The Purchasing Co-Op.
TO: Margaret Warren, Owner.
FROM: ABC Consultants.
SUBJECT: recommendations to promote the growth of the
the following recommendations:
1. Have a plan in place to have
each co-op member grow their combined market share. This will put the co-op in a stronger position as they
will be buying more materials and could even expand on the supplier base.
2. Approach local business owners
not just members of Local Business Women’s Association to enlist them in to the
co-op. This could result in increase in the amount of co-op orders and could
lead to further volume and shipping discounts.
3. Extend the type of materials
purchased to commodity items like copier paper, office supplies and also brochures
and business cards.
4. One way to promote the growth of
the co-op is to increase awareness about the unique contracting solutions the
co-op can offer to its members. This can be achieved by setting up a website
and continuously refining it. Also, participating in trade shows can also
5. The purpose of the co-op should
not be limited to just purchasing. The members of the co-op are small local
business owners. We suggest providing opportunities for the members to share
best practices of their business and industry so that would help the members to
be competitive in the marketplace. One such opportunity could be provided by
conducting annual conferences where members can meet and discuss new ideas and
information. One other way to facilitate sharing is by creating an online group
where members can interact more frequently. The savings in purchasing costs
should be used to finance the above-mentioned initiatives. These initiatives
will attract local business owners to join the co-op as they will see the co-op
as not just a means to buy materials but also a way to improve their business.
6. With the growth in the
membership and type of materials purchased, we suggest setting up of a
centralized warehouse which will result in cost savings related to inventory
holding and delivery.
The growth of the co-op could
result in combined purchases in the million-dollar range in the future. It will
be imperative to have rules and procedures in place to ensure credibility of
the co-op. Our recommendations to ensure efficient handling of purchasing
functions are as follows:
1. As the value of the combined
purchases increases it would no longer be feasible for members to handle the
purchasing functions with their limited knowledge of purchasing and also, they
will have their own business to run. We recommend appointing a chief purchasing
officer (CPO) who will have knowledge of materials and purchasing management
practices to handle these high value transactions.
2. With the growth of the co-op in
terms of membership and purchase value, the co-op will be under scrutiny and so
it will be critical to have a dedicated legal counsel to ensure compliance with
the applicable laws and policies.
3. With the growth in the purchasing
power of the co-op, it will be imperative to develop ethical purchasing
practices. It is important that no unethical means are used to purchase
materials as this will severely damage the reputations of the members and their
business. It would be beneficial if the CPO would publicly endorse these
To grow the co-op, it will be
important to increase the scope of the benefits provided to the members and
create awareness about the contracts. Proper ethical and business practices
will have to be followed to ensure credibility of the co-op and promote its