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Whether you’re new to the industry or just starting out you’ve likely at least heard purchasing groups mentioned. We sat down with one such group to give you an idea of why you might want to join.
What is a Purchasing Group?
A purchasing group, often referred to as a GPO (or group purchasing organization), is an organization that utilizes partnerships with suppliers and distributors to decrease costs and bring members specialized deals.
A good purchasing group, like the National Service Alliance (NSA), will build partnerships with companies that provide the best in what they do and do the research in advance to sort through the latest trends and emerging products for their members.
Essentially, a purchasing group creates a vetting process to ensure that their partners are selling their members high-quality products at lower costs.
Benefits of Working with a Purchasing Group
Did we mention decreased cost yet?
In all seriousness, the most obvious benefit of working with a purchasing group is the savings, as well as access to suppliers and distributors that you may not have had access to before. Members of a good purchasing group receive rebates, incentives, and lower costs due to the focus demand created by being in a group.
However, groups like NSA don’t stop there. NSA, in particular, provides aid in managing and supporting the supply chain of their members. They do this by helping them consolidate the numbers of items they buy and where they purchase from.
NSA also notest that their members get higher levels of support and service where they need it most due to working with NSA and the suppliers to build worthwhile and lasting relationships.
Suppliers will often look to members of purchasing groups to test out new technology, systems, and products before they hit the market, which means members stay ahead of the curve and have the opportunity to make use of upcoming releases earlier than most.
There are many other benefits to working with a purchasing group, many of which are dependent on how driven and involved you are. Listen to our episode with the NSA to learn more.
Drawbacks of Working with a Purchasing Group
There aren’t a lot of major drawbacks to working with a purchasing group. The upfront cost of being a member is quickly made back in savings (and then some!) and there are many valuable business relationships to gain.
Still, we’d like to note the biggest downside (if you can call it that).
A purchasing group isn’t going to be partnered with every supplier and distributor. That just defeats the point. So naturally, when working with a purchasing group, you’ll have their select few to choose from for the deals.
However, many members of the NSA report that they didn’t have to disrupt their supply chains whatsoever and still saved considerably.
When Should You Work with a Purchasing Group
When asked when is the best time to sign up with an organization like NSA, Debbie Wakefield, NSA’s Director of Member Services, quickly replied, “Yesterday.”
Cost savings are almost immediate when you sign up with a purchasing group. Members are able to immediately start applying the savings to the purchases they make as soon as they sign up, so there’s no reason to delay once you’ve found a good GPO.
It is important to note though that there are generally certain requirements to meet in order to join. For example, within NSA, building service contractors must have an annual revenue of $2 million a year and not do a significant amount of subcontracting.
More About NSA
The National Service Alliance is proud to be celebrating 25 years in business, boasts a total of 183 members that support around a total of 500 cleaning companies (through subsidiaries), and is officially in all 50 states.
They leverage their size and scale to provide national contract pricing with the leading supplier and distribution companies in the country. Their ultimate goal is to help their members greatly improve the growth of their business and bottom line with little to no change in daily business routine.
Learn more about the NSA directly from their team by tuning in to this month’s The Business of Cleaning podcast episode.
About Our Guest(s):
National Service Alliance
This month’s episode is fortunate to feature three members from the NSA (National Service Alliance) team. The conversation is led by NSA President, Michael Conrad, with input from Debbie Wakefield, the Director of Member Services, and Ryan LeMire, the Director of Business Development.
Michael has been in the industry for 30 years, primarily working in the supplier and distribution space. He’s also served in a variety of leadership positions, becoming a reliable and trustworthy expert in supply chain management. Debbie has been with NSA for about 13 years and prior to that she owned her own cleaning business. Ryan, himself, has been with the team for two years and he works specifically to bring on new members.