Small businesses pinch pennies to see black at the end of the month, and making the most of your purchasing organization can definitely save you money. Analyze how much time you or your purchasing manager spends price/vendor shopping and identify how much spending you incur.

Even if you believe your internal purchasing department is doing the best it can, always look for ways to improve efficiency and cost savings. Making the most of purchasing organizations may require you to consider a group purchasing organization (GPO) as an alternative to in-house purchasing. Purchasing groups offer individual, like-minded companies prices and leverage with suppliers they would not enjoy if they acted independently.

1. Any in-house purchasing group should weigh its current supplier prices against those achieved through joining a GPO, along with any GPO membership fee to decide which option works best.

2. Besides spend savings, outsourcing to a purchasing group can provide other benefits like networking, best practices, supplier development, contract management and more.

3. Consider starting your own purchasing group by joining with other companies you know you can work well with and trust.

Action Steps
The best contacts and resources to help you get it done

Keep your purchasing organization function in-house

If you operate an internal purchasing organization, take steps to increase efficiency, improve cost savings and help better your bottom line. Encourage your purchasing manager to participate in supplier and customer councils to receive timely feedback and gather ideas for process, procedure and systems improvement. Periodically update savings reporting methods by using a spend analysis to help forecast potential current savings and future savings in new areas. Use supplier scorecards incorporating key factors your purchasing organization will use for choosing/evaluating suppliers.

I recommend: If your company is still new and your purchasing organization still hasn't built a supplier scorecard, take a look at the University of Pittsburgh Supplier Evaluation Program to get some ideas. Keep your purchasing organization on top of its game with continuing education and training designed for purchasing professionals. At Next Level Purchasing, you'll find all types of classes to meet your needs: certification programs, purchasing fundamentals, purchasing management, supply management contract writing, purchasing best practices and managing supplier performance are just a few of the benefits to a more efficient purchasing organization.

Check into the viability of group purchasing organizations

Purchasing groups offer a few substantial benefits: purchasing discounts and negotiating power regarding issues with suppliers. Buying groups don't come free and fall under one of two models: one supported by member dues and the other by negotiated fees from vendors.

I recommend: If you own a retail store, compare the prices you pay with those of H&H Purchasing Services, a purchasing/management group catering to small businesses and summer camps. The company reports it gets prices up to 25% lower than the average small business. See if you fit into one of the many industries served by Alliance Cost Containment. ACC performs a preliminary savings analysis for you, and then you decide if you want to participate. It only charges a fee if you realize savings. Look through the categories in which Corporate United can save your company money. It bills itself as the leading U.S. GPO and works with companies of all sizes.

Join purchasing councils or some other professional purchasing association

Whether you decide to go with a GPO or take care of purchasing in house, benefit yourself, company, suppliers and customers by joining purchasing associations and other purchasing organizations. Through these, you'll reap valuable education, training and networking benefits.

I recommend: Gain access to American Purchasing Society tools/resources that improve negotiating skills and knowledge. It offers seminars, courses, workshops, conferences, degree programs and certification. Consider membership with the Institute for Supply Management, formerly the National Association of Purchasing Managers. The non-profit supply management/purchasing association ranks as the world's largest supply management association.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Before going forward with a group purchasing organization, check your existing supplier contracts; you'll need to satisfy those first or renegotiate if possible. You might give your existing suppliers an opportunity to match pricing in order to keep your business. Always leave the door open with your existing suppliers - just in case the purchasing organization route is not advantageous for your business.

Group purchasing organizations are a collaboration of passionate professionals who want to share their experiences and knowledge. They are a source of support, networking and solutions in the retail industry. Members can work in any part of the industry, from production and inventory managers to the chief operating officer.

Group purchasing organizations link you to workshops and seminars which study emerging trends and challenges in the industry. You exchange ideas about processes, systems, methods and implementation of merchandise planning and allocation. As a result, your job performance and professional development are fine tuned. Consider:

1. Use purchasing organizations to grow as a professional in the industry.

2. Consider different group purchasing membership levels.

3. Benefit from purchasing associations by taking advantage of educational and networking opportunities.

Action Steps
The best contacts and resources to help you get it done

Join purchasing associations to grow as a professional

Purchasing councils range from international groups to statewide or local organizations. They are a group of professionals just like you, with one goal in mind: to advance the purchasing industry.

I recommend: The Health Industry Group Purchasing Association (HIGPA) is a trade group comprised of 21 group purchasing organizations, including multi-hospital systems, associations, non-profits and for-profit corporations and healthcare provider alliances. HIGPA educates on ways to improve efficiencies in the buying, selling and use of goods and services, advocates for health care group purchasing associations and promotes discussion among GPOs. Use the HIGPA website to become a member or sign up for upcoming events. Institute for Supply Management’s (ISM) goal is to be the leader of supply management. Compare your salary to other supply management professionals on the ISM website.

