A group purchasing organization (GPO) is a company or group of companies that uses its combined purchasing power and volume to secure best-in-class pricing on products and services for their customers. GPOs help operators across a variety of industries, including hospitality and leisure, healthcare, education and foodservice. Additionally, GPOs help suppliers by providing access to pooled purchasing volume, making forecasting less variable.
For both operators seeking procurement support and suppliers seeking growth, there are many benefits to leveraging a GPO including:
- Favorable Pricing – Larger organizations or a group of combined organizations with similar needs are able to negotiate directly with manufacturers to secure best pricing in a variety of categories. Additionally, they tend to be more successful in securing monetary perks like rebates and other cost savings based on the volume of business they do with each supplier. Suppliers are able to streamline their sales operations to negotiate pricing with the GPO instead of executing deals with many different organizations.
- Breadth and Depth of Program Coverage – By nature of their offering, GPOs are able to offer a wide selection of contracted products and services to their Members, providing greater flexibility in menu planning and operations. Manufacturers are able to integrate with a “single source” portfolio for customers and frequently introduce new products directly to GPOs before full-scale commercialization; and specialty items are often priced more competitively through GPOs.
- Time Savings – Aligning with a GPO partner doesn’t only save operators money, but it also can save time and resources. GPOs manage supplier contracts for operators so they spend less time sourcing, negotiating, and maintaining agreements. Many GPOs will even assist with distribution and fulfillment issues, giving operators back even more time to focus on the things that matter most to customers. Suppliers realize the operational efficiencies of this scale, from making one sales call to the GPO rather than every individual outlet to decreasing the variability of their forecasting.
- Regional & Minority Vendors – Because of the diverse needs of their Members, GPOs also contract beyond the national brands. Many have a robust selection of regional vendors and minority-owned suppliers in a variety of categories. Smaller, local, and unique suppliers gain significant exposure and sales opportunities through GPOs that would otherwise not be available on their own.
- Value-Added Services – Today, GPOs offer much more than contracts. Many organizations offer value-added solutions of their own which can range from consulting services to culinary engagements to audit services. Joining a GPO gives operators countless resources and options making it easier for themto continue to grow their businesses and optimize savings. Suppliers can leverage these services to develop new marketing vehicles that increase usage of their products or services and demonstrate their value across GPO Members.