Is a GPO Right for My Business?
By Hugo Britt | April 14, 2022
Questions to ask to determine if partnering with a GPO is the right move
Let’s break down the main questions of the quiz. Read on for more insight as to how a group purchasing organization works, what types of procurement activities can be outsourced to a GPO, and what to look for when partnering with a GPO.
1. How big is my business?
Right off the bat, I’m going to offer up a spoiler alert: group purchasing organizations can help businesses of any size!
- Small businesses with a fledgling or greenfield procurement function can take advantage of the services a GPO like Una has to offer as a way to save time and effort on lengthy RFP processes.
- Medium-sized businesses can leverage a GPO to help with bigger challenges, such as getting to grips with maverick spend or bringing tail spend under control.
- Large businesses can partner with a GPO as an extension of the procurement team or as a way to unlock additional cost savings and value.
2. Could you benefit from saving money in one or more categories?
This is something of a rhetorical question because obviously, everyone can benefit from saving money. But perhaps you’ve asked yourself if there’s a way to save more across high-volume indirect procurement categories such as office supplies, marketing services, professional services, travel, shipping, and MRO.
It’s in these sorts of categories (with the biggest purchase volumes) that group purchasing organizations really shine and have the ability to uncover the most value for their members.
3. Can your procurement team access volume discounts with suppliers?
Even after a procurement team has spent time and effort on a spend consolidation exercise or on the elimination of duplicate spend, most purchase volumes simply aren’t high enough to access deep discounts at the level available to GPO members.
By grouping together with hundreds of other organizations under the umbrella of a GPO, volumes stack up and while prices plummet down.
4. Do you need help negotiating contracts?
Contract negotiations are no walk in the park. They require research and preparation time, followed by the negotiation itself which may end up needing multiple meetings. Then there’s the headache caused when negotiations don’t go to plan, or even become acrimonious.
When you consider how many suppliers and contracts most procurement teams attempt to manage directly, it’s easy to see how negotiations can swallow up an enormous amount of time. Una has hundreds of pre-negotiated contracts with dozens of top suppliers ready to go for our members.
5. Do you need access to a certain good/service/supplier?
Sometimes, procurement teams face a David-and-Goliath-type situation where their organization’s purchasing needs are just too small to bring a large supplier to the negotiating table. Joining a GPO changes the game. With massive spend volumes, Una can ensure our members get the goods or service levels they need, no matter how large the supplier is.
6. Have you experienced supply chain disruption?
Everybody experienced supply chain disruption during Covid-19 (remember how hard it was to find PPE?), and the blocking of the Suez Channel demonstrated that global shipping can be disrupted without warning.
Joining a GPO can help mitigate the impacts of disruption by diversifying your supplier portfolio, enabling access to a variety of suppliers at a moment’s notice to help ensure business continuity.
7. Are you running out of ways to reduce costs?
Mature procurement teams inevitably come up against the challenge of finding new ways to cut costs. When you’ve cleaned up your procurement data, improved visibility, implemented new systems, improved ways of working, tackled maverick spend, and centralized the function, the temptation is to drive more savings by squeezing existing suppliers. This may work in the short term, but will ultimately mean your organization misses out on longer-term value creation.
Instead, consider joining a GPO to unlock further cost savings that would have otherwise remained out of reach.
8. Are you overwhelmed at the thought of bringing tail spend under management?
GPOs such as Una are well-positioned to help you focus on your tail spend to capitalize on untapped value while increasing data visibility and reducing risk. If you haven’t already, be sure to download our step-by-step playbook: How To Manage Tail Spend.
9. Do you need some friendly advice?
In many ways, Una is like a procurement consulting service without the fee. We offer turn-key procurement solutions to provide quick wins, along with longer-term strategies to help make your business more profitable. We help organizations move faster, save, more, and work smarter.
If you’ve answered “yes” to any (or all) of the questions above, we’d love to hear from you! Get in touch with Una today and learn how to save money, time, and effort through the power of group purchasing.