No matter the size of your company, its needs are big. You’ve got a product to support, an office to run, and a team to keep happy and productive. Your operations are as complex as anyone’s.
Yes, you could run to your local office supply shop every time you need a ream of paper. But you’ll pay a premium, and you’ll be limited to the brands the store stocks. What if you need a specialty item? What if you don’t have time to make it to the store that day?
For convenience, as well as quality, you need to partner with national suppliers. But as a small business, you may not be able to meet their minimum-order volume. Without a solid procurement strategy, premier suppliers are unlikely to give your company a second look.
Where to Look for Leverage
If you don’t want to overbuy to reach a certain order amount, you have three options to get a national supplier’s attention:
1. Provide more than money.
Enterprises don’t just need revenue. Think about what else you might be able to offer: Are you developing an invention they might be interested in? Could you swap products or services? Might you be able to help them hit their marketing goals?
Had it simply asked to buy gold from Dell, Bayou With Love almost certainly would’ve been rejected. The boutique apparel startup, however, has something that the typical metal recycler doesn’t: a social mission. Because Bayou With Love builds its products only from sustainable, recycled materials, Dell agreed to provide it with gold recovered from motherboards. Bayou With Love gets gold at below-market costs, while Dell gets to brands itself as environmentally conscious.
The key to this strategy is connecting with the right stakeholders. Dell’s B2B sales team might’ve seen little reason to work with Bayou With Love, but its marketers sure did. Before reaching out, get a copy of the company’s organizational chart. If you might be able to help with innovation, for instance, find out who the CIO is and email her directly.
2. Join a GPO.
The second way to work with national suppliers is the simplest, but it involves giving up some control. By joining a group purchasing organization, you benefit from pre-negotiated agreements and more assurance that suppliers will hold up their end of the bargain. You get bulk discounts, even if you make a relatively small purchase.
Because GPOs handle contract negotiation, however, they also choose which vendors they work with. Vertical market GPOs serve a specific niche: A hospital association, for example, might only offer medical supplies. Horizontal GPOs go broad, covering business needs that are common across industries, like computers and cleaning supplies. Although both types tend to partner with national suppliers, many don’t work with local companies. If you’re set on nearby or niche suppliers, expect to maintain those relationships yourself.
Beware, too, that some GPOs charge a membership fee. Under that model — think Sam’s or Costco — buyers essentially pay for the opportunity to play. If you go the GPO route, look for one that recoups its costs from suppliers.
3. Convince small businesses to buy in.
If you can’t come up with a partnership opportunity, look to the other companies in your network. If you’re part of a startup group that’s outgrown co-working, you probably know a lot of entrepreneurs in need of office furnishings. Together, you might need enough desks to perk the ears of a national office supplier.
This strategy doesn’t just work with products, either. Because major health insurers don’t like to provide group plans to mom-and-pop businesses, small companies have begun banding together to purchase employee health insurance.
The challenges with this approach are twofold: First, small companies in the same industry and geographic region tend to see one another as competitors. Getting them to cooperate can be difficult, even if it’s to their mutual benefit. Second, putting together bulk orders takes time. Which company is going to take on that responsibility, and how should the others compensate it?
If national companies give you the cold shoulder, don’t give up. Their sales team might have written you off, but other stakeholders may be open to suggestions. And if you can’t find your own way in, partner with colleagues to stand out or join a GPO. Don’t neglect these options if you want to save your company some money.