Private Equity ownership and bulk purchasing savings

An article in the New York Times(July 12,2012) describes the private equity firm, the Blackstone Group, which owns 74 companies with a combined 700,000 employees. Across its companies, the firm buys 15 million reams of paper, 35 million FedEx shipments and 900,000 car rentals. Centralized buying through a group purchasing program called Coretrust has enabled savings of 10 to 50%, but requires companies to switch to a common supplier and specifications. Is this switch to more detailed operations a new capability of private equity firms ? Could the focus on savings through common specifications destroy revenues at the individual companies ? How should such programs be managed so that they do not hurt individual firm preferences – should participation be made voluntary ?

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About aviyer2010

Professor
This entry was posted in Operations Management, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

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