Procurement teams are face to face with supply chain disruptions, often serving as the liaison providing product updates to end users. As you've heard and experienced, the global semiconductor chip shortage has impacted major components of everyday life and business, affecting vehicles, laptops, phones, credit cards, home appliances and other products that need a computer chip to operate. Not only a key part of electronic devices, these chips also power the factories where those devices are made. Without enough of them, companies have been forced to stall production, and when you combine high demand with limited supply, you’re paying more for those products.
This is just one example of many depicting how the supply chain’s been hit over the last couple of years, in turn causing procurement, supply chain and sourcing professionals to adjust and pivot in order to continue operating. Now, you may be asking yourself, “will the supply chain ever be the same?” We're beginning to find out that the answer is—probably not. Procurement and supply chain professionals are adapting and continuing to learn how to best function in the “new supply chain.” Part of procurement’s new normal includes ensuring continuity of supply and mitigating risk, while cost avoidance is just as important as cost savings in a market where all prices are rising.
As you perfect your procurement and sourcing strategies, industry leaders are turning to group purchasing organizations (GPOs) for a more guaranteed supply and better buying power. A GPO can give you access to some of the products difficult to get your hands on, while walking you through the new supply chain with deeper discounts, preferred terms and conditions and strong supplier relationships.
Keep reading to learn how a GPO can help you navigate the state of the supply chain.
The New Supply Chain
As you adapt to the current volatile conditions, you’re still seeing lead times for some resources almost doubled and continuing to fluctuate. Transportation and shipping costs are still on the rise, and with the current inflation crisis, we're experiencing dramatic increases in the cost of everything we need for day-to-day life and business from gas to groceries and beyond. The national labor shortage continues to magnify the supply chain disruptions as companies are having trouble finding workers to staff their facilities and keep operations running efficiently.
Organizations across all industries are working to re-evaluate their strategy and futureproof their supply chain. Through group purchasing, your business can overcome these challenges with the unique benefits from a GPO. Below we’ve outlined the next steps your company take with its GPO partner.
Next Steps for Your Organization
Monitor rising inflation with your GPO. All GPO contracts have reduced volatility with contracted pricing to help your organization's budget stay on track.
Master spend and category management with the help of a GPO while strengthening your defense. Your GPO can oversee complex or undermanaged categories while your procurement team focuses on areas of spend that add value to your organization. Through improved spend management, your GPO works to reduce tail spend and eliminate maverick/rogue spending, saving you time and money.
Strengthen your supplier relationships to ensure your organization is prioritized when situations arise. Having a GPO in your strategy automatically sets you up for vendor success and provides you with immediate access to pre-vetted contracts with long-standing supplier relationships.
Manage your organization's risk across all of your suppliers. Adding a GPO to your strategy is a key way to accomplish that. Your GPO will constantly be monitoring and mitigating risk across its portfolio of suppliers.
Gain market and industry insight from your GPO. We have subject matter experts that act as members of your team available to answer any questions diverse set of spend categories including freight and logistics, HR, facilities & MRO. These resources will keep you up-to-date on the latest trends and help you strengthen your procurement strategy.
Group Purchasing Strategy for Supply Chain Management
Overcoming the challenges of the supply chain and moving forward will require some creativity. You can outsource some of your labor and utilize GPO contracts to save your organization time, money and resources. Your procurement team can only do so much, and there may be spend categories you can’t focus on as deeply or aren’t as high priority. Your GPO can give the proper attention to those categories while providing discounted contracts.
During the pandemic, we were able to provide our members with innovative, new solutions from our suppliers faster than other procurement leaders could obtain on their own. The same goes for the current supply chain situation. Group purchasing helps your organization remain resilient. The combined spend of member companies increases buying power to provide GPO members with optimal prices and terms on all contracts.
Start leveraging the partnership today!
