Understanding Group Purchasing Organizations (GPO) 1042

By  //  June 4, 2021

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Are you an entrepreneur who wants to reduce the costs of your company? With the current climate of the global economy, learning the different strategies that can help you save money on each aspect of your business is a must to keep it running.

If you are stuck and have no idea where to start, we might have something to help you out. We will introduce you to Group Purchasing Organizations or GPO — breaking down how it works, its benefits, and how you can find the best one for your company.

What is GPO, and how does it work? 

To put it simply, a GPO or group purchasing organisation aims to increase the opportunities of each of its members to save money through lower rates of services and supplies. By combining the purchasing power of every company that is a member of the GPO, they will be able to find suppliers that can provide quality services at significantly discounted prices.

A GPO can have thousands of members — the more credible businesses in its circle, the better the deals they can acquire. Each organisation may differ depending on the types of programs they offer and the sectors they choose to serve. In general, any business of any industry can find a GPO suitable to its procurement needs, which include utilities, materials, manufacturing, etc.

What are the services a GPO can offer? 

The types of services or programs may differ from one GPO to another. However, here are a couple of examples:

MRO

A GPO can help with MRO or maintenance, repair, and operations procurement. Materials and services used in the upkeep of the facilities and infrastructure of the business are considered an MRO. These are the necessities that maintain the production and operations of the company, although it is not directly used for the end products manufactured by your company.

MRO includes areas in maintenance and repair of the building and equipment used for production and other tools necessary for the upkeep and manufacturing, which may consist of even the most minor items like PPEs and janitorial supplies. A GPO will help you procure these items with the best possible deals. Find an MRO procurement company through a GPO.

Packaging

If your company needs better and more cost-efficient packaging solutions, a GPO can also assist you with it. The packaging of a product reflects its value and quality. It can also influence the buying behaviour of the consumers. If you want your product to stand out in the market, you need better packaging solutions. However, it can be very costly to procure suitable quality packaging materials like boards, papers, bubble wraps, cords, etc. But with the help of a GPO, they can find you suppliers that can provide these materials at a lower rate.

What are the benefits of a GPO?

Joining a GPO will help you reap benefits other than assistance in reducing your company’s regular costs. To convince you that being a part of a group purchasing organization may be the wisest decision you will ever make yet, here are its advantages:

It helps you to save more money.

The main goal of a group purchasing organisation is to find suppliers for its members that can offer them better rates and help them save money. They can find you MRO and packaging solutions that are a fraction of what you currently spend while ensuring excellent quality services.

It increases the purchasing power of a company.

As mentioned above, aggregating the volumes of purchase of its members can help find better deals for goods and services. With this, every member, even the smallest businesses, can have better purchasing power.

It offers suppliers rebates.

A GPO can offer annual supplier rebates to help its members receive additional discounts, increasing their savings to another level. 

It helps link you with suppliers.

Your GPO can help you connect with the top suppliers of their industries. The best GPO has a network of thousands of credible suppliers and vendors that can provide excellent services at the most cost-efficient deals.

It represents its collective membership during negotiations.

In case negotiations are in order, a GPO will represent all its members to talk with suppliers to persuade them. A GPO handles the entire transaction with a supplier from start to finish and ensures that they can get the best rates.

GPO ensures its members receive quality services.

A competent GPO only works with credible suppliers that provide the best quality services. Their main priority is their member’s welfare to make sure that they only work with reliable companies.

It saves you time.

Another benefit of joining a GPO is that it provides all the services without requiring its members to lift their finger. From searching for suppliers, negotiating for services, and closing deals, their team will manage all that for their members — saving the time and effort you could have spent yourself.

It opens networking opportunities.

GPO also serves as a network where all of its members can connect with each other. They make sure that the relationship within the organisation is intact so members can utilise the connections to exchange services and benefit from them. 

A GPO can provide tailored savings analytics.

Even after procurement, excellent GPOs will give you detailed and comprehensive analytics of your spending and savings, which would help identify other potential financial improvements.

How can I find the best GPO for my company? 

If you are not a member yet, maybe this is a sign for you to join a group purchasing organisation. Especially if your primary concern is to save money for your company, then joining one would be the best solution. Fortunately, you can easily find a GPO through the internet. Look for a GPO can that caters specifically for procuring the products that you need.

Make sure to contact them beforehand and ask the right questions. Remember that the first sign of a credible GPO is good communication and excellent customer service. Only join a group purchasing organisation with a credible reputation.

The key to receiving the best services are working with competent companies, and a GPO would help you with that. They will make sure that they find the best deals in procuring your goods. So, if you are eager in cutting down your bills and reducing your procurement costs, consider joining a GPO.