Focus is a key word in
the business world.
Focus on finding the right people to hire. Focus
on meeting the goals that
you set at the beginning of
the year. Focus on sticking
to your budget.
In group purchasing, however, too much focus can be
a killer, Dennis Burns says.
“If everybody comes in saying, ‘This is what I do, and
this is the way I do it,’ it’s
never going to happen,”
Burns says.
“In order to make it work,
everybody needs to come
together with an open mind,
a willingness to change and a
willingness to look at things
differently than they looked
at them in the past.”
Burns is the strategic procurement manager at The
Lubrizol Corp. The $4.5 billion specialty chemical company is a founding member
of Corporate United, a group
purchasing organization that
brings companies together to
help save money on things
they all need to buy.
Burns says the development of faith and trust
among partners is one of the
keys to making group purchasing work. You have to
look beyond your own
needs.
“You need to realize that if
the whole group benefits,
you’re benefiting, as well,
and don’t try to monopolize
it and get all the benefits for
yourself,” Burns says. “You
can’t be cutthroat.
“Let’s say it would take me
40 man-hours to source a
commodity, and it would
take my neighbor down the
street 40 hours to source a commodity. If we do it
together, it’s going to take us
60 hours, but only 30 hours
each. So we’re actually saving time. Even if you go part-way down a path and something doesn’t go anywhere,
basically, it was a couple
meetings and a couple hours
each.”
A good first step for a company wanting to get involved
in a group purchasing program is to talk to someone
who has experience doing it.
Get a few companies together — it’s best if the other
companies aren’t your direct
competitors — and have a
meeting.
“You have to have several
companies who agree that,
‘Yes, it’s something worth
exploring,’” Burns says.
“Somebody is going to have
to make the first call and
take the lead.”
When you meet, brainstorm
about products or services that every company needs to
buy on a regular basis.
“What happens is everybody has more ideas than
they could possibly ever
work on,” Burns says. “You
throw out a dozen items
each, and you have a hundred ideas. Fairly quickly,
you say, ‘I can’t work on all
100, but it would be easy to
work on this one.’ … We
don’t go in with a preconceived notion of what the
final commodity is going to
be. Therefore, we don’t
waste a whole lot of time trying to force it to work. We
move on to the next one.”
Communication is key. Talk
about what it is you’re looking for and have somebody
in your group do the research
and report back on the findings.
“We talk about our specifications and our requirements
and how long we use them
and what we use them for
and come up with common
specifications,” Burns says.
“All those upfront conditions
and internal issues are actually addressed upfront.”
Through the flow of communication, you develop
trust. You also get to know
each other and what needs
your partners in the consortium have. And while your
company may not benefit
from the purchase of light
bulbs, perhaps you’ve been
looking for a deal on safety
glasses.
The key is to look beyond
both the light bulbs and safety glasses and see the bigger
picture.
“Just keep brainstorming
the ideas until something
clicks,” Burns says.
Keeping it friendly
It’s a lot easier to build camaraderie with corporate partners
when you’re not working in
direct competition, says Dennis
Burns, strategic procurement
manager at The Lubrizol Corp.
“You would be cutthroat, and
you would not want the other
members to get the benefits,”
Burns says. “Most of the commodities we’re buying are not of
strategic importance. We’re buying the stuff everybody uses that
no one of us considers a strategic advantage. You don’t have
that distrust of each other.”
In addition to trust, you also
need to accept both the good
and the bad that come with
being part of a team.
“If you and I are both in a consortium, your problem is my
problem, also,” Burns says.
“There needs to be that all-forone type of mentality. If we’ve
got 10 members and we’re each
doing 10 percent of the total,
and one of them starts having
problems or issues, I might say
that’s not my problem. But if I
do that, all of a sudden my volume is 90 percent of what it
used to be because that person
dropped out, and now I’m not
getting as good a price as I
might have gotten.
“There does need to be the
realization of speaking for one
another and helping one another.”
HOW TO REACH: The Lubrizol Corp., (440) 943-4200 or www.lubrizol.com
