James Hallock: 0:03

I think we really do a nice job balancing the value that the member receives, along with the market share that the supplier receives. And that's an important balance here because it, this really, this model has to work for both parties involved and typically the way we manage it, it's an exchange of value for market share, right? And if you think about a scale, we're gonna tip the scale in the favor of the, member in pricing, but we're gonna move market share back to the supplier in exchange for that market leading pricing.

Tom Raftery: 0:35

Hi everyone. And welcome to episode 310 of the digital supply chain podcast. My name is Tom Raftery, and I'm delighted to be here with you today sharing the latest insights and trends in supply chain. Before we kick off today's show. I just want to take a quick moment to express my sincere gratitude to all of our amazing supporters. Your support for this podcast has been instrumental in keeping it going. And I'm really grateful for each and every one of you. If you're not already a supporter, I'd like to encourage you to consider joining our community of like-minded individuals who are passionate about supply chain. Supporting the podcast is easy and affordable with options starting as low as just three euros or dollars. That's less than the cost of a cup of coffee , and your support will make a huge difference in keeping the show going strong. To become a supporter, simply click on the support link in the show notes of this or any episode of the podcast. Our visit tiny url.com/d S C pod. Now. Without further ado, I'd like to introduce today's special guest James, James, welcome to the podcast. Would you like to introduce yourself?

James Hallock: 1:43

Thanks, Tom. Yes. My name's James Hallock. I am the Chief Revenue Officer for Core Trust, which is a GPO here in the United States.

Tom Raftery: 1:50

Okay, cool. And let's, let's take a step back, James, for people who might not be familiar with the terminology, what's a GPO?

James Hallock: 2:01

Sure. GPO stands for group purchasing organization and there are a number of sort of varieties or flavors, if you will, of GPOs, but typically a GPO is a, is a group that negotiates contracts that address different types of spend, right, that are then available for entities to use, typically to find some sort of value or savings.

Tom Raftery: 2:24

Okay. Is it kind of analogous to kind of a Costco that you go out and you buy in bulk and then you have kind of a membership and you get discounted prices for them? Is it that kind of thing?

James Hallock: 2:35

You know, it's similar in the sense of the, the bulk buying you just described Tom. Right. So, you know, kind of one of our key tenants as we try to aggregate spend at a level that does provide some leverage in the market. The difference is that like with Costco, a consumer would actually buy from Costco. Sure. But in our case, the, the business actually will buy from the end supplier. Right. Even though we've negotiated the contract.

Tom Raftery: 2:59

Okay. And just as a matter of interest, could you share the story behind the founding of CoreTrust and you know, how, how it's evolved?

James Hallock: 3:08

Absolutely happy to. So, so GPOs kind of have their space in different market segments, if you will. So one of those segments where GPOs were early adopted was in the healthcare space. So if I take you back into the nineties, there were a few GPOs that served the healthcare space, and one of those is an entity called Health Trust here in Nashville, Tennessee. It's owned by HCA, so, we spun or formed out of Health Trust and the idea was back in the 06, 07 timeframe, we had this idea to take the non-clinical contracts, so those categories of spend that weren't just specific to healthcare, right? That had application in the commercial market. We took those out and we, we tested the idea that they might provide value in the commercial space. And with that, this idea of Core trust as a commercial GPO was born.

Tom Raftery: 3:57

Okay. Who are typical customers of Core Trust and what kind of benefits are you providing for them?

James Hallock: 4:07

Sure. Absolutely. So most of our, and we call them members by the way, back to your Costco reference. So, so most of our members are, uh, commercial entities in the, call it upper mid-market, uh, you know, fortune 1000 space, if you will. So large companies that are looking for value beyond what they might otherwise achieve on their own. Okay, so what I mean by that, and we talk about, we talked about leverage a minute ago, right? So when the company goes out to source to build contracts, to identify spend, they're gonna try and create leverage in the marketplace, which would result in favorable pricing terms, conditions, et cetera, right? Sure. So what we do as a GPO is we try to bring more volume and more scale into that, that negotiation process. To then deliver value that, again, should be greater than what an individual company could achieve on their own.

Tom Raftery: 5:01

Okay. And so yeah, you are kind of a partner for the C P O in the company. Um, I'm, I'm, I'm taking it. That's who you're working with on the company. And is it just, lower pricing that you deliver or are there other benefits as well?

