A practical guide for finance leaders evaluating how group purchasing can improve margins, increase procurement ROI, and unlock measurable value.
Complete Guide to Group Purchasing Organizations
Save more money, time, and effort.
How to optimize your procurement strategy and deliver value beyond cost savings. Everything you need to know about GPOs, how they work, and how to choose the right one.
KEy takeaways
- A group purchasing organization leverages collective buying power to secure discounted pricing. Any business, any size can join
- Una members typically save an average of 18–22% annually through pre-negotiated contracts
- GPOs come in two types: horizontal (all industries) and vertical (niche sectors like healthcare or hospitality)
- Common concerns — limited selection, transparency, exclusivity — have clear answers when you choose the right partner
- Una's membership is always free; revenue comes from supplier admin fees, not member charges
- The right GPO acts as an extension of your procurement team, not a replacement for your strategy
What Is a Group Purchasing Organization?
DEFINITION
A group purchasing organization (GPO) is an entity that leverages the collective buying power of its members to secure discounted prices on the goods and services they need to run their businesses.
Any business, regardless of size, can join a GPO and access pre-negotiated contracts with top suppliers and retailers — saving significantly on their share of spend. GPOs remove the need to negotiate individually by consolidating purchasing volume across many member organizations, which unlocks the kind of pricing typically reserved for large enterprise buyers.
Partnering with a GPO paves the way for procurement leaders to elevate their existing strategies, increase cost savings, and refine their overall approach to spend management. For many organizations, GPOs are the most direct path to measurable procurement savings with minimal setup time.
"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."
GPO Explainer Video
This quick video explains the group purchasing concept and how a GPO like Una works.
Take a look! And trust us, you'll never look at a jar of mayo the same way again!
History & Evolution of GPOs
Group purchasing organizations have a longer history than most procurement professionals realize. Understanding where they came from helps explain why the model is so durable.
1910
The first GPO was established in the healthcare sector to help hospitals combine purchasing power and secure better pricing on essential supplies.
1970s
Rising medical costs and increased scrutiny on healthcare spending accelerated GPO growth. By the 1970s, there were over 100 GPOs serving the healthcare industry.
1980s-2000s
The GPO model's success in healthcare attracted other sectors. GPOs expanded into business, hospitality, and non-acute healthcare, adapting to the unique needs of each industry.
Today
GPOs are a widely adopted procurement solution across virtually every industry, continually evolving to address new supply chain challenges and deliver value through collective buying power.
Types of GPOs
There are two main types of group purchasing organizations. Knowing the difference helps you select the right fit for your business needs.
HORIZONTAL GPO
All Industries & Markets
Works with businesses of all kinds across markets and industries offering assistance on a broad spectrum of goods and services mostly related to indirect spend.
Examples: office supplies, travel, shipping, logistics, facilities
VERTICAL GPO
Niche Industry Segments
Serves a specific industry segment, usually created so management or association groups can benefit their member companies with industry-specific contracts.
Examples: healthcare, hospitality, dental, veterinary sectors
Benefits of Group Purchasing
The GPO model motivates suppliers to offer discounted pricing because it brings them volume they wouldn't otherwise access. Most businesses only spend modest amounts in categories like office supplies or parcel shipping because purchasing is about volume and smaller buyers pay more.
A GPO lets you leverage collective buying power without having to purchase more yourself. Other benefits include:
Significant Cost Savings
Access volume pricing through pre-negotiated contracts. Una members save an average of 18–22% annually; some categories yield savings of up to 80%.
Faster Time to Savings
Pre-negotiated contracts skip the lengthy RFP process. Members can start buying on GPO pricing within days or weeks, not months.
Spend Management
GPOs provide data analytics, cost comparisons, and category management expertise that help procurement teams manage indirect spend more effectively.
Access to Enterprise-Level Suppliers
The best GPOs maintain relationships with top suppliers that are typically out of reach for most businesses. Members gain immediate access to these contracts.
Data & Analytics
Through innovative technology and advanced analytical tools, Una helps you eliminate product and service duplications, analyze potential savings, and evaluate competitive purchasing behavior.
Procurement Expertise & Advisory Support
GPO membership provides access to procurement experts who can advise on category strategy, supplier selection, and cost reduction opportunities.
Potential Concerns & Drawbacks
Like any procurement decision, joining a GPO involves trade-offs. Here are the most common concerns and how to evaluate them honestly.
1.
Limited Product Selection
GPOs may not always offer every product a member needs, which could require some purchases to be made outside the contract. Solution: choose a GPO with a broad supplier portfolio and no exclusivity requirements.
2.
Diminishing Returns as Organizations Grow
Larger organizations may eventually be able to negotiate terms independently. It's worth reassessing your GPO partnership every couple of years to confirm the value still outweighs going it alone.
3.
