Influence of group purchasing organizations on financial situation of Polish SMEs
DOI:
https://doi.org/10.24136/oc.2018.005Keywords:
group purchasing organization, finance, commercial enterprisesAbstract
Research background: SMEs often operate in markets where they compete with large companies. A fight for a customer, payment backlogs, problems with debt collection and new branches cause that managers are looking for solutions that will influence positively on the situation of financial companies. Maintaining liquidity and generating income are the primary steps to build a competitive position and a progressive development of enterprises. One of the most popular methods that allows companies to do profitable business and increase their chances for safety is operation within group purchasing organizations. Currently in the Polish market there are many different types of GPOs (Group Purchasing Organizations). The choice of the right one is a chance to improve their financial situation.
Purpose of the article: The aim of the article is to present an impact of group purchasing organizations on the financial situation of enterprises. In the article the classification of groups is done and there are shown the benefits that commercial enterprises operating in them gain. The article presents some obstacles to join specific group purchasing organizations and difficulties faced by companies operating in them.
Methods: The studies were carried out on the basis of 60 SMEs. These companies operated in five Polish GPOs. The groups were divided into branch and multi-branch ones. The study period covered the years 2013?2015. In order to analyze the impact of purchasing groups on the financial situation of enterprises, some selected groups of financial ratios were used. A preliminary analysis of financial balance sheets and profit and loss account was conducted.
Findings & Value added: The analysis showed that the choice of an appropriate group purchasing organization had a large impact on financial situation of companies. Different opportunities can be offered by a branch purchasing group than by the multi-branch one. Research has shown that better results relate to dynamics of revenues, costs, liquidity and profitability that are effects of operation within the branch purchasing groups. The analysis conducted has also showed that functioning within purchasing groups allows to maintain safe financial liquidity, apart from obtaining a low price of purchased goods and materials, and has a positive impact on the effectiveness of managing receivables and short-term liabilities.
Downloads
References
Blair, R. D., & Durrance, C. P. (2014). Group purchasing organizations, monopsony, and antitrust Policy. Managerial and Decision Economics, 35(7). doi: 10.1002/mde.2633.
Burns, M. (2016). Logistics and transportation security. A strategic, tactical, and operational guide to resilience. New York: CRS Press.
Burns, L. R., & Lee, J. A. (2008). Hospital purchasing alliances: utilization, services, and performance. Health Care Management Review, 33(3). doi: 10.1097/01.HMR.0000324906.04025.33.
Christopher, M. (2011), Logistics & supply chain management. Harlow: Prentice Hall.
Dana, J. D. (2012). Buyer groups as strategic commitments. Games and Economic Behavior, 74.
Doucett, W. (1997). Influences on member commitment to group purchasing organizations. Journal of Business Research, 40(3). doi: 10.1016/S0148-2963(96)00234-2.
Hu, Q. , Schwarz, L. B., & Uhan, N. A. (2012). The impact of group purchasing organi-zations on healthcare-product supply chains. Manufacturing & Service Operations Management, 14(1).
Lekkakos, S. D., & Serrano, A. (2016). Supply chain finance for small and medium sized enterprises: the case of reverse factoring. International Journal of Physical Distributing & Logistics Management, 46(4). doi: 10.1108/IJPDLM-07-2014-0165.
Madhou, A., Moosa, I.,& Ramah, V. (2015). Working capital as a determinant of corporate profitability. Review of Pacific Basin Financial Markets and Policies, 18(4). doi: 10.1142/S0219091515500241.
Marvel, H., & Yang, H. (2008). Group purchasing, nonlinear tariffs, and oligopoly. International Journal of Industrial Organization, 26.
Mikelsen, O. S., & Arlbj?rn J. S. (2015). Purchasing consortia: when money does not make the whole talk. International Journal of Procurement Management, 8(3). doi: 10.1504/IJPM.2015.069156.
Nollet, J., Beaulieu, M., & Fabbe-Costes, N. (2017). The impact of performance measurement on purchasing group dynamics: the Canadian experience, Journal of Purchasing & Supply Management, 23.
Nollet, J., & Beaulieu, M. (2005). Should an organization join a purchasing group? Supply Chain Management, 10(1).
Pais, M. A, & Gama, P. M. (2015). Working capital management and SMEs profitability: Portuguese evidence. International Journal of Managerial Finance, 11(3).
Piorunowska-Kokoszko, J., & Romaniszyn, B. (2015). The impact of purchasing groups on the operational efficiency of the company on the example of Komandor Łódź S.A.. Studia Ekonomiczne Regionu Łódziego, 19.
Praksath, S. (2009). Group purchasing organization - undisclosed scandal in the U.S healthcare industry. New York: Palgrave Macmillian.
Rushton, A., Croucher, P., & Bake, P. (2010). The handbook of logistics and distribution management. New Delhi: Kogan Page.
Schotanus, F., Telgen, J., & de Boer, L. (2010). Critical success factors for managing purchasing groups. Journal of Purchasing & Supply Management, 16.
Schotanus, F., & Telegen, J. (2007). Developing a typology of organizational forms of cooperative purchasing. Journal of Purchasing & Supply Management, 13.
Weinstein, B. L. (2006). The role of group purchasing organizations (GPO) in the U.S medical industry supply chain. Estudios De Economia Aplicada, 24(3).
Yang, Y. C., Cheng, H. K., Ding, C., & Li S. (2017). To join or not to join group purchasing organization: a vendor's decision. European Journal of Operational Research, 258(2). doi: 10.1016/j.ejor.2016.08.069.
Zimon, G. (2017). Inventory management costs in enterprises working in purchasing group. In Book 1 modern science ? volume I political sciences, law, finance, international relations: Vienne, SGEM 2017: 4th international multidisciplinary scientific conference on social sciences & arts - conference proceedings. doi: 10.5593/sgemsocial2017HB11.
Zimon, G. (2015). Organization of goods supply in the marketing and purchasing group. Logistyka, 4.