For many businesses, the cost of goods is a major expense. It can be difficult to know how much you should spend on items and what the best deals are. The good news is that there are organizations that exist specifically for this purpose! Group Purchasing Organizations will provide you with high quality at the best possible price, which means you get more bang for your buck! There are many different types of GPO’s you can join, each with different memberships and prices, so this should be something worth looking into if you’re in the market for purchasing goods for your company.
1. What is a Group Purchasing Organization?
A Group Purchasing Organization is an association of businesses that join together to purchase goods in bulk. This ensures that each GPO procurement member gets the best deals on items they need, whether it’s office supplies or medical equipment. Sometimes companies form their own GPO, while others might seek out a pre-existing one that offers what they are looking for. Either way, members are able to get better deals for things they are already purchasing on a consistent basis. A GPO can be an invaluable resource for businesses that need to purchase items in bulk, but don’t want the hassle of searching out the best deals themselves. Their members benefit from special rates negotiated by their group.
2. How do I know if a Group Purchasing Organization is right for me?
If your company needs to make regular purchases of commonly used items, then a Group Purchasing Organization could be an economical way to save money. Local GPO’s will have membership fees that vary depending on the type of business you have and how many employees you have. For example, if your company has warehouses in multiple locations, you might pay more than someone with only one office. Most GPO’s will have a variety of membership levels, so you may be able to find one that fits your needs. You can also often join for a free trial period before making a financial commitment.
Another great benefit of joining is most GPO’s provide access to GroupSavvy, which is an online platform that has additional discounts and savings available only to members. GPOs aim to save you money, plain and simple. If you have five or six of your own employees shopping around for deals of their own, you will never find the same thing at the same price more than once! Working with a GPO will give you access to great deals that you wouldn’t be able to negotiate yourself. For example, in most cases, if a company is looking for ten or more of the same item, and they purchase it through a GPO, their price per unit is cheaper than if they negotiated with the supplier on their own. This means they get higher quality at better prices, so they can save money!
3. What are some things I need to know before I sign up?
Just because your office needs five printers doesn’t mean you have to join a GPO that caters specifically to printers! If there’s not an organization that offers all the products you need from one supplier, then it might make sense for your company to form a group of your own. However, if you’re interested in joining a GPO to get better deals on goods your business already purchases regularly, the first thing you need to do is decide which one would be best for your business. There are a few different types of GPOs you can join:
- Vertical Organization: Memberships often revolve around purchasing medical equipment or supplies, such as pharmaceuticals and hospital products.
- Independent Membership Association: Memberships here usually revolve around specific categories such as office equipment, food service providers, etc. Sometimes these memberships will cover an entire industry or trade show type setting where all suppliers that attend that event will offer special rates to the association’s members only.
- Buyers’ Cooperative: A co-op will typically offer office supplies and sometimes food service or janitorial products. Membership here requires you to purchase a certain amount of items on a regular basis, and the savings are often tied to that factor as well.
4. What should I be aware of before signing up?
Just because your business qualifies for a GPO doesn’t mean it’s right for you! You’ll want to do some research into what organizations are out there, how much they cost, if they are able to offer the goods your company needs at better prices than what you can find yourself, etc. It’s also helpful to figure out how long their contract period is. A one-year term might not suit your company’s needs very well, since you might make changes to your business over the next 12 months and want to switch suppliers. If you found a GPO that offered everything you needed, though, it could save you time and money in the long run!
5. Is the savings worth anything?
This depends on how much of your company’s budget is devoted to goods and services. Obviously, if it makes up a small portion of your total spending, then working with one GPO probably isn’t worth the effort. If, however, this figure reaches at least $10-$15K or more per year, then it may be worth looking into as those extra dollars saved will add up quickly for any size company! Also, by switching suppliers it can help prevent price inflation, so you’ll get quality goods at the same price, or better, in most cases.
You’ll need to do some research, but once you find an organization that is a good fit for your business, will likely offer you the goods and services you need at the lowest price possible. While it’s not required that you join a GPO if your company wants to save money on goods and services, it can be a great way to ease the stress of searching for suppliers and comparing prices.
One of the best ways to get better deals on goods and services your business already purchases regularly is by joining a Group Purchasing Organization. GPOs are organizations that aggregate members who purchase items in bulk for their company, which means they can receive high quality at the best possible price. There are different types of GPO’s you can join, each with different membership options and prices so this should be something worth looking into if you’re in the market for purchasing goods or services for your company! Don’t forget to do some research when considering signing up because it doesn’t always make sense financially. You’ll want to look at what organization will offer what type of good or service your business needs at lower prices than you could find elsewhere, but also how long their contract period is.