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The Truth About Group Purchasing Organizations

Debunking common misconceptions surrounding the concept of group purchasing and group purchasing organizations.

Here's the truth...

The purpose of a group purchasing organization is to provide businesses access to pre-negotiated contracts designed to save money, time, and effort. Any business can join a GPO to leverage the collective buying power of its members to get unbeatable savings on the goods and services needed to run their businesses.

As procurement continues to evolve and adapt to the ever-changing sourcing landscape, the concept of group purchasing is still unknown territory for a lot of business owners and procurement professionals.

This is where Una comes in. Yes, we’re here to save you money but the truth is, any GPO could probably do the same. Our job doesn’t end at savings.

As a true sourcing accelerator, our goal is to offer turn-key solutions that empower members to achieve category quick wins and then move on to the long-term strategies that make their business more profitable.

And before we get you on that fast-track to savings, a big factor in our role as your partner in procurement comes down to education.

In this guide, we’re going to address several common misconceptions surrounding group purchasing and group purchasing organizations. It’s designed to help you better understand how GPOs work and, more importantly, how you can optimize your own sourcing strategies.

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Video

Check out what Una’s managing partner, Anthony Clervi has to say about myths surrounding GPOs.

Read on to learn more about group purchasing organizations and access additional resources to help you understand all of your options when it comes to working with a GPO.

MYTH #1

GPOs aren’t popular - and only used in the healthcare industry

THE TRUTH

GPO participation may be higher than many realize. While some might think that using a GPO is solely limited to healthcare industries, research estimates that 15%–20% of Fortune 1000 companies take part in some kind of group purchasing relationship, with the majority seeing savings of 10% or more.

Una Group Purchasing Digital Guides

An education gap exists as well which limits the scope at which procurement professionals develop strategies that incorporate group purchasing. Due to the lack of training programs and educational resources for procurement, quality knowledge-sharing is in high demand.

Finding transparent information on how to boost business growth with a GPO and how to use them in a modern sourcing program is not easy — until now. Visit Una's resource center and be empowered.

benefits of a gpo

MYTH #2

GPOs cannot accomodate my unique requirements

THE TRUTH

GPOs operate within a framework that allows participants to enjoy all the benefits while retaining the ability to negotiate adjustments and incorporate options that address specific needs.

A GPO like Una understands the need for flexibility and consequently, and members can fully participate in the structuring of the supplier agreements.

Learn more about the benefits of a GPO in this guide.

MYTH #3

A GPO will lock me in

THE TRUTH

Participating members are not obligated to use Una’s suppliers or contracts, or any other GPO as their sole sourcing strategy. Members leverage category offerings and services based on their unique needs.

New GPO members determine which of the pre-negotiated agreements they will participate in based on the available savings. There is no requirement that a member participates in all or even most of the categories offered.

Group Purchasing Resource Professional at Desk

Not only are you not locked in, but your time is also freed up in the process. By using a GPO, you’re bypassing the time-consuming RFP and negotiation processes and instead you gain the flexibility to impact other areas within procurement.

joining a gpo is a winning idea

MYTH #4

We can get greater savings on our own

THE TRUTH

For some categories, this may be true! But for others, especially in the indirect spend categories, there's a good chance your business doesn’t have enough leverage to compete for the best pricing compared to larger organizations.

A group purchasing organization helps level the playing field so every organization, regardless of size, can purchase like the big guys.

Explore real stories featuring Una members and the success they’ve found utilizing a group purchasing organization.

MYTH #5

GPOs are not transparent regarding member fees and how they make money

THE TRUTH

We’ve written before about some of the key qualities you should look for when choosing a GPO and transparency is at the top of the list. Your GPO should offer complete transparency when it comes to membership specifications, fees and pricing, purchasing requirements, and the suppliers they partner with.

Una makes every effort to inform and educate members before signing into an agreement. We disclose details of how everything works upfront so there aren’t any surprises on the backend once purchasing begins.

guide to una membership
This guide to savings and support details the simplified connection process and ongoing assistance you receive as part of your Una membership.
Group Purchasing explainer video

MYTH #6

Group purchasing organizations are geared toward purchasing more - not less

THE TRUTH

At Una, this is not the case. Members are encouraged to work with their supplier partners to provide clarity on their stakeholders’ needs and create approaches that satisfy organizational requirements.

GPOs should help facilitate these discussions by providing benchmarks to membership so they can make informed decisions and establish achievable metrics.

Need a crash course in group purchasing? This short video does a great job explaining the concept in a fun, easy-to-understand way. Go ahead and press play – you’ll never look at a jar of mayonnaise the same way again!

MYTH #7

A GPO will hurt my relationship with my team or suppliers and seem like a threat

THE TRUTH

GPOs are sensitive to the perception that they are going to be viewed as an impediment or a competitor. That is simply not the case.

Members control the GPO relationship, not vice versa. A GPO is merely an additional resource that is taking on selected non-core categories, thereby enabling your team to focus on higher-value strategic sourcing.

Una isn’t coming for your job, we’re here to make you look better doing it.

sourcing hero
cost savings

MYTH #8

Becoming a member means switching suppliers - which is painful

THE TRUTH

Most organizational procurement initiatives are motivated by saving money, so yes, some changes may be necessary. But in our experience, companies tend to be happier with their new suppliers.

Lax compliance along with a lack of data transparency and accountability are huge factors that attribute to the preconceived notion that switching suppliers or implementing change will be difficult.

Una’s team of Sourcing Advisors can offer guidance for getting everyone on board, including the C-Suite.

MYTH #9

I’m not happy about having low-bid suppliers imposed on my organization

THE TRUTH

Because of the total cost philosophy, an effective GPO’s preferred suppliers are likely to be best in class, not corner-cutting low-bidders. Una members don’t have to worry about contract enforcement because the GPO provides that service.

And, due to a GPO’s buying power, you will be regarded as one of your suppliers’ largest, most important customers.

Explore Una's diverse supplier portfolio filled with deeply discounted contracts from the nation’s top suppliers. Members save an average of 18-22%.

Strategic Suppliers
Una's Group Purchasing Cost Savings Calculator

MYTH #10

Why would I risk reducing my relevance by outsourcing procurement?

THE TRUTH

As an outsourced spend solution, a GPO addresses this concern rather than creating it.

By partnering with a GPO, the procurement function expands the scope of its control and enhances its relevance to the organization.

See what's possible by using our GPO savings calculator tool. The numbers are based off real contract information and member data.

This one's not a myth...

A GPO alone doesn’t provide a comprehensive procurement outsourcing strategy. The GPO model is not about covering every one of the 150-200 different areas of indirect spend. Rather, a GPO focuses on driving value on a broad set of categories that can have a meaningful impact for a large number of participants.

Partnering with a GPO not only generates hard-dollar savings in the selected categories but also enables corporate procurement to redirect freed-up resources to focus on other, more strategic areas.

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