Optimizing your purchases to revitalize and relaunch the growth and profitability of your business

2 essential levers to improve the profitability of a company: increase sales volume or reduce costs.

In the current economic context where corporate margins are weakening, the reduction of expenses in overheads is becoming a strategic approach.

Optimizing purchases is proving to be an unsuspected lever, to be activated through the grouping of purchases.

The latter is of interest to businesses because it provides real support to purchasing services to make up for the lack of time, volume and expertise of VSEs/SMEs.

Overheads represent a significant operating cost, and it is not uncommon to see gains of the order of 10 to 20% in certain purchasing segments.

This can be up to 50% depending on the initial level of business purchases.

Their management is rarely optimized, but solutions for optimizing purchases such as competitive tendering, reduction and pooling exist, and they have real advantages.

The difficulty of making purchases at the right price...

Purchases outside production, considered to be the second item of expenditure, are nevertheless often poorly understood and therefore poorly managed by SMEs.

This finding confirms the lack of internal expertise in The purchasing function of French SMEs which lacks the weight during negotiations to benefit from good rates on their overhead purchases.

Habit, ease and lack of time often encourage SMEs to renew their trust in the same supplier, sometimes without renegotiating.

The definition good purchasing practices, the comparison of offers from different providers, and the negotiation of rates, are time-consuming tasks.

... saves time and money

Purchasing grouping centers (referencing center or central purchasing) aim to save you time and money.

For any company, regardless of its size, it may be interesting to use a power plant that groups together the volumes of different companies.

Indeed, a greater volume of purchases is synonymous with better pricing, payment and delivery conditions. The power plant allows centralized management of suppliers.

Businesses can join on a regional or sectoral basis. In the first case, we can highlight the advantages of consolidating purchasing volumes by geographical delivery area, in the other case, optimizing particular purchasing segments, which are not very large, but strategic for businesses.

To do this, an audit of needs and expectations will determine Purchasing segments who will be mutualists.

This audit will be carried out as a benchmark, that is to say that we will search each time the best performances, or practices, to apply them to global sourcing.

Centrals bring a methodical approach to your management of indirect purchases in order to properly determine what your challenges and objectives are.

Some (purchasing centers) manage the launching of tenders on behalf of companies, ensure the proper application of contracts and constantly renegotiate pricing conditions.

One of the main objectives of a power plant is also to guarantee a good quality of service. The grouping of purchases has the advantage of allowing suppliers to focus their efforts on the quality of their services.

Centralization or sharing to optimize your purchases?

It is important to differentiate a referral center (pooling) from a purchasing center (centralization).

Referral center
(or sharing) Central purchasing office
(or centralization)

The referencing center:

• selects suppliers and negotiates commercial conditions on behalf of its founders or member members
• is often specialized in a field of activity
• is often paid by the memberships of its members

There are no contractual commitments with suppliers, no volume constraints, just access to attractive conditions, either as a basic solution for the purchase of overheads, or as a back-up solution when your purchasing department is overloaded.

Note: The referral center does not make purchases on behalf of its members, who have the choice of whether or not to buy from the listed suppliers.

The central purchasing office centralizes purchases and manages the purchases of its affiliates:

• Product study
• supplier research and referencing
• tender
• negotiation and completion of purchases
• in some cases, distribution, organization and documentation activities

These services are reserved for the exclusive use of members of the central, to which they are bound by a contract.

The main objective of the central purchasing office is to obtain better commercial conditions thanks to the volumes obtained by the grouping of purchases; it also makes it possible to further promote the specialization of the purchasing department.

The grouping of purchases is an operation that has grown in recent years, in the public and private sectors, within VSEs/SMEs, as well as within major accounts.

There is probably still room for improvement, but the results are palpable. So why not give it a try?

With the right choice of the power plant and a detailed analysis of your needs, the grouping of purchases could prove to be a success within your business organization and not just a fad.

The central shopping center centralize purchases and manage purchases of its affiliates:

— product study

— search and referencing suppliers

— call for tenders

— negotiation and completion of purchases

— in some cases, distribution, organization and documentation activities

These services are reserved for the exclusive use of members of the central, to which they are bound by a contract.

The main objective of The central purchasing office is to obtain better commercial conditions thanks to the volumes obtained by the grouping of purchases, it also makes it possible to further push the specialization of Purchase function.

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