Complete Guide to Group Purchasing

Save more money, time, and effort.

As a group purchasing organization (GPO), Una partners with the best suppliers to provide businesses access to unbeatable savings on essential products and services. This is done all in the name of forging new relationships and embarking on a path to procurement success.

Our brand promise is to empower procurement teams and accelerate their profitability. Simply put, we work to save you money, time and effort.

Any business, regardless of size, can take advantage of the GPO’s purchasing power and access pre-negotiated contracts with some of the nation’s top suppliers and retailers, saving big on their portion of spend.

Partnering with a group purchasing organization paves the way for procurement leaders to utilize purchasing solutions that elevate their existing procurement strategies, increase cost savings, and refine their overall approach to spend management.

GPOs tend to be procurement’s best-kept secret – until now!

Group purchasing organizations have a long history that began in the healthcare sector. The very first GPO was established in 1910 to help hospitals combine their purchasing power and secure better pricing on essential supplies. For many decades, GPOs grew slowly, but by the 1970s - driven by rising medical costs and increased scrutiny on healthcare spending - there were over 100 GPOs serving the industry.

Over time, the success of the GPO model in healthcare attracted the attention of other sectors as well. GPOs expanded into areas such as business, hospitality, and non-acute healthcare, adapting their approach to serve the unique needs of each industry. This evolution was shaped by changing market dynamics, regulatory developments, and the need for organizations to manage procurement more efficiently.

Today, GPOs are a widely adopted solution across various industries, continually evolving to address new challenges and deliver value through collective buying power.

There are two main types of group purchasing organizations:

Horizontal GPOs serve organizations spanning all markets and industries. This type of GPO works with businesses of all kinds, offering assistance on a broad spectrum of goods and services, mostly related to indirect spend.

Vertical GPOs serve a niche segment of industry, 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 veterinarian segments.

The group purchasing method of sourcing motivates suppliers to give GPO members discounted pricing.

Most businesses only spend a modest amount in a particular category, like office supplies or parcel shipping. Because purchasing is all about volume, you end up paying more since you only need a small quantity.

A GPO allows you to leverage the collective buying power of a group of people, saving money on your portion of spend.

In addition to increased buying power and cost savings, other benefits of working with a group purchasing organization include:

• Supply chain management
• Data analytics & cost comparisons
• Category management expertise
• Better overall indirect spend management
• Access to additional resources, education, and more.

Like with every decision, it's important to consider what may be considered drawbacks to working with a GPO:

1. Risk of Limited Product Selection and Off-Contract Purchases: It's true that GPOs may not always offer every product a member needs. This could potentially force purchases to be made outside the contract—resulting in lost savings and compliance headaches.

2. Potential for Diminishing Returns as Organization's Grow: Some worry the value proposition of a GPO may decrease as a company’s purchasing power grows, since larger organizations can often negotiate better terms on their own. Like any relationship, it's always a good idea to reassess your GPO partnership every couple of years or so to ensure it's still working for your business.

3. Lack of Transparency: There are industry-held criticisms about GPOs’ compensation structures and potential conflicts of interest. Partnering with a GPO that is upfront about their operation and is willing to answer any and all questions is key.

4. Opportunity Cost and Potential Loss of Free Market Leverage: Critics raise the concern that GPO contracts may restrict members from shopping around for better deals, potentially missing out on market opportunities. However, it’s important to understand that joining a GPO doesn’t mean relinquishing control. Instead, it enhances your purchasing power while still allowing for independent negotiations when needed.

5. Suitability Concerns for Different Organization Types: Consider the fact that GPOs may not be equally beneficial for all organizations, particularly those with highly specialized or unpredictable procurement needs. This GPO Checklist can help you decide.

We've created a few resources to help you prepare for potentially tough conversations surrounding the use of a group purchasing organization. These tools try to debunk common misconceptions and offer up solutions to overcoming objections:

• Group Purchasing FAQs

• GPO Checklist

• 10 GPO Myths Debunked

• Benefits of a Group Purchasing Organization

• The Truth About Group Purchasing Organizations

At the end of the day, your GPO of choice should act like an extension of your procurement team that ultimately improves your bottom line.

By developing a holistic approach to procurement that includes group purchasing, you can reclaim your valuable time, find new cost savings, and focus on leading your team.

Let’s start with the basics.

Group purchasing organizations leverage the collective buying power of their members to obtain volume discounts from suppliers and retailers. Any business can join a group purchasing organization and take advantage of a “strength in numbers” concept when purchasing goods and services.

When you join a GPO, your collective buying power increases, which means you join forces with a group of consumers to leverage the GPO size in exchange for discounts.

