Let’s bust a myth: the idea that joining a group purchasing organization (GPO) means waving goodbye to strategic supplier relationships, Supplier Relationship Management (SRM), and the benefits that flow from it.
The prevailing myth suggests that GPOs turn everything into cold, cut-and-dry transactions, stripping away personal relationships and long-term wins.
This article will demonstrate that GPO membership doesn’t mean relinquishing supplier relationships. In fact, joining a GPO like Una can enhance and preserve your strategic supplier relationships. Here’s how.
Redefining the Relationship
Using a GPO contract means you skip the lengthy, often contentious negotiation process. Instead of starting relationships with arguments over price and terms, GPOs allow you to begin on a more positive note.
At Una, we handle the grunt work, freeing you up to build relationships focused on growth, resilience, and innovative ideas.
Both procurement teams and suppliers benefit from the GPO approach. GPOs create a win-win scenario rather than a win-lose situation. Also, the time saved by using a GPO means more resources can be devoted to nurturing relationships with key suppliers.
What’s Really Going on with GPOs and Your Suppliers?
Contrary to the belief that GPOs make everything feel like a vending machine transaction, Una acts as a matchmaker, connecting members with pre-negotiated contracts that can save you 18-22% right off the bat on indirect categories.
Our approach allows you to manage supplier relationships on your terms. Want regular check-ins? Go for it. Looking for additional value beyond the initial savings? Absolutely.
This model flips the narrative. SRM does not disappear; it evolves. With the tedious negotiation tasks managed by the GPO, you can focus on the more engaging aspects of procurement, like brainstorming ways to innovate and improve processes together. Suppliers who feel like true partners are more likely to bring fresh ideas, adjust their offerings based on your needs, and prioritize your business during high-demand periods.
A quick caveat here: not every supplier relationship requires a strategic partnership. In many indirect categories (where horizontal GPOs like Una excel), a transactional approach can still yield positive outcomes. But if you identify indirect categories where a deeper relationship is beneficial, there’s nothing stopping you from pursuing SRM with those suppliers.
Why SRM Rocks (and How GPOs Help)
SRM is your secret weapon for turning suppliers into allies. It builds trust, aligns goals, and uncovers hidden opportunities. Without SRM, relationships might stagnate, but when paired with a GPO like Una, you gain immediate savings that free up resources for deeper collaboration. This can lead to innovations such as adopting smarter supply chain tools or implementing greener packaging solutions.
Moreover, strong supplier relationships can lead to better quality, faster responses during market fluctuations, enhanced compliance, and greater contributions to sustainability goals.
A Tale of Three Procurement Teams
Three (hypothetical) procurement teams took different paths to manage their indirect spending.
Team A decided to go it alone. Without the support of a GPO or SRM, their approach was straightforward but limited. Relying on traditional negotiation tactics, they managed to save only 2% on their total indirect spend of $1,000,000.
This translated to just $20,000 in savings. Without the leverage of collective buying power or strategic supplier relationships, they found themselves missing out on better deals and opportunities.
Team B took a mighty step forward by joining a GPO. This decision allowed them to access pre-negotiated contracts, leading to impressive savings between 18% and 22%. So, from their same $1,000,000 indirect spend, they saved between $180,000 and $220,000.
While they enjoyed substantial savings, their lack of engagement with suppliers meant they were still operating in a somewhat transactional manner. They were getting amazing deals, but they weren’t building the kind of relationships that could lead to even more value.
Team C understood that savings were just one part of the equation. By combining GPO membership with active SRM, they not only tapped into a solid 20% savings from the GPO but also added an extra 5% thanks to their strong relationships with suppliers. This meant their total savings reached an impressive $250,000.
Breakdown of Team C's Savings:
- 20% from GPO Membership: Access to pre-negotiated contracts through the power of volume purchasing.
- 5% Additional Savings from SRM: Enhanced collaboration and communication with suppliers, leading to better quality and innovative solutions.
In the end, it was clear: the best outcomes are achieved not just through cost savings, but through meaningful collaboration and innovation. Company C had nailed it, proving that relationships matter just as much as the bottom line.
Conclusion
The myth that GPOs turn supplier relationships into robotic transactions? Busted.
At Una, we deliver savings and ensure you maintain control over your supplier relationships, preserving and often enhancing the benefits of SRM.
Our pricing structure ensures that membership is always free, with no minimum purchasing requirements. You can choose which suppliers best fit your needs, and our dedicated Sourcing Advisors provide support every step of the way.
In conclusion, great relationships in procurement aren't about who wins the deal; they’re about what you create together. By leveraging the advantages of GPOs, you can build stronger, more productive supplier relationships that drive long-term success.
Join Una today to unlock the full potential of your procurement strategy while nurturing invaluable partnerships.
