Small buyers can beat big with joined-up thinking

Small- to medium-sized enterprises (SMEs) have discovered there’s strength in numbers. The trend began some years ago for smaller printers, mainly specialising in digital output, banding together in ‘hub’ models to share jobs and transfer peak loads. This has benefited both customers and printers.

One of the flow-ons from hub printing has been the ability to find more efficient ways of doing things further up the supply chain, in terms of buying consumables, even capital equipment. There are plenty examples of buying groups in all walks of life and all industries, including some close to home. 

There are a number of cooperatives already operating in Australia, but now a much larger organisation is bringing its combined purchasing clout to Australia and New Zealand. Independent Printers Worldwide (IPW) is a member-based buying syndicate with a combined US-Europe turnover of US$2.5 billion.

Launched by Mark Campbell, formerly of PMP and McPherson’s Printing Group, IPW has assembled some 20 print companies in Australasia. The target is 25 before the buying program will be rolled out, he tells ProPrint.

Campbell, IPW’s regional director, says: “IPW is a hugely successful business operating out of the US, with hubs in Europe, and South Africa – cumulatively representing $2.5 billion in print and communication. IPW Australia and New Zealand has set up here to provide the same financial procurement benefits to small independent printers in this region.

“IPW will allow SMEs to stay indepen-dent and go to market cost-competitively. The majority of the international suppliers have agreed to extend their existing IPW contracts globally, which provides a significant advantage to local members.

“Buying groups will become more popular simply because it’s a far more compelling proposition than singularly dealing with vendors. Outsourcing these negotiations to a third party is ultimately beneficial for all involved. Suppliers will still ‘win’ under this arrangement, with more products being sourced via the buying group, and SMEs seeing the benefit directly to their bottom line. Realistically, it’s one less thing independent printers need to worry about,” says Campbell.

Where’s the catch?

Buying groups are set up to secure lower prices for their members, so there’s no avoiding the fact that somewhere up the chain, someone is going to be asking for a discount. It’s easy to see why some suppliers might be concerned about being squeezed on price. 

“Vendors are within their rights to refuse selling to IPW, however, we have received an overwhelmingly positive response from all of the vendors that we are dealing with,” says Campbell.

He says that previous attempts at buying groups gained little traction, partly because most focused solely on universal procurement, from office products to vehicles. But the real cost for printing companies is in production, he argues, and consumables play the greatest part. 

“Without an international approach, it is difficult to negotiate deals that provide a point of difference. Addition-ally, these programs need significant ‘back end’ functionality for reporting and managing the processes to provide visibility and transparency to members. This has proven difficult to set up and manage.

“Buying collaboratively is the way forward in the industry, so fear shouldn’t be preventing printers from the benefits offered by the model. Our experience is quite the opposite, with many printers who are essentially competitors already collaborating, and they see IPW as a natural extension of what they are doing.”

Melbourne-based Vega Press has enjoyed close relations with Mark Campbell for some time, and when he proposed the join the co-op, Vega studied his concept and registered. For com-mercial manager Rob Nugent, IPW will, at the least, be a benchmarking exercise to gauge the prices it pays for consumables.

“Like most printers, we believe we’ve got reasonably good deals with our suppliers and it will interesting to see whether that’s true. If IPW’s theory works, which it seems to have done overseas, it will bring some consistency to the market for purchases of material such as paper, particularly standard lines,” says Nugent.

“It may have some advantage for inks, as there aren’t that many products out there. There might be some good opportunities with small line items in the bindery, such as shrinkwrap, because the prices vary a lot. And there’s a lot of time involved trying to get the best pricing.”

Vega is no stranger to co-ops, participating in the Victorian Chamber of Commerce & Industry (VECCI) buying group for its energy contracts. 

“We used to do individual contracts with our energy supplier. But it makes sense to go through VECCI, because of the high number of members they’ve got and, with the purchasing power they can get through the retailer, you get a good deal.” 

David Atkins, managing director of Auckland-based Image Centre Group is weighing the prospect of signing up with IPW. “We are not closed to the concept at all but wonder whether New Zealand has both the diversity and scale of market along with the geographical span to allow it to deliver any significant savings to potential members. I feel New Zealand is probably too small for IPW to achieve its potential. I do like the idea of collaboration and regularly work with a group of printers and will continue to do so.”

Critical mass

Mauro Mattarucco, managing director of Melbourne-based PrintBound, was receptive when Campbell sounded him out about IPW. Mattarucco is at pains to explain that it’s early days but he is interested in co-operative procurement of papers, plates and press chemicals. 

“They do of course need to be suitable for your production needs and workflow, but if they are, then you can enjoy the benefits of belonging to a co-op.”

Mattarucco believes any co-op needs to build a critical mass of member businesses before it can make any impact and he is waiting for that situation to firm up with IPW.

To the casual observer, there’s one stumbling block to these kinds of collectives. Rival businesses are not known to play well together. In an industry as pressurised as printing, competitive tensions are palpable. While for the most part, printers fight fair and can find common ground over a beer at, say, the National Print Awards or at a trade show, the market can be vicious. Printers are known to undercut each other to win work, poaching clients is far from a rare occurrence and ProPrint knows firsthand that backstabbing is not uncommon.

Mattarucco dismisses the idea that competitors can’t procure co-operatively. “I can’t envisage any hurdles, if you really have a desire to be part of a group. I’ve been used to sharing ideas and building trust and friendships in the industry for some time now.”

PrintBound is a member of the Printing Industries Association of Australia’s (PIAA) buying group, which has pre-negotiated offers on operational products and services, such as fuel cards, laptop computers, business travel and car leasing, all at discounted membership prices,
and provides contract negotiations for utilities, phone, internet, insurance and waste management.  

Launched in April, the group is a one-stop online shop. It is coordinated through the association’s partnership with co-op EMS Squared, which is jointly owned by Leading Edge Group, a private buying group representing 1,300 Australian retail stores and by Employers Mutual, Australia’s largest mutual workers’ compensation manager, representing more than 90,000 SMEs and managing more than $1 billion in assets.

PIAA communications & marketing director Joe Kowalewski tells ProPrint the greatest interest so far has been electricity. The group is also close to finalising EFTPOS facilities and health insurance, and exploring reduced credit card and merchanting fees. 

An Australian consumables vendor, who does not want to be identified, tells ProPrint there were pros and cons to bulk buying and what suits one situation does not necessarily suit another. 

He is sceptical of claims that some businesses might not even be players if not for their co-op link. He felt it is far more likely these printers would be in the market, just paying higher prices and trimming margins. “Everybody has to be able to make a living,” was his reflection, and squeezing vendor’s margins, particularly in the current climate, was making that difficult. 

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