherent value, a dollar strategically spent can procure much more.
A child, for example, 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 maxes out when it comes to purchasing power.
Live up to your potential
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!
To get started, run 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 in which your company is spending, down to the candy in your snack drawer.
Once you have an idea of where money is going out the door, step back and ask your team two questions:
- What needs to stay for the company to reach our goals?
- Where can we make cuts?
Leaning out your company spend should filter what is essential for your company and may even reveal recurring spend with saving potential. That filtered list will be a baseline for your vendor requirements.
Research your options
The next step is to research who 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.
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 national pricing if you request it and qualify. Negotiation is an option to lower prices for your company.
Find a true partner
Joining a group purchasing organization (GPO) can be a great option to help you find suppliers and negotiate the lowest price. GPOs leverage the collective buying power of its members to obtain bulk discounts from suppliers and retailers. Pre-negotiated contracts are already in place which saves you money, time and effort.
Compared to a large Fortune 500 company, most organizations spend a small amount in regards to indirect spend. Chances are, you are also paying more for these items because your volume lower. By forming a partnership with a trusted GPO and increasing your own buying power, you can take advantage of larger discounts you wouldn't have been able to negotiate on your own without actually paying more.
Finally, it's important to 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.