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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




     Buying groups?
           Group of firms collectively purchasing
           inputs for their individual firms
           Reasons for their existence
           Mechanics of the groups
           Successes and failures
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
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
Natural Gas
 One owner solicited vendor
 Vendor collects bids, invoices direct
 Savings variable




Dairy Industry
  Milk house materials
  Breeding supplies
  Fuel
  Fertilizer
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
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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Group Purchasing

  • 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. 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. 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. Natural Gas One owner solicited vendor Vendor collects bids, invoices direct Savings variable Dairy Industry Milk house materials Breeding supplies Fuel Fertilizer
  • 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. 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