Recent waves in the industry have made it more necessary than ever for builders to join forces. As a successful, independent home builder, a group purchasing organization can help you fare the ups and down of the market. Riding these waves — supply chain and labor shortages — with your fellow builders by your side has its perks.
Maybe it seems like a bad idea to work with the competition, however, GPOs prove it’s worth it. Strength in numbers gives you the advantage when it comes to purchasing and guaranteeing materials.
Consider this your basic guide to a GPO: the benefits to your company and how to start saving.
What is a GPO in construction?
Group purchasing organizations are a network of buyers that work together for the common goal of lowering costs on goods. A GPO in construction aims to link builders with a larger network to secure building materials and cut construction costs.
What are the benefits of a GPO membership?
Simply put, membership in a GPO boosts your bottom line, shortens your material lead time and broadens your builder network.
Have you considered joining a GPO? Would it be a good fit your business? What are the benefits?
Here are four ways a GPO will benefit your company:
1. Lowered costs
Are you looking to reduce your overhead?
With a home builder buying group comes clear, set pricing for your materials and at a discounted group rate.
The competitive pricing is negotiated by the group and the manufacturer, which gives you more buying power than you would have on your own. Building-material-buying-groups use higher volume to bring down the cost of construction materials.
Working smarter means working together with fellow builders to assure locked-in and low-cost construction materials. The power of group purchasing saves your business money and can help you reach that next level.
Rebates are another way to save with a GPO. When you enroll in a rebate program and report your purchasing to a GPO, savings will be deposited directly back to you. With rebates, you can earn back a percentage of your purchase on construction materials and other building expenses.
Tim Jackson from Tim Jackson Custom Homes in Dallas is a success story of how to save stress and thousands of dollars by joining a GPO. CBUSA is one line of revenue for this construction business.
Jackson said, “It’s nice to look back and see we’ve got $40,000 or $50,000 in rebates a year.”
2. Reduced hassle
How much time do you spend getting multiple quotes on materials?
Time is money — and negotiating takes time. A group purchasing organization negotiates on your behalf and pricing information is ready immediately online. It’s as easy as a quick search to compare prices. Stop running around to multiple vendors when a GPO can do the work for you.
When you join a GPO, you become a team member of the best builders in the market. While some GPO members may be competitors, each participant is working towards a common goal … lower costs.
Your fellow builders know the industry best, so look inside your industry to find the skilled labor your business requires. Knowledge and collaborating with other members will set you above the competition.
With a community of vetted builders and remodelers, you will have the resources you need to learn how to beat the construction labor shortage and overcome other common industry challenges.
3. Guaranteed materials
How has your business been impacted by the material shortages?
According to the National Association of Home Builders, more than 90% of builders reported shortages of framing lumber, engineered wood, plywood and appliances.
Builders are facing both material shortages and surging construction supply costs. Buying materials on your own with your individual volume creates many unknowns for your business.
When materials are backed up, individual purchasing can make a mess of your job deadlines and leave you with undesired brands.
Missing deadlines and utilizing lower-end brands makes for unhappy clients and backed up jobs. No one ends up the winner in this common and current situation.
The upside of a GPO is the ability to secure the best products with more accurate lead-times. When materials are on-hand, jobs are on schedule and clients are satisfied. Win. Win. Win.
4. Preferred brands
Has a client passed you up to work with a larger company?
Being an independent builder doesn’t mean you should have a disadvantage compared to the big guys.
A GPO enables small business builders to maintain independence while accessing the brand network of the big builders.
You can maintain your small, local building business, but also have access to premiere brand partners such as Andersen Windows & Doors, Lennox, Ferguson, Kohler, Dupont, Electrolux, Cambria and Beacon to name a few.
Check out the rest of CBUSA’s national brand partners.
Since 2004, CBUSA has brought more than 500 independent builders and over 1,200 suppliers together to create more than 30 local chapters across the country.
With this expansive network, CBUSA allows you to save on brand name products.
How do you get started?
Applying for a GPO membership is simple.
CBUSA is the leading group purchasing organization for the residential construction market that connects like-minded, high-end builders and remodelers under the goal of saving you money.
Start by connecting with a member of the CBUSA team to see how a GPO could benefit your construction business.
Once you determine it’s the right fit, simply apply for membership and the savings are immediate.