Addressing the Possible Risks Associated with GPOs

Procurement or not, the decision to partner with a third party service provider is not one that is made lightly.

Everything must be taken into consideration, from your needs as a business and how well that partner matches your core values, to the risks associated with bringing in an outsider to help you reach your goals.

Addressing the possible risks associated with GPOs

There's no doubt that procurement professionals are feeling the pressure to deliver cost savings and value in today's economic environment. We also know that procurement teams are oftentimes understaffed and missing the resources they need to maximize their efforts.

Bringing in a third party, like a group purchasing organization, to accomplish seemingly standard job duties seems counterintuitive - and maybe even risky - especially if you've never worked with a GPO before.

This is where Una comes in. As a GPO, we're committed to providing resources and tools designed to empower procurement to make the best sourcing decisions for their organizations. This means offering full transparency from the beginning, helping you understand what it's like to work with us, how a GPO fits into your overall procurement strategy, our role throughout the process, and address any concerns you may have about working with a GPO.

Common questions and concerns

Keep in mind that every group purchasing organization is different and may not offer the same services and value. As you work to determine the best path for your own organization, here are Una's answers to some common misconceptions and possible risks associated with GPOs:

1. Will joining a GPO mean a loss of control over categories?

Members are not obligated to use a GPO for every category. You can leverage category offerings and services based on your unique needs and where the most value can be driven. You can choose to participate in one supplier agreement or many and are free to use these agreements as much or as little as desired.

Generally, most Una members prefer to retain control over their direct or more strategic categories. GPOs are most effective at driving deep discounts in non-strategic and indirect categories such as shipping and logistics, technology, facilities maintenance, and food to ensure category management without sacrificing quality or resources.

2. Will joining a GPO mean we can no longer work with a preferred supplier?

The best GPOs will have established relationships with the nation's leading suppliers and vendors, meaning it's very likely that a contract is available with your preferred supplier. Depending on the category, change management may be minimal and as easy as shifting your existing account over to the GPO contract.

In other categories, it might be necessary to change suppliers to capture the most value but your GPO partner should be willing and ready to walk through the process with you to avoid any delays or headaches.

3. Will a GPO take over our relationships with suppliers?

Part of the beauty of working with a GPO is that they do the heavy lifting when it comes to vetting suppliers and negotiating contacts - in certain categories. Members are in complete control of which categories and supplier relationships they're handing over to the GPO.

Even then, the GPO facilitates introductions and provides the opportunity for new relationships to be established.

4. Does joining a GPO limit potential customization of goods and services to meet our specific needs?

GPOs are mostly used for indirect categories like shipping and logistics, facilities maintenance, technology, and food where organizational needs tend to be very similar. That said, sometimes a company’s purchasing needs require plans that go beyond out-of-the-box setups. Make sure that any GPO you choose to work with offers flexibility built into its supplier contracts.

5. Will we have visibility into contractual agreements, pricing structures, and financial arrangements between GPOs and suppliers?

Una provides our members with full visibility and transparency into the pricing and contract details and are happy to explain contracts to ensure understanding.

6. Does the GPO charge membership fees or retain a portion of the negotiated savings?

At Una, our membership is always free to join and free to use. Every time you entrust your purchasing needs to Una, we get paid an admin fee by our suppliers. The negotiated committed volume Una brings to the table is much more efficient for major suppliers and they want business to reach our members. We use the administrative fee to finance our services, allowing us to keep membership free for our members.

When researching GPOs and their pricing structure, we recommend working with one that is completely transparent about the way they conduct business and what they expect of their members when it comes to fees and purchasing volume.

7. What if joining a GPO means we end up with products or services that don’t align with our needs?

With over 2,000 pre-negotiated contracts with some of the best supplier partners in the country, we can help you find the right product or service to meet your needs. All Una members have a dedicated Member Experience representative working to understand their requirements, answer contract and supplier questions, identify additional cost savings opportunities, and ensure their success.

And remember, members are free to use our supplier agreements as much or as little as desired.

8. Will joining a GPO mean we are “locked in”?

No, membership with Una is always free, there are no minimum purchasing requirements and you may cancel your GPO membership at any time.

9. Will sharing sensitive purchasing and vendor information with a GPO compromise our data security and privacy?

Protecting your privacy is of utmost importance to Una. We do not collect any information about you or your organization unless it is voluntarily provided and we do not sell, rent or lease member lists to third parties.

10. How can we be sure the GPO’s practices and contracts adhere to legal and regulatory requirements?

Leading GPOs including Una use stringent methods to audit and investigate potential partners before signing any agreements. With full transparency, GPO members can be sure that due diligence has been performed and all suppliers have been thoroughly vetted.

11. How does working with a GPO align with our procurement strategy?

When you reach out to Una, you’re getting more than a group purchasing organization. You’re choosing a partner in procurement. In practice, this means Una becomes an extension of your procurement team – and your procurement strategy.

You are in control throughout the entire process, guiding the conversations to achieve your desired outcomes. We do this by first seeking to understand your procurement strategy, then showing how Una can work within it.

To learn more about addressing the risks associated with GPOs and Una membership, download our free playbook