Transparency Concerns
Some GPOs face criticism around compensation structures and potential conflicts of interest. Work with a GPO that is upfront about how they operate, how they make money, and what they expect from members.
4.
Loss of Free Market Leverage
Joining a GPO doesn't mean giving up control. The best GPOs allow independent negotiations alongside contract use — enhancing purchasing power without restricting your options.
5.
Not Right for Every Organization
GPOs are best suited for organizations with recurring indirect spend needs. Companies with highly specialized or unpredictable procurement requirements may see less benefit from a standard GPO model.
Average Cost Savings
Una’s free cost savings calculator tool highlights the power and value a group purchasing organization brings to the table. See how much you could be saving today.
Simply enter your spend amounts and get an instant quote based on actual contract terms and conditions. While the total savings amount shown is an estimate, Una’s pre-negotiated contracts generally save members an average of 18-22%.
How Group Purchasing Organizations Work
GPOs leverage the collective buying power of their members to obtain volume discounts from suppliers and retailers. When you join a GPO, your buying power increases. You join forces with other member organizations to leverage the GPO's scale in exchange for better pricing.
The mechanics are straightforward: the GPO negotiates contracts with suppliers on behalf of all its members. When a member makes a purchase, they pay the pre-negotiated rate which is lower than what they could typically secure on their own.
The GPO handles supplier relationships, contract management, and ongoing negotiation so members can focus on their core procurement priorities.
Where GPOs Fit in Your Procurement Strategy
A GPO works best as a complement to, not a replacement for, your existing procurement strategy. It's most effective for indirect spend and tail spend categories where your team has limited bandwidth or negotiating leverage. Strategic, high-value categories often still warrant direct attention.
Understanding how GPOs compare to other procurement approaches helps you determine which combination is right for your organization:
How GPOs Make Money
Understanding a GPO's revenue model helps you evaluate whether their incentives align with yours. GPOs typically generate revenue through one or more of these models:
Membership Fees
Charged to members either as a one-time fee, an annual amount, or a percentage of purchases
Supplier Admin Fees
Paid by suppliers when members make purchases. This is the most common model for business-focused GPOs
Una's Model
Always free for members. Una earns an admin fee from the supplier after each purchase so membership stays free
When evaluating a GPO, always ask directly: how do you make money, and what does that mean for my membership? A trustworthy GPO will answer clearly and completely. Any hesitation around this question is a red flag.
What to Look for in a GPO Partner
Selecting the right GPO is an essential step in developing a comprehensive sourcing strategy. Here are the criteria that matter most:
Transparency
Your GPO should be completely open about membership terms, pricing structure, supplier relationships, and how they make money. No surprises — know everything upfront before purchasing begins.
Culture Fit
Work with a GPO whose values mirror your own. The right partner will take time to validate suppliers and ensure they're a good fit for your organization, not just any supplier willing to pay an admin fee.
Speed to Savings
Your GPO should connect you with a contract quickly: within days or weeks, not months. Pre-negotiated contracts exist specifically so the procurement process runs faster and more efficiently.
Advisory Approach
The best GPOs help you buy smarter by understanding your pain points and leading you to the right solutions, even when the answer is something they don't directly offer. They're advisors, not just contract administrators.
Clear Scope
A good GPO knows its place in your overall strategy. It's a supplement to C-suite procurement priorities, not the whole strategy. The right partner will be honest about where they add the most value (and where they don't).
Value Beyond Cost Savings
Cost savings are the most visible benefit of GPO membership, but the full value runs deeper. Procurement outsourcing through a GPO can span strategic to transactional activities freeing your team from lengthy RFP processes and supplier vetting so they can focus on higher-impact work.
Most importantly, GPO membership gives procurement teams access to something they often lack: outside expertise. Sourcing advisors who specialize in specific categories and supplier markets can provide guidance that internal teams — stretched across dozens of categories — simply can't replicate alone.
The time and effort saved is a real bottom-line benefit. Procurement leaders who use GPOs effectively describe it as getting an extension of their team without adding headcount.
The Una Difference
Una is a sourcing accelerator and GPO on a mission to empower procurement teams to save more money, time, and effort. Each GPO has its own strengths; Una's differentiation comes from its people, values, and approach to member relationships.
Value-Driven
Every supplier relationship is built around delivering real, measurable value to member, not just filling out a contract roster.
Member-Centric
From dedicated account management to personalized consulting, membership with Una is supportive at every step of the procurement journey.
Partner-Focused
Una acts as a true partner — identifying savings opportunities, analyzing spend data, and staying actively involved in member success.
Education-First
Una's Unaversity resource center is dedicated to empowering procurement professionals with guides, tools, calculators, and expert content.
Una membership is always free to join and free to use. There are no purchasing minimums, no exclusivity requirements, and no contracts. You pick the suppliers that suit your needs and start saving immediately.
Ready to Save More With Group Purchasing
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