Examine four scenarios when you should not use a GPO for procurement support - and five scenarios where you definitely should.
Just like you wouldn’t use ChatGPT to write your wedding vows, there are certain situations where it isn’t a good idea to use a group purchasing organization (GPO).
While the world is full of incredible, time-saving ideas, the smartest users know more than how to get the most value out of them. They also know when it’s not appropriate to leverage particular products and services.
GPOs are famous for our ability to provide access to massive supplier discounts for procurement through the power of volume purchasing, but that doesn’t necessarily mean we’re the right-fit solution for every procurement challenge.
When You Should NOT Use a GPO
In this article, we share four scenarios where you shouldn’t use a GPO… and five scenarios where you should.
1. When you’re looking for discounts in direct categories
Horizontal GPOs like Una are strongest in indirect or tail spend categories (like office supplies, MRO, or shipping). If your spend is highly niche or falls outside the GPO's expertise or portfolio, you may not get much value.
However, Vertical GPOs may be able to help you in this respect. These GPOs serve niche segments and are usually created as a way for management or association groups to benefit their member companies. This type of GPO is commonly found in the healthcare, hospitality, dental and veterinary industries.
2. When you need a high level of contract flexibility
If your organization requires highly customized terms, service levels, or specifications that go beyond the standardized contracts a GPO offers, you may be better off managing the procurement yourself.
Think about it. GPO contracts are designed for scale and efficiency. For example, when we pre-negotiate a contract with an IT vendor with an impressive discount and great terms for our 10,000+ members, the vendor would be unlikely to offer tailored contracts for individual members because it simply isn’t cost-effective for them.
3. When your vendor relationships are strategic
A strategic supplier typically provides products or services critical to your business. They often feature deeply integrated, long-term relationships, and are a major factor in your organization’s risk management strategy. Strategic suppliers can exist in both direct and indirect procurement.
A procurement team may prefer to retain their relationship with a specific, strategic supplier rather than take advantage of a pre-negotiated contract with another supplier via a GPO.
4. When you’re as big as Amazon
Some of the biggest businesses may have the scale and capability to negotiate huge discounts on their own. But they’d have to be really huge - we’re talking Walmart and Amazon size - to most likely not see any benefit in joining a GPO. But don’t fall for the misconception that GPOs are only for small and medium businesses. Una has several very large enterprises in our membership base that use our services to cut indirect spend costs, improve tail spend management, increase speed to savings, and more.
We’ve written an article on this topic arguing that there’s no such thing as being too big for group purchasing.
When You Should Use a GPO
We’re biased, obviously, but we highly recommend using a GPO when the benefits of aggregated purchasing power, speed, and efficiency align with your business goals.
Here’s when a GPO makes the most sense:
1. When you can’t negotiate a great deal with suppliers
Even the best negotiators will struggle to negotiate a great discount with suppliers if they don’t have enough volume. Using the power of volume purchasing, group purchasing organizations provide you with access to incredible discounts that you may never be able to negotiate on your own.
2. When speed to value matters
If you need to access immediate cost savings, especially in indirect or tail spend categories, a GPO is a fast path to value. We’re talking 18% to 22% cost savings in some indirect categories, achievable within weeks, not months, because you’ll skip the lengthy RFP and negotiation process.
3. When you lack internal resources
If your procurement team is small, overextended, or lacks deep category expertise, a GPO like Una can provide near-immediate access to ready-made contracts with top suppliers. We act as an extension of your procurement team and offer a great alternative to hiring new staff or expensive procurement consultants.
4. When you're managing tail spend
Tail spend (low-value, often unmanaged purchases) is a classic use case for GPOs. Everybody needs these services, so the volumes are huge and so is our buying power. Rather than waste internal resources chasing small savings on office supplies, janitorial services, or IT peripherals, let a GPO handle those categories efficiently.
5. When you want built-in compliance and risk reduction
GPOs like Una pre-vet every supplier to ensure they meet strict compliance, regulatory, and ESG standards. This reduces our members’ legal and reputational risk, and saves a great deal of time for procurement teams by lifting the compliance burden.
Talk to Us!
Still unsure whether a GPO is the right fit for your unique needs?
Don’t hesitate to give us an obligation-free call. One of our friendly procurement experts will listen to your needs and let you know exactly where Una can - and where it can’t - drive value for your organization.
