Are you using software simply as an operational tool or are you using it to drive your buying group forward?
One of the biggest mistakes I see buying groups and purchasing cooperatives making is investing too much time, energy, and money on technology projects that are operational conveniences. Upgrades to accounting systems, cosmetic improvements to your web portal, and even adopting online ordering tools all have value, but will they help you meet your core objective of significantly improving your membership’s bottom line?
The technology you use should be aligned with the core objectives of your group. For example, a traditional purchasing group focuses on leveraging the buying power of their members. The goal is to reduce the overall cost of goods through discounts and rebates in order to significantly improve their member’s bottom line. There may be other secondary goals, but if this main goal is not consistently achieved, membership in the group has little value.
How can you use technology to drive your strategy? Your highest priority should be on getting accurate and complete real-time data about what your members are purchasing. Groups who capture category and item data real-time have a distinct advantage over other groups. They typically pay higher rebates out to their members. Their negotiations with vendors are smoother. They provide more creative services to their members. Member turnover is smaller, and as a whole the group is more resistant to the impact of corporate competitors.
Given how overworked most groups are, it can be tempting to think that increasing operational efficiency is a strategic goal. Tech projects can be frustrating and distracting for a lean buying group. That makes it even more crucial to focus on the right projects first. By focusing on operational efficiency, your group risks becoming an administrative body. Instead, focus on the larger goals of your group when choosing a tech project, and use these projects to distinguish yourself from other competing groups in your sector while adding value to your members.
For a full discussion on this subject, check out this recent webinar conducted with LBMX and the National Cooperative Business Association CLUSA International: https://goo.gl/W9nr4W