James Hallock: 5:17

Sure, sure. So, so to begin with, yes. We typically talk, talk to the cpo, the Chief Procurement Officer. Often our, our relationship also is centered on the CFO who has, you know, right savings as a, as a target for the organization. The conversation typically begins with price. It's a focus on price, and there's a, a deep analytical process to prove the value opportunity early in the engagement. Because that's sort of the foundation of, of how we build a relationship. However, we tend to focus on a number of other things that go beyond price. So probably if I was going to take you through the process, you know, sort of leverage to negotiate prices, the first piece after that, it, to us, it becomes sort of a speed to savings, if you will, Tom. Right. Okay. So most GPOs like ours, have pre-built contracts, I'm gonna say typically in the indirect spend space, right? So those spends that are sort of horizontal in nature, you know, regardless of industry or market segment, et cetera. So, so we build those contracts and they're available. So if we run a savings analysis for a company and it looks like there's an opportunity, they can elect a category and start saving immediately, as opposed to them running a lengthy, what, three to six month sort of sourcing activity or process.

Tom Raftery: 6:36

Okay. Yeah. Okay. Nice, nice, nice. And what do you think sets CoreTrust apart from other, say, GPOs in the market? How do you, how do you remain competitive?

James Hallock: 6:47

Sure. So I would say a number of things. One scale really is impactful here, right? So, and we've been at this, I would say longer than most in the commercial space. So the, the, the leverage we're able to create based on the volume of spend that we have under management is significant and it delivers a different value, to our members. Secondly I would say, I think we really do a nice job balancing the value that the member receives, along with the market share that the supplier receives. And that's an important balance here because it, this really, this model has to work for both parties involved and Typically the way we manage it, it's an exchange of value for market share, right? And if you think about a scale, we're gonna tip the scale in the favor of the, of the member in pricing, but we're gonna move market share back to the supplier in exchange for that market leading pricing.

Tom Raftery: 7:41

Okay. And we are kind of in a bit of a economic downturn at the moment. sure. How, how is that impacting Coretrust and how is it impacting your customers and suppliers?

James Hallock: 7:56

Absolutely. So, gosh, there's so many, there's so many levels to that discussion. So when you think about what's happening with a business's supply chain or procurement team, right? Mm-hmm. They're probably finding themselves number one, running a little bit lean, given resource constraints, right? In this environment. And number two, really actively or aggressively looking for savings. So the first part of that piece, we serve as an extension of their team, right? We've, yeah, we typically say that we take care of the, the tactical challenges that they face so they can go really focus on those items that are more strategic value inside the organization. So we become a really valuable extension of their team in this type of an environment. For us as a business, what that means is we typically experience some growth in terms of number of members. However, the spends sometimes decrease a bit, right? As companies look to, to pull back on the expense side in these sort of economic times. So it's a little bit of a balancing situation for us in an environment like this.

Tom Raftery: 8:58

Okay. Okay. And this is the Digital Supply Chain podcast. So how is the role of digitalization and technology, how has that played in, you know, the growth of Coretrust and your ability to serve your members efficiently?

James Hallock: 9:14

Yes. So it's, it's actually something that I think will have a bigger impact for us going forward than it, than it has for us historically. I would say traditionally, the GPO space probably has not been an early adopter in the world of technology within the call that digital supply chain. Mm-hmm. But what we're looking to do as a number of things, Tom, so one is we're trying to really automate more of the engagement process and experience so that it's a, it's a smoother, faster process for a member and that accelerates their speed to savings, right? So there's, the value for them is to recognize, recognize savings more quickly. Um, that's number one. Number two for us is a better use of data in the process. So in addition to kind of automating the process, uh, we're, we're, we are taking a look at how to better leverage data to provide more visibility to our members and to allow us to really better meet their needs. And so, When I think about meeting their needs, it's gonna be both to sort of map their spend into where we can best help them. So that's kind of the priority, right? But then the second step of that is to use that data to help us determine where we need to go build the next contract. Again, we're we're very member driven, right? Member led. So we wanna make sure we're building contracts and programs that are of value to the member.

Tom Raftery: 10:35

Yeah, cuz I was gonna ask how do you determine which categories to include in your portfolio and how do you ensure kind of maximum value for your members? I'm sure that's leading into that you're using the data to decide which way to, kind of point to, to use the Gretzky term. You're, you, you, you know, you go to where the puck is headed. Is that, is that kind of the, that the theory.

