Valuing Vendors Participation In Buying Groups: A Strategic Context For Contract Negotiation

Introduction

Industrial buying groups enable independent distributors, dealers, retailers, and business-to-business buyers to collectively negotiate and buy products and services as a group, allowing individual members access to the sort of scale discounts that are traditionally available to only the largest individual buyers within a given marketplace. Designed and managed on behalf of their buyer members, buying groups typically measure their success in terms of purchasing scale purchases made by members through pre-negotiated group contracts and overall savings to members. As such, buying groups are driven to seek out highly competitive purchasing contracts with the largest and fastest-growing vendors in each of the primary sourcing categories defined by the membership.