NASCO-OP Means Purchasing Power
advice and quality products at a good price are only a toll-free call away
via the National Association Supply Cooperative.
Borsecnik is assistant editor of Scrap
Processing and Recycling.
is a not-for-profit buying cooperative made up of about 900 companies,
more than 95 percent of which are members of the
co-op concentrates the buying power of its members, creating a single
voice vendors have to listen to. "If a [co-op] customer has a real
complaint," says Jack Goldin, Goldin Industries Inc. (
only sells items widely used in the scrap processing and recycling
industry that can be distributed nationally at a competitive price. The
co-op is careful not to "spread itself too thin," says Matchett.
For example, he says, the group used to sell vehicles but found that such
varied and infrequently purchased items were more of a strain on the co-op
than a benefit to members.
is volume oriented, concentrating on products that many members need,
especially items they need frequently. In 1990, in addition to selling
large quantities of wire rope, the co-op sold more than 63 miles of magnet
crane cable, 27,000 torch tips, and significant amounts of other products.
was incorporated in
the early 1970s, another group of scrap processors began an effort to keep
the co-op afloat. One of the first steps was moving the co-op out of its
high-rent office in
significant step took place in late 1975, when the co-op's board
interviewed Matchett, who was purchasing manager for the construction
equipment division of Warner & Swasey Co. (
says he was "awestruck" when he first met the co-op directors: "I had never met a group of people
like that in my life. They were very entrepreneurial individuals. They
owned their own companies but were willing to give their time and effort
to keep this thing going, and that impressed me. It made me think that, if
I've got guys of this caliber behind it, it must be viable, so we talked
... and they made me an offer I couldn't refuse."
the spring of 1976, the co-op moved its office to Matchett's hometown,
one knew a whole lot about what was going on," Matchett says,
"but we worked our buns off." He credits the co-op's members for
being patient while the staff learned about the scrap business.
in the first year in
co-op is the largest buyer and distributor of some industry-related
products. In addition to the volume of potential business the group's
membership represents to suppliers, vendors are offered other advantages
when working with NASCO-OP.
one thing, they know they will be paid promptly
when selling to the co-op, says Matchett, who takes advantage of any price
breaks available for quick payment, such as 10 days/2 percent, to keep the
co-op's costs as low as possible.
co-op also can mean opportunities to vendors that previously ignored the industry. The scrap processing and recycling
industry has a relatively low profile and many operations are only small
purchasers, says Matchett. Some distributors simply didn't want to get
their tires dirty, he says. Also, he points out, there has been a
perception among vendors that the scrap processing industry is "a
hard sell and, sometimes, a hard collect."
Houston of Galbreath Inc. (
for additions to the co-op's product lines come from its officers,
directors, and members. If an idea is considered worthwhile by the
board, Matchett says, "We evaluate whether we think it would be a
viable product for us and, if so, we try to get it on-stream."
identifies suppliers that have the most to offer, those that can supply
"the gamut" of a product type. "The co-op has weeded out
unreliable suppliers with products that don't holdup," says Goldin.
"It seems the managers research a product pretty well before they
calls from members and discussion at board meetings about the
problems of radioactive scrap, the co-op has added radiation detectors
to its line. Matchett researched available products and called scrap
processors around the country to evaluate the need for the equipment. The
co-op chose to represent Bicron Corp. (
and Wagner negotiate prices with suppliers based on what other buyers pay,
how the item is marketed, and the advantages the co-op offers the
things, especially in high-volume areas, cost dramatically less through
the co-op," says David S. Blue of Louisville Scrap Material Co. Inc.
processor buying wire rope from a local distributor probably pays 30 to 40
percent more than the co-op with its volume break, says Matchett, and
similar numbers apply to other items.
of the least talked about and, I think, best buys from the co-op,"
reports David Gahagen, Gahagen Iron & Metal Co. (Commerce City, Colo.)
and first vice president of NASCO-OP, "are scale tickets, work forms,
computer printout forms, and truck reports." Matchett says local
distributors sometimes charge as much as 100 percent more than the co-op
for such items.
high-end items such as magnets and shears, members may save only 5 or 6
percent by buying through the co-op, says Matchett, but even a low
percentage on such items can equal significant dollar savings. "Along
with that," he adds, "we pay a dividend."
