Group Purchasing

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Group Purchasing: Case Studies in the Horticulture & Dairy Industries. Walter N Nelson
Sr. Extension Resource Educator
Horticulture
South Central New York

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Group Purchasing

  1. 1. Group Purchasing Case Studies in the Horticulture & Dairy Industries Walter N Nelson Sr. Extension Resource Educator Horticulture South Central New York Buying groups? Group of firms collectively purchasing inputs for their individual firms Reasons for their existence Mechanics of the groups Successes and failures
  2. 2. Why? Save money Improved availability of product An alternative to traditional brokers & retail vendors Save time shopping around Known costs for a given period Horticulture Industry Specific horticultural inputs provided by brokers Generic inputs from general economy
  3. 3. Cardboard One owners solicited bids & offered to pool an order. (~20 years) Pooled order, direct delivery, one invoice from manufacturer to leader who bills again all participants Challenges: Pooling orders!!!!! (~1% surcharge per box) Bad debts Benefits: $$$ Plastic Pots One owners solicited bids & offered to pool an order. Pooled order, direct delivery, (initially drop shipped) Distributor invoiced each participant Challenges: Pooling orders!!!! Early deadlines Similar containers/same market Small % of cost of production Benefits: $$$ Up to 13% less
  4. 4. Natural Gas One owner solicited vendor Vendor collects bids, invoices direct Savings variable Dairy Industry Milk house materials Breeding supplies Fuel Fertilizer
  5. 5. Dairy Situation I Direct delivery & invoice Challenge Participation Uniform products Benefits: Cost savings Less time shopping Dairy Situation II LLC Hired Nutritionist (also acts as buyer) Group does milk marketing
  6. 6. The Next Step Like Partners/Colleagues Solicit sources/bids Do you have to have… Keep It simple, uniform Fewer vendors Resources Monika Roth, CCE Tompkins Wen fei Uva, Cornell AEM Thanks for help from: Shawn Bossard, CCE Cayuga Janice Degni CCTTS Dairy Team Walter N Nelson Sr. Extension Resource Educator Horticulture South Central New York

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