Four reasons care homes should consider outsourcing purchasing

Labour costs are up to 10% in the last 12 months and the industry is suffering energy price and commodity shortages causing a surge in food price inflation. Now is the right time to consider outsourcing purchasing.

1. Mitigate rapidly rising prices

With inflation continuing to put pressure on care homes as prices of key ingredients soar, protecting the bottom line is more critical than ever. A group purchasing organisation (GPO) gives businesses access to the best possible prices in the industry by combining the purchasing power of multiple companies to negotiate higher discounts than any single business could achieve. When businesses pool their buying power with other businesses, they benefit from upfront savings and pre-negotiated discounts.

 

2. Better manage costs

The market continues to be turbulent as the sector enters 2023. Food manufacturers price increase warnings continue due to the cost of raw materials, energy price increases, and ongoing conflict in Ukraine. Manufacturers and brands are reviewing product ranges and reverting their focus onto core ranges and removing the tail. Supply also remains a challenge due to raw material packaging availability and demand outstripping supply. In these unstable market conditions, it can be difficult for businesses to maintain consistency of supply. With rising costs squeezing margins, a GPO can negotiate lower prices on food and non-food purchases across its client’s ventures, support with supply chain challenges, and improve operational efficiency.

 

3. Eliminate dependence on certain suppliers

It is critical for care homes to be able to secure the right ingredients in a timely manner. In this volatile environment, product demand surges can constrain supply chains and result in shortages. If a business’s supplier does not have the items required available, it is up to the internal procurement team themselves to them spend time and resources to source these constrained items. A purchasing partner can help businesses find critical items easily and efficiently by leveraging their large network of strong supplier relationships when supply chain constraints occur. They can source items at speed from any of the suppliers in their network, enabling procurement teams to utilise a GPOs wide breadth of supplier relationships, giving clients more flexibility and options for sourcing food and related supplies.

 

4. Reduce procurement admin

Many care homes are not resourced to negotiate competitive pricing with suppliers, indeed some don’t even know which suppliers can meet their specific business needs. It takes significant resources to navigate purchasing and negotiating with suppliers. A GPO offers cost and time-effective solutions by supporting with streamlining their supply chain. Internal resources can be freed up and focused on other parts of the business by delegating certain procurement activities to a GPO, whether that is on all items or a select few.

 

 

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