How to Cut Business Costs: Using a GPO to Increase Savings
By Cindy Rittel | December 9, 2021
When it comes to cutting business costs and implementing a procurement strategy, sourcing professionals have several things to consider. The goal of getting the best price on your direct and indirect spend is easier said than done. Once pricing is in place, making sure your established rates remain stable and don’t unreasonably increase is another challenge.
There are several different approaches to reducing procurement spend, with our favorite being what some may consider an unconventional, yet extremely effective method.
This post covers that unexplored saving solution. It’s a tactic that both reduces your cost and keeps your prices low.
How to cut business costs by joining a group purchasing organization
Any business, regardless of size, has access to the group purchasing model. When you join a group purchasing organization, you join a group of buyers who are purchasing from a curated portfolio of suppliers. Since it’s common for businesses to have different purchasing needs in varying categories, it’s often difficult for organizations to negotiate decent pricing on their own.
The GPO uses the aggregate buying power of its membership base to negotiate contracts and secure discounted pricing on goods and services. Business owners get to take advantage of the lower pricing without having to increase purchasing volume.
While some GPOs charge members a fee in order to join, other GPOs – like Una – offer services completely free of charge. Una makes money via administrative fees, covered by the suppliers we partner with, allowing members to access our contracts for free.
Joining a group purchasing organization is a brilliant corporate cost reduction strategy.
Using a group purchasing organization to keep costs low
Every procurement professional has a story to tell about supplier research, jumping through hoops to submit an RFP, and negotiating a contract to get the best price. It’s a time-consuming and exhausting process. And as we know all to well, nothing guarantees your prices will remain steady.
For your complex product and services categories, it’s likely you’ll want to monitor those agreements closely to make sure there aren’t unwarranted increases. But is it required to put that same level of work into your indirect spend or tail spend categories? Not necessarily – especially when these categories are typically already left unmanaged or you simply don’t have the time, resources or bandwidth to address them properly.
When you work with a GPO like Una on indirect spend categories like JanSan and MRO, shipping, travel, and office supplies, our team of Sourcing Advisors assist with monitoring those contracts for you.
This allows you to bypass the process of finding and vetting suppliers and access pre-negotiated contracts right away, meaning you can start saving in 30 days or less. Plus, our category executives and specialists will audit your suppliers to make sure they remain compliant.
You retain complete control, but we’ll be there for you as a true partner, fighting for you, throughout the process, ensuring you get the lowest price and get to keep the lowest price.
Joining a group purchasing organization helps small and mid-sized businesses get the same pricing and value-added services a Fortune 500 company may receive.
Partner in procurement
When it comes to cutting business costs, it’s important to keep a few things in mind:
- Are you aware of what your organization’s total spend is? What about the total spend in each category? How accurate is your data?
- Are you currently getting the best price available? We’ve experienced first-hand many times when members think they’ve been getting the best pricing, only for us to show them a way to save more.
- Will your current contracts ensure you keep the best price? Is the bulk of your time and attention spent managing your most complex agreements? Or are you wasting time chasing down redundant invoices, and making sure your prices are stable?
If you’re struggling in any of these areas, or simply want to free up a few hours of your day, Una is here to help.
Want to learn more about how to cut business costs by joining a group purchasing organization? Contact our team of Sourcing Advisors to get started today.