How to Overcome the Misconceptions Surrounding GPOs
By Mackenzie Oakley | January 27, 2022
Our team is dedicated to creating and providing resources that address this issue head-on, giving procurement professionals the tools they need to make informed decisions, along with actionable takeaways they can put to use in their role.
The goal is to help procurement professionals like yourself feel empowered to make the best sourcing decisions for your organization, while showcasing our ability to understand the challenges you’re facing and be your true partner in procurement.
Overcoming the misconceptions surrounding GPOs
When it comes to the concept of group purchasing, we’ve identified three main reasons sourcing professionals tend to balk at the idea of partnering with a GPO to further their procurement efforts.
With the help of our own in-house sourcing experts, this article will cover each misconception and provide valuable advice on how to sort through the noise, leaving you with the facts about GPOs and how a group purchasing organization can work for you.
What is a GPO? And how do I work with one?
Una’s number one priority is to make sure private businesses are aware that working with a GPO is an actual option for them.
Group purchasing organizations originally formed within the healthcare industry to help health systems save money on the supplies they needed to run their hospitals and clinics. After success within the healthcare industry, the GPO concept spread to other verticals as well, including the private business sector.
A group purchasing organization is made up of hundreds of businesses, allowing for procurement costs to be reduced since the demand for supplies and services is combined across of a broad range of industries. As a result, the consolidation of purchasing power and the GPO’s ability to establish contracts achieves preferred pricing, terms, and service standards for their members.
And truly, any business of any size can benefit from the services a GPO can provide.
At Una, regardless of the business, our approach will be the same as we look to see how using a GPO can become part of your overall sourcing strategy. Our first step is to make sure we listen to understand what success looks like for you. Are you needing to lower costs or is there a strategic plan that we need to be aware of in order to help you succeed?
From there, our team can decide which playbooks to implement that will best suit your needs. A smaller organization that only has a few employees may need a lot more assistance when it comes to pricing out items and searching for contracts. A larger corporation may only have one problem category where they’re needing to optimize spend. That’s the value a GPO brings, along with a dedicated team with a level of expertise that is hard to match.
Lack of support from the C-Suite
What if you understand the concept of group purchasing – and may have worked with a GPO in the past – but your current executive team isn’t sold on the idea of brining in a GPO partner? This is a common issue many of our members have to overcome in the beginning.
One of the main objections our Senior Sourcing Advisor, Cindy Rittel, hears comes from the CEO or director questioning why they even hired the sourcing professional in the first place.
Cindy’s go-to response?
“I found the GPO. That’s why you hired me. I found this additional value. I found this additional savings and I brought it to the organization. That’s exactly why you hired me.”
Not only that, but potentially partnering with a GPO is going to help everybody, specifically the balance sheet and the bottom line – something the C-Suite definitely cares about. One of procurement’s main focuses is cost savings and driving home the idea that a GPO can greatly increase the amount of money saved in certain categories is key.
Additionally, it’s important to keep in mind that when it comes to your direct spend, the bulk of your time and energy will be spent managing those more strategic opportunities. On the non-strategic spend, whether we’re talking about $1 million, or a much larger amount in indirect spend or tail spend, partnering with the right GPO makes sense in order to free up that individual’s time. It allows them to focus on that top 20% of spend knowing their GPO is working to secure savings in all of the other categories.
Another perk of working with a GPO like Una is our team’s willingness to have these conversations WITH you as we understand these interactions can sometimes be difficult.
Fear of being replaced
Oftentimes, sourcing professionals are wary of entering a partnership with a group purchasing organization due to an internal fear of being replaced. Pressure isn’t necessarily coming from the C-Suite in this instance but from their own concerns that a GPO would replace their entire role.
One of the main jobs of Una’s Sourcing Advisors is to reiterate the idea that this isn’t a replacement – it’s a supplement or an add-on at no additional cost.
Once certain procurement tasks are outsourced to the GPO, our team looks to empower the sourcing heroes we work with to move beyond that tactical purchasing agent capacity, and into a larger, more strategic role.
We’ll help you quantify the time saved and the value of sourcing through a GPO, operate as an extension of your procurement team, and take over the tedious tasks or the things you don’t like doing. This gives you back your time to focus on your strengths and identifying additional strategic ways you can move the needle for your organization.
For a more in-depth view at how a group purchasing organization operates, listen to this episode of The Sourcing Hero podcast: