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Strength in numbers Featured

8:00pm EDT June 25, 2008

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