“You have to address behavior or you cannot reduce costs.” That was the overarching sentiment at the inaugural Prime Advantage Healthcare Summit, held in Washington, D.C. The Summit brought together healthcare legislation architects and experts, members of previous presidential administrations and transition teams, as well as business leaders in manufacturing, all for an inside look into healthcare policy and solutions to subjugate rising costs.
Any well-run business is constantly looking for ways to improve. But the better you are at staying on top of this endeavor, the more it can sometimes seem like you’ve exhausted most of the good ideas. You can reach a point where you’ve done your due diligence and feel pretty confident that you’re making the best decisions on the options realistically available to your company. You can only get so lean, squeeze so much out of your resources, and fine-tune your processes so tightly.
Manufacturers join a Group Purchasing Organization (GPO) to help solve sourcing and procurement concerns through advice and networking. GPOs achieve this by combining the purchasing power of businesses to get discounts from its vendors. The primary goal for Members is saving on cost, although there are many other advantages of joining a big network. Suppliers benefit from the increased market share and by building better relationships with customer organizations.
Refining strategy is a never-ending process. Once you get a project, a relationship, a product line to lift-off, there will always be room for improvement and opportunity to tinker with its underlying strategy. When it comes to sourcing, sure we may be getting the job done, but are there areas that can be enhanced or further developed? We don’t just want suppliers who meet requirements or who are merely “good enough.” We strive for true partnerships, mutual benefit and shared skin in the game. We want vendors who can help take us to performance and end products that smash our goals and expectations. So, how do we get there?
Everyone wants more for less. We want more output for less work, more action for less discussion, and more products for less money. When it comes to the latter, we're often hamstrung on the optimal price we can attain by the amount of volume we need to purchase. But what if I told you there was a way to get better deals without changing any of your buying habits? Sounds like a fantasy, but it is in fact the reality for members of group purchasing organizations (GPOs).
Myths pervade our existence. Some people think you need to drink eight glasses of water every day. But in reality, you should just drink when you’re thirsty. Some people think that if you shave your hair, it will grow back thicker and darker. Nope, that’s not actually happening. And some of us even think we only use 10% of our brains. Okay, maybe that one’s true for me. Nevertheless, myths are everywhere. Fall victim to them and you might find yourself making some questionable decisions.
Raw materials are essential to making our products. Keeping your supply chain running smoothly to ensure the delivery of these raw materials is the focus of every procurement group. When you have a supplier that is struggling to keep up their end of the bargain, it is an arduous task to find their replacement.
Most big decisions in life are best suited for some level of consultation. Decisions like: Which college is the best fit for me? Can I really afford to buy this house? Should we have a kid? All should be decided on with more than just you in the room. The same rings true for running a business. You may have the world’s greatest idea and business plan, but if you’re going to execute, you’re going to need some help. And if you want to make it big, you’re going to need a lot of help.
Sometimes, it pays for competitors to set the rivalry aside and work together for mutual advantage. By joining forces as part of a buying group, competitors within an industry can produce greater results for their customers without any fear of ‘falling behind’ in the process. Every Member of the group can excel within the industry without giving the competitors they work alongside an unnecessary leg up. Skeptical? Let’s first discuss how a buying group works, and then hit four key short and long-term benefits buying groups can offer businesses that choose to operate together.
What is a Buying Group?
Before we talk about the way competitors can work with opposing businesses and still come out ahead, we need to discuss what a buying group like Prime Advantage is and how it works. Buyers within an industry team up via Prime Advantage to gather purchasing power, and in return for this market share, suppliers are able to put together a better deal for the Members. On the other side of the table, due to limited competition on the supplier side, as well as valuable feedback from the buying group, suppliers shape themselves into stronger, more effective, increasingly flexible partners. Buyers benefit from added negotiating power; suppliers gain from additional access and intelligence to potential customers. So how do the different advantages stack up?