the end of every fiscal year but one since 1977, NASCO-OP has returned
profits to its members in the form of a dividend based on the amount each
member spent on co-op purchases during the year.
dividends have ranged from 1 to 3 1/2 percent of a member's purchases. For
fiscal year 1990, the dividend was 3 percent on total co-op sales of
nearly $6 million. More than 600 firms that spent more than a minimum
amount--$150--and were not delinquent in payments received checks ranging
from $5 to $5,825. Since 1977, the co-op has paid out more than $1.1
million in dividends.
its fall board meeting, the co-op's directors review projected sales for
the fiscal year, which ends Nov. 30, and determine the dividend. Co-op
prices include an average markup of less dm 8 percent, says Matchett,
which covers expenses plus a buffer. The dividends come from the
difference between the co-op's income and its expenses, minus a small fund
retained for working capital.
co-op's board is elected by the members; each member company has a single
vote. Directors serve three-year terms, and a third of the board is chosen
each year at the first of its quarterly meetings, which is held at ISRI's
annual convention. The board selects the officers.
board sets the membership fee and approves new members. It also reviews
new product selections and the annual budget, which is submitted by
Matchett. NASCO-OP President Lee Hummelstein, Hummelstein Iron & Metal
does its business by telephone. In addition to two local lines, the co-op
has four incoming toll-free lines, three outgoing toll-free lines, and a
toll-free facsimile line. (All the 800 numbers are for member use, notes
Matchett; vendors must pay for their calls to the co-op.) NASCO-OP's staff
of six handles 1,500 to 1,700 incoming calls each month and makes 1,200 to
1,500 outgoing calls.
placed are fed into the co-op's IBM System 36 computer and purchase orders
are generated daily. About 80 percent of the orders are confirming POs,
says Matchett; the original orders were called in as soon as they were
placed. "Nobody wants anything in two weeks," he notes.
phone access is a key benefit of the co-op, according to members. The
co-op encourages members to call and compare prices between the co-op and
local suppliers. "NASCO-OP makes purchasing a lot easier," says
Michael Bank, Winston-Morrow Co. (
co-op also encourages callers to report better prices found elsewhere,
says Matchett. We want to know if our price is not competitive because
then I go back to the supplier and ask why."
co-op is always looking for new items, asking for local sources, to
determine if a product can be made available economically at the national
level, says Gahagen.
members receive a 345-page catalog that gives a picture of what's
available through the co-op. It is not exhaustive, nor frequently updated;
it is meant to let customers know the range of products the cooperative
sells. The book is indexed by product and by supplier and provides a
purchasing starting point. "We tell the members to just use it as a
reference book, " says Matchett. "We say, 'If you don't find
what you're looking for, call us. It's a toll-free number and it only
takes a couple of minutes.'"
callers tap into a "wealth of knowledge" about products unlikely
to be available from a single source anywhere else, says Gahagen.
are in constant contact with what's going on in the industry and with what
people are using and why," Matchett says. He is often asked for
advice on products and is usually ready with an answer based on the
experiences of hundreds of co-op members. And, he warns his suppliers, he
will be utterly objective in comparing competing products.
is also an expert on many of the products the co-op handles, says Matchett,
and takes primary purchasing responsibility for several co-op fines,
including safety and cutting equipment, torches and tips, twin hose, air
compressors, and hand tools. Matchett concentrates on
membership is approximately half that of ISRI, estimates Matchett, and his
goal "is to get them all in the co-op." Some companies don't
join, he says, because they figure they can purchase as well as the co-op
does on their own, especially the big operations that have their own
buying clout. "Where we really are beneficial is to the smaller
plants because they don't have clout and they are subject to the prices of
local distributors," says Matchett. But he says the big guys benefit,
too, because "they can call and see if their local price is any
co-op suffers from being "out of sight, out of mind," says
Matchett, and doesn't drop in on its customers like other distributors. It
does send out occasional mailings, Matchett speaks at ISRI chapter
meetings, and co-op staff call members that haven't made recent
purchases--all to remind customers/members that the co-op exists. "We
want them to sit that great big red catalog on their desk," says
Matchett, "and when they want something, give us a call."