The Buying Groups

Definition

The CCS is a business model that allows members to compete in the market without losing ownership of their businesses and also enjoy advantages such as better purchasing power through grouped purchasing volume; greater market information through the contribution of individual experiences and the incorporation of a market information system; greater security in management through the exchange of experiences among people with similar interests; the incorporation of expert management professionals; and access to more services whose costs are not affordable individually.

Purchasing centers guarantee a diversity of formats, as they allow small and medium-sized enterprises to compete on the same level as large distribution companies.

A Purchasing and Services Center is defined as:

An operator that, having its own economic resources and legal personality, aims to develop activities and provide services to independent companies that, in a spirit of cooperation, have joined its organization through internal regulations, in order to improve its competitive position in the market.

Common Elements of CCS

Being an operator with its own economic resources: implies that the CCS must have a minimum structure, that is, an organizational chart of personnel as well as a physical space and the necessary and sufficient material resources to provide services with a guarantee of effectiveness.

Being an operator with its own legal personality: it must be an entity capable of assuming rights and obligations, that is, CCSs are companies.

CCS directs its activity to a group of independent companies, whatever the legal form it adopts (Limited Company, Public Limited Company, Cooperative Society, etc.), provided that they are legally constituted and governed by commercial law.

In a spirit of cooperation: membership in a CCS is voluntary and implies a commitment of loyalty to the CCS and its members. This is the key element, as it means that members must relinquish some independence to align themselves with the collective of business owners associated with the CCS.

The CCS’s relationships are established through internal regulations: in addition to contributing their individual business experience, members must build operational ties through contractual agreements that govern the relationship between the CCS and its members. A document must always exist that establishes the rights and obligations of each member with respect to the CCS and defines the mechanisms for monitoring compliance with those rights and obligations.

The main purpose of the CCS is to improve the competitive position of its members by obtaining economies of scale, operating with business criteria and obtaining positive operating results.

Although not explicitly stated in the definition, it is considered essential to be a CCS to have the capacity to negotiate, guarantee transactions, have a structured offer of activities and services, and communication mechanisms with associates.

CCS in numbers

275 CCS

63,000 Associated Companies

150,000 Establishments

600,000 Employees

30 billion in Negotiated Purchases

125 billion in "Sellout" Added

5 Steps to create a CCS

1. Environmental Analysis

Study the current situation of entrepreneurs in the sector in relation to the value chain of their business.

2. Study of potential partners

Analyze the characteristics, location, purchase volumes, assortments and suppliers, the individual expectations of potential partners and/or associates of the central office, as well as short and medium term growth forecasts.

3. Development of the conceptual bases

Define the key points that are considered necessary to create the Purchasing and Services Center that will be the basis for developing the Feasibility Plan.

4. Development of the feasibility plan

Quantify parameters and establish the minimum necessary to carry out a sustainable operation in the medium term.

5. Creation and implementation plan

Design a detailed action plan for the effective creation of the Purchasing and Services Center. This should include staff selection and training, the setup of management systems and technology, the definition of operating protocols, and the development of a marketing and communication plan to attract the right partners and suppliers. It is essential to ensure continuous monitoring of this plan and make adjustments as needed, thereby guaranteeing a successful launch and efficient long-term operation.

Objectives of the CCS

Reducing costs: By pooling purchases from multiple companies, a CCS improves negotiation of prices and terms with suppliers, resulting in significant savings for all members.

Improve operational efficiency: By standardizing procurement, logistics, and technology processes, CCS optimize the operational efficiency of their members, allowing them to focus on their core activities.

Access to a wider range of products and services: Offering its members access to a wider variety of products and services allows them to diversify their offering and better meet the needs of their customers.

Promoting collaboration and knowledge sharing: By facilitating collaboration among its members, a CCS fosters the exchange of knowledge and best practices, benefiting all parties involved.

The 5 structural principles of the CCS

When discussing structural principles in the context of purchasing and service centers, we are referring to the fundamental principles or basic guidelines that govern the organization and operation of these entities. These principles establish the foundation upon which the purchasing and service center operates, makes decisions, and seeks to achieve its objectives. Their existence is essential to establishing a solid base that allows the entity to function effectively, meet the needs of its members, and achieve its long-term goals.

