I interviewed Mary Pat Freeman who discussed Leveraged Purchasing Agreements.
Well today were speaking with Mary Pat Freeman, we've spoken in the past we've gone interviews in the past and today, she's going to discuss something does not-well-known regarding how companies can achieve significant operational cost savings. So Mary, can you start by providing a brief background of yourself and your company.
Certainly, I’m Mary Pat Freeman, a corporate strategic consultant and previous Vice President of i-pallets, Inc. a division of Indiana Properties TriState Logistics, a US provider of international logistics, pallets, and warehouse services located in southern Indiana that currently operates a 350K sq. ft. storage and outsourced manufacturing facility. I helped them launch a new product line and find ways to reduce and control costs with ramping up. That’s why I’m here – to talk to you about a great way I found to save significant indirect costs.
Today, cost-reduction strategies are top of mind for most executives. World economics mandate it. Yet, many executives overlook one major strategy that could have the biggest cost-savings impact to their operation – Leveraged Purchasing Agreements. I’m here to talk about it because I didn’t know about it.
What are Leveraged Purchasing Agreements?
Leveraged purchasing agreements, or LPA’s they are called, allow medium-to-large companies with significant spends in these areas to be able to enjoy the large discounts that large Fortune 500 companies get for their indirect spend– well beyond what they could achieve negotiating their own volumes – and I’ve found that Gentry Partnership, another US company, offers LPA’s that are unique- andcould save money for many of you listeners.
So, who is Gentry Partnership?
John Syverson is who I’ve worked with at Gentry Partnership, a US company based out of Chicago, IL. John is a Managing Partner for Gentry Partnershipand has personallynegotiated many of their LPA’s. He has extensive expertise in corporate purchasing and negotiating and previously worked as an executive for Kelly Services, United State’s largest temp labor provider. He’s very effective at leveraged that knowledge as well as his professional connections to construct effective agreements.
What types of cost-savings are available through Leveraged Purchasing Agreements?
Gentry Partnership has focused on several very specific indirect spend areas – those that can have the largest financial impact on a company: Temporary or Contract Labor, International Freight Forwarding, Small Parcel Shipping, and Corporate Relocation Services. Yet, because of their expertise, theyalso offer Workplace Solutions, Safety Equipment, and prescription benefit LPA’s as well. Your international listeners would probably be most interested in the Temp/Contract Labor LPA or the International Freight Forwarding LPA’s they offer.
According to John, for the Temp Labor LPA, it took over 2 years to develop the LPA that your listeners could participate in. Gentry Partnership brought together Sr. Leadership from several large, Fortune 500 international companies to develop the Temp Labor LPA. The Agreement aggregated their entire spend – all 200 Million dollars of it.
They, then leveraged this $200Million in a draft LPA, and put it out for bid – not just to achieve higher discounts, but to achieve improved service performance, Business-to-Business communication, and, improved problem resolution response time. They then thoroughlyassessed each potential vendor’s proposal, selected a few large, reputable vendors to work with, and created the Temp Labor LPA.
They did the same for international freight forwarding.
So what impact have these clients seen on their operational budget by participating in thesespecific LPAs?
Gentry has indicated that all of their existing clients are now realizing significant savings – between 10 and 39% of their overall, already-very discounted rates. Plus, they are seeing improved service metric, stronger vendor relationships, and quicker problem resolution when issues do come up.
Are there other providers of the same types of LPAs? And what’s the major difference between them?
Yes, there are other providers. In the United States, there are a few large GPO’s or group purchasing organizations that offers this type of leveraged purchasing power…. But, I found Gentry Partnership’s LPA’s to be different. Many of the other GPOs require huge member fees (some up to $2500) to reap the cost-savings benefit. However, Gentry does not charge membership fees. Plus, Gentry Partnership does not charge to perform the analysis necessary to know if companies could companies could benefit from participating. They simply dialogue about needs, provide a few spreadsheets that you populate with current usage information, and then they show you how much you’d pay using the tiered-discounts available in the Gentry LPA. YOU decide if you want to participate…..
Plus, because the continuance of the LPA is based on the overall aggregate spend, savings and improved service level agreements are just going to get better over time. That’s what I loved about it when I was first introduced to it and why I think your listeners should be aware of its availability.
So what types of clients can participate?
For Temp Labor LPA’s, any client that is medium-to-large in size and could benefit from a higher tiered pricing and service structure in either temp labor utilization or international freight forwarding. Even large defense contractors can participate. And, each of them can reap the benefits without signing a long-term agreement or paying upfront fees.
In fact, some clients engage Gentry at the outset to help design the entire cost-saving program and manage the vendor selection and negotiation processes, while others bring Gentry in at the end of their selection process to drive additional savings they may not have known existed. Bottom-line -- Many of YOUR listeners could participate.
John provided me with Case Studies for both Contract Labor and for International Freight Forwarding. I’d be happy to provide links to access them.
Sounds like a very good cost-savings strategy. So how can listeners contact you if they would like more information?
About Mary Pat Freeman
Mary Pat Freeman
Business Development/Marketing, i-pallets. Inc.