The idea of a buying group (also known as a collective purchasing plan) is still a newer concept when it comes to employee benefits, but has existed much longer for a plethora of industries with other applications.
The following is a more in depth description of what collective purchasing is and how it can benefit and empower people.
‘A cooperative purchasing model allows a group of buyers with a common interest to pool their buying power in order to negotiate more favorable pricing on goods and services. Cooperatives—also known as group purchasing organizations or purchasing consortia—are set up to aggregate purchasing volume from many different companies and increase the purchasing power from each individual.
Cooperative purchasing can be an important element of any organization’s procurement strategy by providing purchasing professionals with the opportunity to be proactive. It allows member organizations to aggregate volume of specific commodities, and in doing so, achieve better pricing than they could have on their own.
Think of it this way: you’re getting ready to place an order for a dozen animal cages. You call your local supplier and get a quote for 12 cages. You place the order and pay the rate for 12 animal cages. Now imagine you place the same order through a purchasing cooperative that has a contract with that same supplier. Only this time, the pricing you receive is based upon the potential spend of an entire membership that may be ordering through that same supplier. The saving opportunities are exponential.
Cooperative purchasing is a time-tested model that can make a significant contribution to its members’ bottom lines by lowering costs, reducing redundancy, and freeing up valuable resources for reallocation to other strategic initiatives. Cooperative contracts are only useful, however, if they deliver more than cost savings. The time and process efficiencies, knowledge, and expertise available through a cooperative can be priceless.
Ultimately, a company should utilize a cooperative that will act as a reliable business partner in helping to support its mission and achieve its fundamental goals.’ (source: alnmag.com)
Here at Palladium we can help ensure that your buying group is structured and protected in the best way. Click here to learn more, and let us earn your trust.