5. Steroids: Strength from scale. Orchard Brands has used its power as a group to negotiate very aggressively and effectively with its vendors. “We do this on a coordinated basis,” she said. “Culturally at Orchard, it’s not acceptable to go off and do your own thing.”
Specifically, the company has negotiating power with printing, paper, shipping, merge/purge and other key areas. “We’ve gotten together, gone out and tried to consolidate efforts to negotiate.”
As a group, the company obviously gains economies of scale in such areas as its distribution center and call center operations by leveraging staff functions. Each brand has a distinctive front-end focus. The value comes from Orchard’s shared services organization, which consists of call center, distribution center, IT and finance.