Five reasons to consider outsourcing purchasing

1. Mitigate rapidly rising prices​
With inflation continuing to put pressure on hospitality businesses as prices of key ingredients soar, protecting the bottom line is more critical than ever. A group purchasing organisation (GPO) gives businesses access to the best possible prices in the industry by combining the purchasing power of multiple companies to negotiate higher discounts than any single business could achieve. When businesses pool their buying power with other businesses, they benefit from upfront savings and pre-negotiated discounts.

2. Better manage costs​
The market continues to be turbulent as the sector enters 2023. Food manufacturers price increase warnings continue due to the cost of raw materials, energy price increases, and ongoing conflict in Ukraine. Manufacturers and brands are reviewing product ranges and reverting their focus onto core ranges and removing the tail. Supply also remains a challenge due to raw material packaging availability and demand outstripping supply. In these unstable market conditions, it can be difficult for businesses to maintain consistency of supply. With rising costs squeezing margins, a GPO can negotiate lower prices on food and non-food purchases across its client’s ventures, support with supply chain challenges, and improve operational efficiency.

3. Eliminate dependence on certain suppliers​
It is critical for hospitality businesses to be able to secure the right ingredients in a timely manner. In this volatile environment, product demand surges can constrain supply chains and result in shortages. If a business’s supplier does not have the items required available, it is up to the internal procurement team themselves to them spend time and resources to source these constrained items. A purchasing partner can help businesses find critical items easily and efficiently by leveraging their large network of strong supplier relationships when supply chain constraints occur. They can source items at speed from any of the suppliers in their network, enabling procurement teams to utilise a GPOs wide breadth of supplier relationships, giving clients more flexibility and options for sourcing food and related supplies.

4. Reduce procurement admin​
Many businesses are not resourced to negotiate competitive pricing with suppliers, indeed some don’t even know which suppliers can meet their specific business needs. It takes significant resources to navigate purchasing and negotiating with suppliers. A GPO offers cost and time-effective solutions by supporting with streamlining their supply chain. Internal resources can be freed up and focused on other parts of the business by delegating certain procurement activities to a GPO, whether that is on all items or a select few.

5. Support a growing business​
When businesses are expanding, it becomes more important to have access to a group purchasing organisation. The concept is simple, a GPO combines the spend of businesses within their portfolio to secure better pricing with suppliers. Its clients can leverage a GPO’s more favourable contracts, with lower pricing and better contract terms. The pre-negotiated contracts bring time back to businesses whilst delivering the best value for items currently purchased. The large volumes bought by a GPO allow them to purchase at very competitive prices, they then pass this saving down to their customers. A good GPO will ensure their clients receive the same quality of goods and advise when beneficial to switch supplier or quantities based on the current market conditions.

Want to learn more? Explore getting started with Entegra ​​or call us on 07749016032.