Pay annual dues to belong to purchasing councils

Purchasing groups' dues usually range depending on the membership level. Once you find an association you want to join, decide what type of commitment your company is willing to give.

I recommend: American Purchasing Society brings more than 2,000 professionals together at the only international conference solely devoted to purchasing and supply management. Sign up for an individual membership to access American Purchasing Society's wealth of resources in the "Members Only" section. You can also post resumes in the "Career Center" section. Company membership comes with three memberships for employees and allows you to post job openings. The Association for Merchandise Planning and Allocation (AMPA) is an international organization that promotes communication and interaction among retail practitioners. AMPA requires members to be a merchandise planning retail professional, complete a survey, have access to the Internet and attend AMPA meetings. Complete the surveys and sign up for membership online.

Benefit individually and professionally from joining a purchasing association

When you join purchasing groups, you get access to magazines, business reports, a career center, groups and forums. Statistics show that professionals who belong to an association make more money than non-members, because of their access to resources and career development tools. Not only do you make bigger profits, but you develop more self confidence.

I recommend: Association for Operations Management (APICS) is a purchasing organization with more than 43,000 professionals from thousands of international companies. As soon as you sign up to be an APICS member, watch your email for the e-newsletter, chock full of industry news and information. You also save on business and management training seminars and conferences. Supply Chain Council (SCC) offer its members SCOR training and access to publications. It’s a non-profit consortium with benchmarking and evaluation tools to help companies make fast and dramatic improvements.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Consider a company membership instead of individual membership to a purchasing association, so that your employees can benefit as well.

Whether you're new to purchasing or you've been at it for several years, purchasing organizations education and training programs will ensure your success for years to come. Group purchasing organizations and purchasing departments within small businesses perform many tasks every day that require skills and knowledge related to vendors, products, negotiation, contracts, budgeting, contractor grievances, preparing bids, social/political/economic conditions and trends that can affect employers and so much more.

With so much responsibility and the potential for great losses with just a single mistake, ensure you and your purchasing employees receive all the education and training necessary to keep your business humming. Consider these sources of education/training for purchasing organizations and departments:

1. A purchasing association or related trade organization that provides training and education.

2. Companies focused on helping purchasing organizations and departments.

3. Online university programs offering certificates for purchasing organizations and professionals.

Action Steps
The best contacts and resources to help you get it done

Start your education/training search with purchasing associations

Purchasing trade organizations offer tremendous membership benefits that include lots of training and educational opportunities. Purchasing associations, purchasing councils and purchasing-related professional organizations provide certificate programs, seminars and other educational forums/resources to further the careers of purchasing professionals.

I recommend: If you haven't already, join the American Purchasing Society to take advantage of reduced prices for certification courses. Through the society, you can work towards earning the title of Certified Purchasing Professional and Certified Professional Purchasing Manager. You'll find all its classes and seminars offered online so you can work on your professional development on your own schedule. Visit the American Management Association (AMA) to satisfy your current educational needs. The AMA lets you attend purchasing and supply management seminars nationwide or via recorded webcasts and podcasts for your convenience. While at the website, click on the Blended Learning link to find out more about the AMA's e-Learning Solutions. If you work in the realm of public purchasing, find certification opportunities through a purchasing council like the Mid-America Council of Public Purchasing. Through the council, purchasing professionals can apply for Certified Public Purchasing Officer (CPPO) or Certified Professional Public Buyer (CPPB).

Consider companies dedicated to reaching out to purchasing groups and purchasing professionals

Look for consulting/management companies that specialize in providing beneficial training and education programs for you and your employees.

I recommend: Next Level Purchasing, an official Educational Partner of the National Contract Management Association, has trained purchasing professionals since 2000. In addition to its online purchasing certification program, the company also offers group purchasing training sessions at a discount for purchasing groups with at least four people. The Purchasing Group offers purchasing management, consulting and training services. Its training programs include the Essentials Series, Advanced Series and Condensed Series, and you can attend the programs in one of their training facilities or at your own workplace. Additionally, it conducts workshops and in-depth programs on specific subjects.

Find certificate programs for buying groups and professionals through online universities

Whether you operate a group purchasing organization or run a purchasing department, you'll find value and convenience in an online purchasing certificate program offered through a university.

I recommend: The Institute for Supply Management website offers a listing of colleges and universities that have degree plans in purchasing, supply management and logistics.Saint Joseph's University Professional online Purchase Management Certificate will boost your efficiency, confidence and success. The program covers purchasing and supply chain management fundamentals, administration and Certified Purchasing Manager exam preparation. Pursue the Online Certificate in Purchasing from California State University, and earn three units of Bachelor degree credit for each course. Courses begin in January, April and September, and topics include cost-price analysis, negotiation, legal/regulatory considerations, ethical issues, partnering and more.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  While you'll rarely come across an online purchasing degree program, those who work in purchasing organizations or departments can gain just as much benefit from an online MBA program. Additionally, look for financial management training programs if you already possess a degree related to your industry, like IT or human resources.