The Five Ws of Group Purchasing Organizations
In the world of business, Group Purchasing Organizations (GPOs) provide a solution to complex procurement challenges. In this blog, we'll explore the Who, What, When, Where, and Why of GPOs. Whether you're a senior living community or any business looking to streamline procurement, understanding GPOs can unlock cost-efficiency and convenience. Let's dive in!
Group purchasing organizations connect businesses to suppliers with products and services. Care Purchasing Services (CPS) is one example of a GPO. CPS partners with suppliers in the senior living industry who seek assistance procuring the best goods and services for their communities. GPOs exist in a range of industries, from foodservice and healthcare to nonprofits.
GPOs rely on what is called “purchasing power” in negotiating discounts from suppliers. GPOs combine the purchasing power of multiple businesses when they negotiate pricing, giving them more leverage than a business operating alone. Vendors are more willing to negotiate lower prices with GPOs because they offer a higher volume of customers and orders, relative to standalone businesses. GPOs also save businesses time, because vendors are pre-vetted, and contracts are pre-negotiated.
There is no set time for a business to join a GPO, but the benefits of group purchasing may be especially fruitful if a business is looking to expand their offerings with new products or services or searching for cost efficiencies within existing products or services.
GPO's work with local, national and international vendors and business partners. The type of GPO a business partners with depends on their unique needs and preferences. GPOs exist at many different scales; CPS partners with local and national vendor partners.
Successful group purchasing creates win-win-win outcomes for all three parties: buyers, suppliers, and the GPO itself. Buyers benefit from lower prices and a simplified negotiation process; suppliers gain new clients and expanded volume; and GPOs generally profit from member participation fees and/or supplier payments.
Want to learn more?
Contact our Director of National Business Development, David Mercugliano, at (561) 894-7660 | email@example.com or fill out our "Contact Us" form here!
This blog was written with the assistance of ChatGPT.
OpenAI. (2023). ChatGPT (June 22 version) [Large language model]. https://chat.openai.com.