James Hallock: 10:56

That absolutely is the theory, Tom. So then of course, the challenge is to determine where that puck is going, right? So, uh, to do that, we, we actually approach it a number of ways. One is we do use data from our members, so that is a big part of it. Secondly, we set up advisory boards. So those advisory boards are gonna be a combination of CPOs and CFOs. But also, and we haven't really talked about this, but we have a, a strong presence in the private equity space. So we tend to work really well with private equity firms, cuz as, as you know right, they, they buy companies and look to increase their value and we help them increase their value by driving cost out. Right? So, so, we'll, we'll typically stay very close to operational leaders at the private equity firms and they help guide us down the path they'd like to see us take as it comes to addressing spend.

Tom Raftery: 11:43

Nice. we're seeing now a huge increase, uh, in interest in sustainability and ethical sourcing. So how are you incorporating that into your procurement strategy and supporting members in achieving their sustainability goals? Or does that come up at all?.

James Hallock: 12:03

So it, it has started to come up. Yes. And so for us, the focus really becomes on the suppliers with whom we contract. So, we get very close to our top suppliers and we start to understand sort of their ESG plans, frameworks, right? How they're trying to drive sustainability, how they're trying to reduce, you know, their footprint and their, you know, emissions, things like that. So, we'll often have those suppliers come in and present their plans to our members. So, you know, maybe on a, on an event like this, a podcast, maybe it's a webinar, maybe it's a, conference, something like that. So, so we look at it from that standpoint. And then we also look for multi-tiered, suppliers, if you will, for those that are trying to, to reach, you know, goals around diversity and things like that. So we, we try to incorporate all of that into our contracting plan.

Tom Raftery: 12:52

Okay. And how do you ensure transparency and trust in your negotiations with suppliers and communications with your members?

James Hallock: 13:00

Oh, absolutely. In fact, um, You know, if you ask me what differentiates us, right? And I think back to that question, that's something that we think is extremely important. And so the transparency begins in the beginning of the engagement where when we run a savings analysis, we're being extremely transparent about what the opportunity looks like, right? What the end result is of that analysis, and we run that all the way through to contract renegotiations, contract extensions. We're constantly communicating with our members about any changes, market checks, you know, those sorts of things.

Tom Raftery: 13:33

Okay. Generally on the podcast, I, I ask, interviewees to talk about success stories they've had, customer success stories. Is that something you can do as well? Can you discuss some of the more successful partnerships or collaborations that you've established and how they've contributed to your success?

James Hallock: 14:26

Yeah, sure. Happy to do so. So, you know, for us, we, we define success by really driving value for our members, right? And, and at the same time, as I mentioned, moving market share to suppliers. So, gosh, probably one of the, the most impactful stories I could tell you is it's in the world of, of pharmacy benefits. So you just think about how healthcare expenses continue to rise, right? And a pharmacy benefit would be one where an employer provides that benefit for their employees around filling prescription drug orders. Right. So sure. Again, it's, it's a space that has increased, what, five to seven, 10% a year incrementally. So for us, that's a big cost we try to address for our members. And about three years ago, we, we had, a very large block of that business that was delivering value to members that we took back out to market. So think billions of dollars in spend, which is delivering tens of millions of dollars in value. And we actually moved that from one supplier to another, which resulted in even greater savings for our membership as a whole. So, It sounds, it's easy to say, right? But, but doing that and managing that was, was quite a feat. And what it took was alignment across our membership, right? So it was making sure that our members agreed with the decision to go to market. To run a very detailed, very thorough RFP and then ultimately move that business to a new awarded supplier. Right? So it's really speaks to the core of what we do. So our members experienced additional value that, again, I can kind, you know, confidently say none of them would've achieved on their own. And a supplier picked up market share that was super impactful to their world.

Tom Raftery: 16:09

Oh, nice, nice, nice. Yes. If you know, if I am out there considering onboarding a GPO or becoming a member of a gpo, what kind of considerations should I have for choosing between different GPOs that are out there?

James Hallock: 16:27

Absolutely. So I do think transparency is, is the first step. And again, we begin almost every engagement with the savings assessment. So we transparently show what the savings opportunity is. So I think that's important. Secondly, I'd wanna understand, uh, the GPOs sourcing process and strategy. So for us, for example, we're very focused on making sure we identify categories of spend when the market timing is correct, the market conditions are favorable. We try to choose categories that align well to the G P O space. Meaning there are multiple national suppliers that will compete for the business. You know, those sorts of things. Mm-hmm. Um, so I think that's important. Number one is to understand whether a GPO takes that approach versus I'll, I'll, I'll say maybe the other end of the spectrum would be, sort of an all play model where there might be multiple suppliers in a category. And what ends up happening is it's diluted value, right? So the suppliers aren't typically picking up new business, therefore they're not exchanging, you know, a market leading price for the contract. So I think that's probably number one. Tom, the number two is I would want to understand the, the GPOs development plans. Right, because I think for a relationship like ours to bring value, we need to constantly innovate, whether it's along the digital supply chain as we talked about, or perhaps it's category expansion. Maybe it's making sure that the teams are growing and investing and providing the right member experience right throughout the process. I think those are the types of things I would look for if I was sort of shopping, if you will, for a GPO.

