Frequently Asked Questions
What is the difference between a Cooperative
and a Consortium ?
Often a cooperative and its members are non-for-profit organizations from a specific industry in a close proximity to each other. Also, competitors can be members of a cooperative and utilize the same administrative services and staff. Cooperatives also actively advertise and collect dues from members as well as suppliers. A consortium is a formal business corporation whose members are for-profit business firms from various industries and geographic regions. Suppliers do not pay fees to participate, and there is no interaction between competitors.
Are Purchasing Consortiums Legal ?
Properly established and managed consortiums operate legally. However, the legal aspects of the consortium must be carefully monitored. When group purchasing is discussed, most purchasers are concerned with the Robinson-Patman Act, a law applying to products but not to services. This Act requires that favorable prices received by the purchasing group must also be available to comparable purchases, unless the pricing differential is cost-justified or granted to meet a competing suppliers price. The CPS Consortium is in full compliance with all governing federal, state and local laws.
Will I lose control of my procurement
activities if I join the consortium?
In the consortium most aspects of the supplier relationship other than price remain under the individual purchasers full control.
Is the supplier cooperation poor ?
Suppliers to the consortium may initially fear expensive concessions and be reluctant to participate. However, suppliers involved in consortiums say they are rewarded with large future volume requirements from the consortium members. Suppliers also see advantages in timely and dependable receivables. By participating with the consortium, suppliers ensure an opportunity to serve a large group of customers and improve quality based on input from those relationships.
Will my company's secrets be exposed ?
CPS employs mutual-nondisclosure agreements. All members volumes, pricing, and supplier information are kept confidential.
What will it cost to become a member of the
CPS Consortium ?
CPS currently has two membership fee structures.
Our one-time membership fee covers all commodities currently under contract at the time of joining. This one-time fee traditionally offers our clients an average of 700% return on investment.
In our "Sharing of Cost Savings" approach, there are no up front fees. This program works well for those organizations with fixed annual budgets. CPS is only compensated through the sharing of procurement savings. When CPS negotiates cost reductions through the leverage buying power of the consortium, your organization receives 65% of the supply chain cost savings and CPS receives 35% of the supply chain cost savings. All supply chain cost savings for subsequent years are received by your organization.
Are there any limitations or qualifications
for membership ?
Members will be accepted by a specific criteria set by CPS to remain compliant with all laws, acts, and legislation. In certain industries where little or no competition exists, CPS will limit memberships due to FTC regulations.
Is it mandatory to purchase products through
the CPS supplier agreements ?
It is not mandatory to purchase all your products through the CPS Consortium. Your purchases are totally voluntary, and you may purchase outside the consortium agreements at any time. However, you will find that in most cases the consortium supplier agreements will provide your company with the best price, quality, and service available in the marketplace. Also as more volumes are added to the consortium base, supplier rebates can make purchasing through the consortium the best procurement choice.
Will we lose our corporate individuality with
the suppliers ?
No. All of our approved suppliers will work directly with you to handle all your strategic goals including: local issues, specifications, delivery, and payment arrangements.
Does CPS set up the credit arrangements with
the suppliers ?
All credit terms and arrangements will be further negotiated by the consortium member and the supplier due to local issues. CPS will utilize a 30-day term for payment arrangements in all bid proposals.
Can our company sell products to other
consortium members ?
You may participate in any bid process as a potential supplier. All winning bids will be awarded solely based on price, quality, and service.
May one of our suppliers sell through the CPS
Any global supplier may compete in the bid process. The contracts will awarded to those suppliers that best fit the needs of the consortium members. This includes the best price, quality, and service throughout the world.
How does CPS earn its revenue ?
CPS earns its revenue directly the sharing of cost savings, membership fees, reverse auction fees and consulting fees.
What if we want to cancel our membership ?
You may cancel your consortium membership agreement at any time. CPS requires that this be done in writing. Upon CPS receiving the written cancellation, your organization will forfeit all rights to procure goods and services under the CPS Consortium Supplier Agreements.
May we join another consortium or purchasing
Yes, your purchases as totally voluntary. Therefore, you may join as many purchasing groups or consortiums as you feel necessary.
For more information please contact us toll free at 800-277-0826 or visit our contact page at your convenience.
Copyright 2011 Corporate Purchasing Solutions, Inc.