Principle of unity in diversity: All parties involved, despite their individual differences, work toward a common goal. While it is true that each member of the CCS has its own identity and purpose, interdependence suggests an understanding that more is achieved by working together than separately.

Principle of mutually beneficial coexistence: The relationship between the parties is not based on destructive competition but on constructive cooperation, so that synergies in a central promote a culture in which the success of one member benefits the collective, rather than undermining the others.

Principle of collective growth: Progress and development are not limited to isolated individuals or companies; they are shared and celebrated collectively. The CCS operates on the idea that everyone should prosper together, which promotes an attitude of mutual support.

Principle of shared values and vision: Beyond pragmatic collaboration, synergy in purchasing and service centers is based on a shared set of values and visions, ensuring that the actions of the collective are aligned with these ideals.

Principle of joint evolution: The companies involved cooperate in the present and also work together to adapt and evolve in the future, using synergies to seek opportunities and face challenges collectively.

Advantages for Associated Business Owners

They respect the independence of their members. The CCS makes recommendations regarding actions to be taken locally and sets the framework around which all members must align. The member always makes the final decisions that affect their business.

They are a management engine that helps to size associated businesses, generating joint and individual growth, increasing their purchasing potential and market share.

They allow access to economies of scale, in aspects such as purchase volume, logistics, marketing actions or the reduction of operating costs.

They have the ability to develop communication actions at a national level and adapt the group’s corporate materials for local campaigns.

The notoriety of the corporate brand and the prestige of the CCS reinforces the entrepreneur’s identity and brand recognition in his field of operation.

They allow the exchange of experiences and best practices, enabling organizations to leverage their know-how and gain collective experience for the benefit of each member.

Advantages for Manufacturers

Horizontal formats provide stability for the manufacturer, as they concentrate less financial and commercial risk and, furthermore, do not base their purchasing strategies on negotiating market share, which forces suppliers to drastically alter their commercial terms to access certain volume transactions. This does not preclude the manufacturer and CCS from jointly designing purchasing deals that are advantageous for both parties, in terms of both price and volume.

The association of many SMEs around a CCS provides a “useful” and “tactical” geographical reach, if used strategically, as it allows taking advantage of economies of scale, quickly implementing expansion plans or launching new products and exercising greater control over the production, supply and distribution of products or services.

Ability to adapt to change and flexibility to respond to new supply chain needs, such as scheduling purchases, implementing co-marketing actions, potential recommendations to enhance the product mix, among other actions.

The relationships of the CCS with their suppliers are based on trust and are characterized by being long-term.

Obtain feedback on the strategies developed by the manufacturer in the market, as well as ideas and experiences that allow them to improve their market offering.

Advantages for Consumers

Proximity, given that most of the establishments of many CCS are located in urban centers.

Better customer service through the services that the CCS makes available to its members, such as the corporate website, the call center, etc.

Better sales conditions and better prices, thanks to the combined volume of purchases that allows for better costs and margins to bring an attractive offer to the market.

Financing of purchases on preferential terms, thanks to the collective agreements of the CCS with financial entities.

Capillarity guarantees a wide geographical coverage of the chain, allowing it to provide service in any location.

Greater specialization, by being able to offer a wider assortment of brands and product categories and having the necessary training to prescribe the most suitable solutions for each need.

The owner of each establishment becomes more involved in the relationship with the customer, since the customer’s satisfaction in the sales process and their loyalty directly affect the profit and loss statement of their business.

Keys to Success

Despite the differences between one CCS and another, there are common principles that determine the success and effectiveness of this organizational model: Trust, cohesion, commitment, loyalty, solidarity, respect for the rules and pride of belonging to the group.

THE SUCCESS OF A CCS IN 6 KEY POINTS:

1. A charismatic, visionary, and exemplary president, board of directors, and management team.

2. A central structure focused on its members, dedicated to offering services, generating value and decisively contributing to increasing the competitiveness of associated businesses.

3. A sufficient size to have negotiating power with suppliers, the necessary financial resources for the development of common policies, and the capacity to implement ambitious and coherent strategies.

4. An organization structured through the involvement of members and the delegation of tasks to expert professionals at headquarters.

5. A strong group culture based on solid and shared values, such as: trust, cohesion, commitment, loyalty, solidarity, respect for the rules and pride in belonging to the group.

6. Have clear rules that are shared and respected by everyone.