Tom Raftery: 18:01

Okay. And in your experience, what are some common misconceptions around GPOs and how do you work to dispel those myths?

James Hallock: 18:11

Sure. Um, gosh, that I could give you a long list, but let's just hit a, maybe we'll just hit a couple here. Um, it was funny, I remember one of our very large members early on, I went and met with, and, and after they'd been a member for about a year, they said, okay, now we understand it. You're not gonna come in and, you know, take our firstborn children and whatever, right? There's all these myth around GPOs but I will tell you this. So, so first of all, the, the member does in fact retain a client, a, uh, supplier relationship, okay? And that's one of the first myths I think, and most common mis, you know, conceptions is that procurement specialist is going to lose that relationship with the supplier. And we do, in fact make sure that that remains intact. You know, secondly, it's a participation in the process, right? So, I think, you know, strong procurement people tend to want to really control and own the process, right? And what I think they may not realize is we often include them in that process. So we, will form advisory boards, we'll make sure they have a voice in the decisions we're making, you know, those sorts of things. So again, I think that's probably a little bit less understood about our space.

Tom Raftery: 19:19

Okay. As you continue to grow and expand in Coretrust, what are some of the key challenges you anticipate in the coming years and, you know, how do you plan to address them?

James Hallock: 19:34

Absolutely. So I think the, the first one I would, I would refer back to is the use of technology and data. For us, And I think about this, your world, right? When you think about the world of supply chain, and then you narrow it down a little bit, and we think about the world of procurement. We've played a really niche role today, right around really sourcing the contract that a company might use in that process. And so for us, I think a big challenge is to figure out how we bring more value beyond price, right? So as we zoom out a little bit, we start really thinking about how to bring value to that member in terms of speed, in terms of, I guess here's a good way to look at it. If you think about the procurement cost is being price times quantity, right? As the most basic part of the equation. We wanna start bringing in other factors like behavior or SKU rationalization, or other things that will contribute value beyond simply price times quantity. So I think those are the challenges for us to address, right? How we can be more valuable across the broader spectrum to our members.

Tom Raftery: 20:39

Lower carbon footprint.

James Hallock: 20:41

That'd be a big one. Right? Sure.

Tom Raftery: 20:44

Good. That's right. So that, that brings me nicely onto my next question, which is what kind of future trends do you foresee in the GPO and procurement space and, you know, how are you going to try and stay ahead of the curve there?

James Hallock: 20:59

Sure, sure. So, you know, what I see happening right now, Tom, is if you think about again, the procurement lifecycle, there are a number of companies that, that play a role across the chain, right? So there are spend analytics companies upfront that help, uh, an entity take a look at where their spend is. There are ways to source and build contracts. You know, of course us being one of those. There are ways to procure and pay. There are ways to optimize. So there's that whole ecosystem. And so, you know, I really think, the challenge is gonna be determining how all of those entities either start to work together or create a seamless experience, right? So that value is recognized across that whole process. So we think a lot about that and the role we're gonna play as that kind of evolution continues.

Tom Raftery: 21:48

Okay, Cool. And. What are future plans? Where, where to next for you know, you guys? What? What are your plans for global domination for the next five, 10 years?

James Hallock: 22:02

Global nomination. Boy, that's a good one. You know, one of the things we have, we have realized is that, you know, United States, for example, operating a GPO here in the United States is different than, than maybe operating one in Europe or other parts of the, of the country or of the world rather. Sorry. So, um, Because it doesn't all operate the same way, right? Mm-hmm. So, so for now, I'll tell you, we're trying to really make sure we define our plan and roadmap here, and then use that to carefully expand where we think we can add value to entities overseas or in other markets. And it's, it is a common request, if you will. Again, think about this world of private equity. They invest, you know, all over the world, right? So, so it is something we're considering, but I would tell you that it probably comes a little bit later in our process once we really nail down some of these other things we've talked about so far today.

Tom Raftery: 22:54

Okay. And I should have asked earlier on where I know you, you right now are in Tennessee, but where is the organization based and where are your markets? Are you just North America? Uh, you, you mentioned, uh, Europe and other markets as well. Are you global? You know, where do you fall within that spectrum?