The best GPOs will have strong relationships with the world’s top suppliers. Una has spent years developing partnerships with high performing, culture-driven suppliers that are typically out of reach for most businesses. We happily serve as the gatekeeper, connecting our members to the best enterprise-level contracts available.

While some GPOs charge a fee, membership with Una is always free. Once you’re signed up, you have access to all of our supplier contracts and business savings can be achieved in just a couple week’s time.

Before joining, consider how a specific GPO will offer value beyond cost-savings. Are you saving time, or are you still having to negotiate terms with suppliers? Are the supplier contracts offered to you better than what you can get through your own effort?

There are many ways to operate a successful procurement program. At Una, we encourage a diversified approach to sourcing where group purchasing enhances the values that drive your business.

Comparing a GPO to Other Purchasing Solutions

Understanding the elements of a well-rounded procurement strategy can help determine which approach - or combination - is best suited to meet your needs.

1. Direct Negotiation with Suppliers

   • How it works: Organizations negotiate contracts and pricing directly with suppliers, leveraging their own purchasing volume and relationships.

   • Best for: Large companies with significant spend or strong supplier relationships; direct spend categories.

   • Comparison to GPOs:

     • Direct negotiation offers more control and customization but may lack the volume discounts GPOs can secure for other organizations.

     • GPOs simplify negotiations by providing pre-negotiated contracts, but may offer less flexibility in terms and product selection.

2. Procurement Software and E-Procurement Platforms

• • How it works: Digital platforms automate sourcing, purchasing, and spend management, often integrating with multiple suppliers.

  • Best for: Organizations seeking efficiency, transparency, and data-driven decision-making.

  • Comparison to GPOs:

    • Procurement software provides automation, spend visibility, and compliance tools, which can enhance control and reporting.

    • GPOs focus primarily on cost savings through aggregated buying power, while procurement software may not directly negotiate discounts but can optimize the overall process.

3. Buying Groups, Consortia and Cooperatives

• • How it works: Groups of organizations (often in the same industry or sector) jointly negotiate contracts to leverage collective buying power, similar to GPOs but often member-owned.

  • Best for: Nonprofits, public sector entities, or industries with shared needs.

  • Comparison to GPOs:

    • Buying groups or consortia and cooperatives are typically governed by members, offering more say in contract terms and supplier selection.

    • GPOs are often third-party entities that manage contracts on behalf of their membership and make money via supplier admin fees.

4. Hybrid and Diversified Approaches

• • How it works: Organizations combine elements of GPO participation, direct negotiation, and procurement technology to maximize value.

  • Best for: Companies seeking flexibility and the ability to tailor procurement strategies to specific categories or business needs.

  • Comparison to GPOs:

    • A hybrid approach leverages the strengths of each method, using GPOs for categories with the best group discounts and other solutions where customization or control is needed.

Keep in mind that as your GPO partner, we will always be forthcoming about our role, where we fit, and where we don’t.

Typically, GPOs make money a number of ways:

• By collecting participation fees from their members; membership fees might be a one-time thing collected upon joining, a set amount paid annually, or a percentage of purchases
• By collecting administrative fees from the suppliers when members make a purchase
• Or a combination of the two

When researching GPOs and their pricing structure, we recommend working with one that is completely transparent about the way they conduct business.

Make sure you're clear as to what they expect of their members when it comes to fees and purchasing volume.

Entering into a new business relationship is a big deal and forming a true partnership that is mutually beneficial takes time. Selecting the right GPO to work with is an essential step in developing new comprehensive sourcing strategies.

Here are things to look for when deciding to partner with a group purchasing organization.

When choosing the right GPO partner, make sure they know their place in your overall procurement strategy. GPOs are a supplement to come alongside the C-Suite strategy. Group purchasing isn’t the end-all-be-all and your GPO should know that.

Your GPO’s main goal should be to provide immediate value to your non-strategic spend and then over time, look for additional ways to provide value in other categories or, better yet, in areas like reporting function, data and supplier transparency and accountability.

Download our playbook on how to maximize your GPO relationship.

No matter the circumstances, group purchasing can be used as a way to reduce costs and free up your time to further develop your procurement strategy. GPOs are designed to save you money, time and effort.

Group purchasing is procurement’s best-kept secret. Being able to obtain savings (sometimes up to 80%) on products and services you need to run your business is an incredible advantage.

Each organization has its strengths and many have unique product offerings in addition to the benefits of group buying power.

Una’s people, our values, and our community engagement set us apart. Our passion lies in being value-driven, member-centric, partner-focused, and committed to educating, advising, and enabling businesses to achieve tremendous savings.

From dedicated account managers and personalized consulting to spend analytics and supplier management, membership with Una is all-encompassing and supportive every step of the way.

Join now and find your true partner in procurement.

Be empowered to take advantage our increased buying power, comprehensive savings solutions, and superior service today.