With inputs from Karthik Somasundaram -- Senior Research Analyst
Casino operator Caesars Entertainment and Foodbuy, a unit of Compass Group Inc, have joined hands to create a group purchasing organization aimed at the North American gaming and entertainment industry.
Group purchasing organizations (GPOs) are typically end-to-end service providers on a global scale. Their value propositions to prospective buyers are integrated sourcing models, transparent supply chain including cost structures and other quality related parameters.
GPO model have proven successful in other industries such as healthcare, education, manufacturing and hospitality.
The new entity named Parlay Solutions will combine Caesars' expertise in the gaming industry, supplier relationships and sourcing capabilities with Foodbuy's supplier relationships, analytics and procurement expertise, the companies said in a statement. Click here
The joint venture brings in expertise managing more than $20 billion in purchasing volume.
"Parlay will help its members save on their supply chain expenses through purchasing efficiencies as well as help them optimize their spend with local and diverse suppliers," said Mark Frissora, Chief Executive of Caesars Entertainment.
More than 200 Caesars suppliers have signed on to join Parlay. Along with more than 2,000 suppliers from Foodbuy, Parlay would help gaming operators to realize savings on the millions of dollars they spend annually on their supply chain.
Meanwhile, suppliers will benefit from faster and more economical ways to create and grow relationships with gaming operators across North America.
Engaging with a GPO enable buyers to have all the value added services under one global contract, which in turn helps cutting costs as well as supply base.
A typical hierarchical structure in a GPO is established in such a way that there are separate local teams handling local or regional stakeholders of a single client. This ensures that the regional and local requirements are also taken care of while sourcing globally.
The local account team understands local dynamics, which is very essential to work in partnership with key local stakeholders and ensure that the services are delivered effectively. The local teams along with the operations managers take care of compliance and procedures, factory/manufacturer audits, freight management and other legal compliances required for each country.
The GPOs also have other functional teams like IT, Project Design and Supply chain who work with their respective regional peers.
It is not immediately clear how Caesars Entertainment and Foodbuy have structured their GPO.
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