Why it is important to understand the difference between direct and indirect procurement.
Many small business owners do not realize what kind of power they wield. To utilize their purchasing power, business owners need to be able to track their spending on a monthly basis. Once they have a purchase history , they can renegotiate based on their volume.
Here are some recommendations for immediate purchasing power:
1). Chambers & Associations – Local chambers and member associations are a great resource for purchasing power. As a result of volume with an individual supplier, members are able to take advantage of preferred pricing. Though the chamber or association might not have the staff on site to handle a project like this, they can partner with a vendor or group purchasing organization where the chamber/association can also receive a rebate or revenue share as an added benefit.
2). Group Purchasing Organization – Procurement Concepts, is a Group Purchasing Organization (GPO) that combines the purchasing volume of their membership base to achieve extreme discounts. For example, Procurement Concepts partnered exclusively with Staples for office related products after going through a rigorous proposal process with the largest office related products vendors. Due to Procurement Concepts’ combined purchasing volume with Staples, members are able to save up to 83% off list price. In addition, Staples is able to increase their business by acquiring new customers. It truly is a win-win situation.
3). Shop the Buyer’s Market – Vendors are all dedicated to keeping customers loyal and active. If your cleaning supply vendor knows you are shopping your price around, they will likely hope to keep your business and match or beat any other offers. I highly recommend auditing your spending habits each quarter or bi-yearly so you can take advantage of market changes and developments.
These are just a few ways to take advantage of your purchasing power for a competitive advantage. Of course, keep in mind that relationships are extremely important and that quality of products and services can trump low prices. Remember, you get what you pay for.
Many small to mid-sized business owners don't have time to think about procurement. And, it makes sense... they are focusing on the product or service that they provide. So, when it comes time to purchase coffee, office supplies, business cards, or travel, they either run to the store or order online. Or, maybe an account rep contacted your company and put you on your own corporate account (but discounts are not extreme).
Procurement Concepts believes that small to mid-sized businesses should not spend more per item than the "big dogs." That is why we aggregate our members spend together to create purchasing power. We then select one vendor in each category (Staples, Vistaprint, etc). There are no costs to join, no minimum spend requirements, and no contracts to sign. All a small to mid-sized business owner needs to do is provide us with a little bit of information (name, phone, address, email) and we can provide them with usernames and passwords so they can take advantage of extreme discounts.
In addition, Vistaprint is offering a great promotion for new members. They are offering 50% off most items. Just go to our co-branded store Vistaprint and enter the code PROCUREMENT50 when you checkout.
Our goal is to help small businesses control costs. Take a look at our marketplace and feel free to enroll in any of our programs at no cost!
What do you think of when you think of procurement? If you are like many people, you think of cost savings and/or contract negotiations. But the new era of procurement has become more strategic in nature. Procurement professionals can not just look at old price and new price anymore. They need to understand the total cost of ownership.
At Procurement Concepts, we believe that you get what you pay for, especially in the professional services industry. Let's use law firms as an example. To simplify this, imagine your company is owed $1 million by a client who refuses to pay. You solicit bids from 3 law firms.
- Firm A: Proposes an hourly rate of $150/hour and estimates 150 hours ($22,500)
- Firm B: Proposes an hourly rate of $200/hour and estimates 200 hours ($40,000)
- Firm C: Proposes a $300/hour and estimates 250 hours ($75,000)
Before answering the question, we highly suggest looking at the probability of success and the reputation of the law firm. Ask the firm a few questions around performance and service levels. For example, based on historic data, what is the probability of recovering all $1 million? What other fees will we incur (mileage, copies, filing fees, etc)? Who will be working on the case (partner, associate or paralegal)? How can we be sure your firm won't bill more than the proposed hours?
What if firm A is able only able to collect $500,000 within the hours proposed? Then your company nets $477,500. If Firm C is able to collect all $1 million within the hours proposed, paying the highest price of $75,000 is definitely worth it. In our experience, many companies would just look at cost (and would have selected firm A).
