Leveraging your buying power with suppliers is an important skill to know how to utilize. Your practice can yield a huge cost savings in supplies by being part of a larger group in the industry; Cost of Goods Sold also directly impacts the profitability of a practice.
Utilizing this buying power enables the practice to create strength in numbers and the benefits create other opportunities for redirecting saving into other programs, or strategic initiatives.
What is a purchasing consortium?
Defined, a purchasing consortium “Consists of two or more independent organizations that join together, either formally or informally, or through an independent third party, for the purpose of combining their individual requirements for purchased materials, services, and capital goods. They leverage more value-added pricing, service, and technology from their external suppliers than could be obtained if each firm purchased goods and services alone” (Corporate Purchasing).
Buying Through Consortiums and Consortium-Type Organizations
Collaborative purchasing among independent organizations is an idea that has been around for centuries. Purchasing consortium’s can be a valuable strategic initiative worth serious consideration.
In addition, consortiums can lay the platform for dimensions of “partnering” strategic alliances beyond those of individual buyers collaborating only with individual suppliers. This new dimension can create a horizontal multi-buyer and vertical, multi-supplier strategic “partnering” alliances. Many of the same successful factors associated with vertical strategic buyer-supplier “partnering alliances” can be applied to the design and management of horizontal alliances which consist of small groups of like-minded buying firms.
Tips for Negotiating with Suppliers
Dealing with suppliers puts your negotiation skills to the test. Successful business owners offer up these pointers on getting the best deal.
1.Never Compromise on Communication
Always be attentive and responsive on communication to help build a rapport with the supplier.
2. Research Actual Costs
Make sure to take the time to research the cost of items. Doing this will make it easier to determine the best deal that you can get.
3. Know the Lingo
Learning the industry jargon will help you become your own best advocate.
4. Think like the Supplier
If you have a previous record of selling to your target audience, make your successful track record known.
5. Discover Areas of Mutual Gain
Keep your eye on areas that provide mutually beneficial gains for both parties.
6. Quote Multiple Suppliers
Quoting multiple suppliers helps to get the best possible price.
7.Reference their customers
Current customers are a great resource to get insight on prices and products that they frequently use.
8. Help Save them Money
Helping suppliers try to save money and understanding their business model can help lower the cost for everyone involved.
“Leveraging Your Buying Power.” Consortium2. N.p., n.d. Web. 17 Nov. 2016.
INC. “13 Tips for Negotiating With Suppliers.” Inc.com. N.p., n.d. Web. 18 Nov. 2016.