As supply chain consultants we help our customers to improve their purchasing processes and find savings opportunities within their supply chain. There are a number of ways to do so, from instituting centralized purchasing tools, guiding purchasing behavior that promotes process efficiencies, and even managing the relationships with the suppliers that our clients choose to use to support their business. One of the quickest routes to savings is the management of indirect spend through Group Purchasing Organizations (GPOs.)
Indirect spend is any spend not directly included in the Cost of Goods Sold of a product or service. Indirect spend refers to expenses incurred for materials, services and maintenance required to operate the business. For example, if you own or operate a fleet of vehicles, any money spent on maintaining that fleet would be an indirect spend. Other examples of indirect spend would uniform rentals, industrial supplies or even janitorial services. To help your business Corcentric would holistically analyze all expenditures you’ve made in the past fiscal year. From there we categorize which spend is indirect vs. direct, and then deem which indirect spend categories may be impactable with our help. We look for supplier redundancies, large tail spends, and spend volumes overall. These are all factors that would lead us to look into further details regarding a supplier relationship and discover the room for improvement.
One tried and true avenue to create savings is the utilization of Group Purchasing Organizations. GPOs are a quick way to savings because we connect our clients with the suppliers Corcentric has already partnered with and identified as among the best providers in their respective industries. GPOs were a new concept to me upon joining the consulting division here at Corcentric. A GPO is an entity created to combine the purchasing power of a collective of businesses to leverage better pricing and service with desired suppliers.
When we think about what that means for our clients, the idea is that we pull together all of customers’ expenditures to qualify for discounts and rebates that they otherwise wouldn’t be able to achieve independently. If we continue to use our example before of being a company that owns a fleet, that fleet will need repairs, fuel and maintenance. If you are a smaller business, you may not have the purchasing power to qualify for rebates from large suppliers. If you were to need new tires, you would be stuck buying them at retail value. However, if you were to join Corcentric’s Michelin GPO, your company’s spend would be combined with all other clients of ours participating in that GPO program and thus would qualify you for better discounts and better service due to that now improved purchasing power.
By leveraging pre-negotiated contracts with leading suppliers to source the products your organization uses every day, you benefit from the best possible pricing and service levels. It’s the ideal solution to get everything you need to keep business running smoothly while optimizing control of your indirect spend. We have pre-negotiated GPO deals that you can get immediate access to just by signing up to be a Corcentric customer. Our consulting team knows all the questions to ask and has experience with all the elements of a successful implementation across varying product categories. Corcentric will also act as a managed service for the implementation process, managing the implementation between the customer and supplier. Our goal is to assist with your procurement needs every step of the way.
See the chart below for more on what your company stands to gain by working with Corcentric GPO programs, either as a buyer or supplier. If you feel like your company could benefit from tidying up indirect spend and leveraging GPOs to reduce costs, or becoming a supplier in our network, feel free to reach out to us today to see how we can help your business grow.