In addition to costs, Procurement Concepts analyzes service levels, performance requirements, and success rates for our clients. Please let us know how we can help your company reduce costs while increasing performance!
Many small- and medium-sized companies and organizations that have joined Procurement Concepts are finding the management of the vendors and pricing to be the biggest reward from this free membership. Currently, Procurement Concepts offers memberships for savings with Staples, Priceline, Expensify, and Banc Certified Merchant Services, but our vendor management is not limited to these companies. We can negotiate with and reach out to any vendor your company has to deal with and because of our background in sourcing management; we are excited to take this hassle off the plate of your swamped managers.
The group buying model is beneficial for many reasons, but saving time and headaches was an unintentional added benefit discovered through our management of vendors and negotiation of contracts and pricing on behalf of all our members. Each member has their own reasons for using Procurement Concepts’ buying model, but the feedback about how easy it has been for their office managers has been the most consistent feedback we’ve received across all industries.
Every 3-5 months Procurement Concepts works with our vendors to improve our programs and benefit our members even more by creating more savings or adding SKUs to the discount list. Using technology to simplify the process has always been our goal and we continue to manage our vendors on this process to continue building technology based platforms and executing our goals for improved portals for the customer to use.
Give one of our programs a try today. It is completely free and the benefits of our programs will easily make an impact on your business practice.
One of the rewarding parts about having a diverse membership is that we get to help a variety of organizations. This includes non-profits and member organizations where every dollar saved can go towards their cause. Creating savings for a non-profit is one of the many satisfying benefits of our organization, but social responsibility should be something all companies take pride in. To put your stamp on a community and provide for the less fortunate should not just feel good, but feel necessary. Certainly this is just our opinion, but we have seen, over the years, many successful companies with a social responsibility side of their business plan often times as big as their marketing and operational portions.
A community is only as strong as its supporters and partnering with many new non-profits this year, PC is proud to acknowledge our growth into many new communities consisting of many wonderful organizations. All non-profits have budgets they need to manage, so by saving money through our discount programs, those budgets become more flexible and therefore they are able to accomplish more towards their missions without any extra money spent. This is the basic model of group buying working at its best. For those who support non-profits which could use the savings, please direct them to our website and we will sign them up for our free programs and do all we can to get them as many dollars saved as we can.
Have a happy Monday and thank you for supporting your communities and non-profit organizations everywhere!
People are constantly are looking for more time in the day to make more moneyincrease profitability. Every second a business owner wastes is dollars down the drain. When we launched our company, we decided to only offer programs that would save time as well as money. Our discounts are convenient to access and free to anyoneeveryone.
The value of time this day and age, is unmeasurable and whether someone lives in Illinois, New York, Kansas, or California, they are able to save time by joining a buying group like Procurement Concepts. Specifically designed for small and mid-sized businesses, PC has strong buying power already to negotiate pricing that benefits the smaller business owners resulting in extreme discounts. We help you extend that your dollar and through price analytics analytics and monthly reports, we provide a valuable assortment of information and resources for the average business owner.
Wouldn’t it be great if your office manager or administrator had more time to be more efficient around the office? By joining Procurement Concepts since they won’t be constantly shopping prices around to find the best price available for that upcoming trip or the necessary office supplies that you need. in your office? That’s the world we are have created trying to create and it will only get better as more companies join because as the savings will continue to grow.
Give us a holler and we are happy to answer any questions!
Procurement Concepts' model of consolidating client spend allows for larger discounts. Having the opportunity to consolidate the entire spend into one negotiable number allows Procurement Concepts to act like a large company on behalf of the small and mid-sized members.
There are many examples of other ways consolidation works in the real world, so we took those models (i.e. splitting the dinner check five ways rather than two, collecting all the neighborhood cans to take to the recycling center rather than only your own) and we applied them to our organization. Staples has partnered with Procurement Concepts to bring these discounts to every customer who joins our membership.
By having a free membership, every member has incentive to recommend our programs because the larger we get, the better the discounts will get.
Discounts on office supplies, travel, and credit card processing is just the start. There are many other programs that can be instituted within the next few months, so keep an eye out!