Thursday, November 17, 2005

What Forprofits Can Learn from Nonprofits

Earlier this week I attended an event at the Ritz in Tysons Corner, Virginia where roughly 15 CEOs and supply chain senior vice presidents representing as many companies sat in on eight hours worth of presentations. One of the attendees was a company called the Georgia Center for NonProfits (GCN) and I spoke with the CEO Karen Beavor over oyster shooters and caviar. It's was quite decadent. Anyway, I found Ms. Beavor's company rather unique. Basically, they aggregate the spend for 1,400 non-profits that represent $19 billion in spending power. The nonprofits that participate have benefited from, on average, a 10% reduction in the purchasing of everything from office supplies to transportation services. GCN clients also expect to halve procurement operating costs and dramatically improve requisition-to-pay efficiencies and effectiveness. Two considerable savings, when you consider that every penny saved can be applied to helping the elderly, to the sick to the disabled.

Now think about the typical business that has a dozen different divisions that doesn't aggregate spend. The same model could be applied particularly for small businesses that don't have the spending power, procurement skills and infrastructure. If procurement isn't your core competency, you should be asking yourself, "why keep it in-house"?

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