Pro Group Changes Vendor Strategy
Bringing together Pro Group members as one buying group for Panasonic was in part made possible by floor planning providing by Capital Solutions, Iacoviello and Workman said. Panasonic plans to open up its full line of CE products to the members and hopes to increase sales through the group by roughly 50 percent within a year, Iacoviello estimated. “This is a big initiative so we’re going to make sure we get it right,” he said.
Workman underscored that statement, saying that he hopes to eventually involve all of Pro Group’s major vendors in similar programs. “We’re not ending with Panasonic, but we needed someone to take us from zero to one,” he said, adding that no new vendors would be involved during the second half of this year.
Workman referred to the program as a “virtual distribution model.” Some major buying groups have similar purchasing arrangement with vendors but usually use a distributor as a middle man, which can add six to eight points to the overall cost, he said. The new program greatly reduces those costs and helps to develop closer working relationships between the manufacturer and retailer, which should ultimately decrease inventory on hand to three weeks from its current level of about five weeks, he said.