Two large Dutch retailers have decided to bundle their purchasing activities. A completely new organisation is to be established, which will negotiate with suppliers on behalf of the two parties. A new office, new automation system, new staff.
Stronger purchasing position
The purpose of the JBO (Joint Buying Operation) is to gain a stronger purchasing position, thus increasing the profitability of both formats and reinforcing their position versus the market leader.
Besides all the organisational aspects, a great deal of work needs to be done before establishing contact with suppliers. The information from the two formats must be harmonised. There must be insight into contracts, prices and conditions. This requires great IT and controlling efforts, with assistance from Recentes.
Negotiation aspects
According to the JBO strategy, negotiations with suppliers can be conducted in a number of rounds. A distinction can then be made between a number of negotiation aspects; in practice, they can also be addressed in a single round of negotiations:
- Harmonisation of prices: which of the two formats already has the lowest purchasing price and the best conditions? These can then be applied by both formats, giving a quick win.
- Bundling of purchasing volume: many suppliers can be convinced that the larger (joint) purchasing volume must be translated into lower prices or better conditions. This is the second improvement aspect, which specifically increases revenue
- Following the negotiations by the JBO, the individual formats will negotiate separately with the suppliers in order to reach the best possible agreements regarding marketing efforts and contributions, special discounts and special offers, logistic advantages, etc.
Maximum improvement of results
Recentes plays an important role in this process, by establishing effective data management, making analyses and the preparation necessary for negotiations. The Recentes analyses enabled the JBO buyers to achieve maximum improvement of results.
In the end, the conditions agreed by both the JBO and the individual formats need to be registered integrally, in order to book and settle the right results in the appropriate place (the correct organisation).