Create More Purchasing Power
23 September 2014 There is a way to make more money, create more transparency in the supply chain and build stronger relationships in the process: Build a business peer group.
You need a business peer group. Business peer groups are composed of same-sized companies with similar challenges, such as production, distribution and purchasing. Business executives use peer groups to benchmark financial, technical and operational details about the business.
A key benefit to crop protection companies would be purchasing and the ability to share experiences from a centralized supply sector. Let’s face it: The most unpredictable part of business for importers and distributors is sourcing, pricing and general product availability. Sourcing events like Shanghai’s CAC and AgroChemEx often make things worse, as attendees filter through a cavernous exhibition in hopes to find a sustainable supplier with fair prices. Buyers are regularly lied to about product availability and price, creating more uncertainty in the process.
What if you knew what other similar-sized companies were paying for products and which companies were supplying those products? What if you could compare data compensation, GLP and other data charges with companies like yours?
Chinese companies are already doing this. The China Crop Protection Industry Association Task Forces on specific active substances meet regularly to control production, supply and price. This very organized and deliberate peer group engineers a distinct advantage over buyers around the world. It makes sense that buyers try to level the playing field with some peer oversight of their own.
Here are a few tips in setting up a peer working group for crop protection companies:
1. Confidentiality is crucial. For peer groups to work well, there must be a serious level of trust and transparency. That means opening up your balance sheet, purchasing agreements and other details that you would normally guard with fervor. This is a difficult concept in an industry that is so competitive, but you can easily see how beneficial this will be for your business.
2. Choose like companies. Companies will benefit the most if you are comparing peers of a similar size and distribution model. Like product portfolios would be of obvious benefit too. Additionally, domestic companies will be able to offer insights into the import process, fees and regulations that companies from other countries might not share. Again, trust is crucial for competitive markets.
3. Commit to quarterly meetings. Trust and information will not progress without regular face-to-face meetings that can help address the most current business climate as well as make progress on long-term challenges facing your businesses.
Many company executives have peers that they use for counseling on specific job tasks. But your entire business needs a sounding board. Many of these relationships evolve into purchasing consortiums or other cooperatives that share resources. You can design yours to be whatever you need.
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