Impact on Small to Medium Businesses

January 3, 2022

Frederique Rammeloo

 

Collaboration or consortium buying is believed to be one of the most powerful concepts in many areas of business.  Often you may see this as a collaboration in sales.  This is a regular topic at events especially a subject discussed in small to medium businesses, sometimes female or minority owned, all trying to identify ways to grow organically.   Shared exposure is a sensible and cost effective approach that some of these businesses excel at but other businesses can’t quite seem to follow the roadmap to success.   While working with the right parties can create growth, it is surprising that so few organizations have the same thought process when it comes to procuring their products and services and managing their costs.   A collaboration in the procurement space can be incredibly powerful and cost effective.

 

Since the 80’s the concept of collaborative or consortium buying has been taught to procurement professionals.   The concept is incredibly exciting and the opportunities to gain more volume and more impact seems like it should have a fundamental place in every procurement department.   However, there are several stumbling blocks that must be considered and resolved before this can be truly successful and considered as a cost savings solution.

 

Stumbling blocks to consider:

 

  • Obtaining buy in from management
  • Identifying the categories to focus on
  • Identifying the key stakeholders
  • Obtaining the specs required from each stakeholder and department
  • Identifying any personal vendor relationships that should be considered
  • Concept of losing negotiating power

 

 

Collaboration In Action

 

In the following scenario you will learn from a past experience how the collaboration project was approached, the stumbling blocks that were overcome and the positive results that were attained.

 

Introducing the concept to your employer can be very simple with requesting a project for as little as one category.   Office supplies is a simple, non critical category that most often is a very meaningful spend.   Initially in this scenario, there was a lukewarm response from the management team.  Where collaborating in sales was seen as a no-brainer, trying to apply the same concept to the purchasing of office supplies came with a few stumbling blocks.   Some of the pushback was very sensible and each had to be overcome to move the project forward.

 

In our project the initial issue of someone else potentially negotiating on the behalf of our organization was seen as a loss of control.   To assuage the fear of the management team, we promoted the concept of collaborating with four (4) companies, and we were allowed to choose four (4) categories.  With this concept, each of the four (4) companies was allowed to choose a category that they would be responsible for negotiating on behalf of and this kept the balance for each company doing their part and being involved.  The categories chosen, in addition to office supplies was cleaning products, electricity and telephony.

 

The initial stumbling block of obtaining the buy in from management and deciding on the categories to include were successfully managed and the next task was to get the stakeholders involved.  The procurement team was on board.   After all, it would be less work for each person, and there would be a bigger impact with cost savings and better costs through combining spends.  Quickly we arrived at the one area that caused a slow down on the project, – agreeing on specs for simple things like core lists on office supplies or agreeing on which type of cleaning products to procure.  Each of the cost categories became incredibly complicated to define as more stakeholders became involved, many of which were never involved before the project began.

 

Once the internal stakeholders were tamed and specs defined, the next stumbling block took over the project – the Suppliers.  Many Suppliers fought the process and did not want to participate, some even lobbying stakeholders to undermine the project.   Some stakeholders were concerned that their favorite Supplier was going to be forced out or not be happy with the end result causing unnecessary issues for the project.  Fortunately some of the Suppliers quickly understood the opportunity.

 

Key Takeaway

 

As projects of this nature expand over the years, and a better understanding of the challenges that will be encountered with each is resolved, the end results of each project get progressively better.   Managing the learning curves means a successful cost savings project.

 

Here are a few of the Learning Curves

 

  1. Finding Companies to collaborate – this is not as easy as it sounds and you will need a massive network and colleagues that are open to the concept of collaboration and consortium buying.
  2. Obtaining Buy in – this really depends on the organization you work for and can largely depend on the size of your procurement team. The larger the company, the better suited they are to have all of the in-house resources needed to do this internally.
  3. The small to medium companies had fabulous results when collaborating or consortium buying and was willing to try something new to create phenomenal results.
  4. Once the stakeholders and upper management saw the positive results, the appetite for more collaboration grew.

 

 

Most small to medium businesses will not have experts for buying products and services like big businesses have, so they do not get the access to the knowledge base and innovation.   For those reasons, time, volume and access to knowledge and innovation should be a key driver businesses to collaborate.   Every penny counts towards profitability and competitiveness and better customer experience through offering the right propositions where third parties are involved.

 

BNDL provides the experience and power of a large organizations procurement team without having to have the procurement team in-house.   The deals have been made with vetted Suppliers that get the concept of collaborative or consortium buying.   This allows your business to buy collaboratively, using an experienced team to do the hard work for you.

 

With BNDL, your online shopping experience is made easier because of the automated process with a Supplier Ecosystem that matches your business service or product needs with the best cost.   This will allow you and your team to focus on your core business while not having to worry about cost and knowing you get access to collaboration without having to spend time on developing relationships and running complex processes.

 

Sign up at www.BNDLbuy.com and you will have access to great products and services at competitive pricing. So you can boost your profit or reinvest the money you do not spend paying premium pricing.

 

Collaboration is key, and now, it does not have to be hard or time consuming either!