James Hallock: 23:14

Sure. So, so yes, we are very North America centric and focused. So we are headquartered here in Nashville, Tennessee. You know, our membership really spans multiple industries, so heavy in places like manufacturing, retail, hospitality, hotels, services. So we, we cover kind of most industry, if you will, again, heavy concentration in private equity. So majority of our entities or our members are, are gonna be private equity owned. But we do have some global contracts that, that do have value and application outside of the United States. But typically we're gonna work with entities that are at least headquartered in North America at this point.

Tom Raftery: 23:56

Okay, cool. Uh, Bit of a left field question in terms of talent acquisition and retention. What, uh, what do you guys in Coretrust do to employ, to attract and retain kind of top talent in the procurement industry?

James Hallock: 24:11

Sure, Sure. Well, I'll tell you what the, think about the story I've just shared with you. Right. So we're, we're deep in this world of, of finance and procurement. We're connected into private equity and some of the largest companies right around the country. We talk to CPOs and CFOs. So our recruiting story is actually pretty strong. So we, we typically find top talent that is in roles that might be somewhat similar, right? Maybe, maybe consulting, um, maybe in procurement. Maybe in the world of finance, right? Those sorts of things. Uh, and we like to find really strong talent and then teach them GPO cuz it is a little bit different of a business. And that's really kind of the focus of the training program is to build this talent that becomes an extension of our, of our members' procurement and supply chain teams.

Tom Raftery: 24:59

Okay. Nice. We're coming towards the end of the podcast now, James. Is there any question that I haven't asked that you wish I had or any aspect of this we haven't touched on that you think it's, you know, important for people to think about.

James Hallock: 25:13

I guess what I would share is, I think it, I honestly do believe it's a, it's a good time for companies to, to consider working with GPOs. Right. I think, again, a misconception is that A GPO maybe serves the needs of a smaller entity, but, but the reality is the pricing is so aggressive because the spends are so large that, that the program works across that spectrum and, and the supplier, if you think about from the supplier's lens, they're interested in picking up large chunks of business. Right. So, you know, I guess I would encourage your listeners, especially those that are, that run and operate large businesses, to at least consider a GPO for a few categories that might really come in and compliment their, their procurement efforts that are, you know, that their teams are focusing on.

Tom Raftery: 25:58

Okay. I just want to clarify something there cuz I'm a little confused. You, you said at the outset that a lot of your customers were kind of Fortune 1000, and then you said just now that you kind of benefit smaller companies. So, uh, there, there seems to be a bit, a little bit of a contradiction. Could you clarify that one for me?

James Hallock: 26:16

Oh, sure, sure. What I was saying is I think most people believe that A G P O exists to serve smaller companies. Yeah. But the reality is our membership tends to be larger entities, um, with larger spends because they see the larger savings. So, sorry, Tom. That's what I, that's what I was trying to explain is that, again, to a, to a person maybe that doesn't understand the space, they tend to think the GPO serves the needs of smaller companies, but that's not typically the case.

Tom Raftery: 26:42

Okay. Could it be, I mean, if I was a small company, a smaller company, you know, could I benefit? I mean, obviously not financially to the same extent as a larger company, but maybe as a proportion of my annual, purchasing.

James Hallock: 26:57

So I would say yes, there's probably is an opportunity. What we would need to do as a GPO is think about the, the most optimal way to serve that market. Right. Because what happens is it, it probably is a, it's a larger subset of entities, right? Just in terms of sheer numbers. Mm-hmm. So we'd have to really think about how we automate that experience, to provide the right, the right opportunity for that company to still see some speed to savings that they would come to expect in working with the G P O. Yep.

Tom Raftery: 27:25

Okay. Interesting. Cool. Thanks James. Uh, James, that's been really interesting. If people would like to know more about yourself or Coretrust or any of the things we talked about in the podcast today, where would you have me direct them?

James Hallock: 27:39

Absolutely. So, so we do have a website, Core Trust pg, which stands for purchasing groups, so Coretrustpg.com. We are pretty active on LinkedIn, so you can find us there as well. Or, you know, look me up on LinkedIn, send me a note. I'll be happy to respond and get folks connected with the right people to help 'em out.

Tom Raftery: 27:56

Cool. I'll put those links in the show notes so everyone can find them. Great. James, that's been really interesting. Thanks a million for coming on the podcast today.

James Hallock: 28:04

Thanks for having me, Tom. Appreciate it.