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6 Signs You Need a Group Purchasing Organization

Michael Wilson | Mar 24, 2015

Category: Healthcare

Group purchasing organizations, also known as GPOs, have many benefits for healthcare companies. The problem is, not every medical professional understands how to identify when ...

Dollarphotoclub_49658087Group purchasing organizations, also known as GPOs, have many benefits for healthcare companies. The problem is, not every medical professional understands how to identify when the time is right to join one of these organizations.

If you have recently found yourself pondering the relationship between a group purchasing organization and healthcare supply chain concerns, here are 6 of the top signs that you need to work with a group purchasing organization to improve your efficiency:

1. You Have Too Much Product or Product Shortages

Best practices for inventory management indicate that just-in-time inventory management is ideal for reducing overhead. The Houston Chronicle says that companies like Dell and McDonald’s have been using just-in-time inventory management to both lower costs and better serve customers. If you have noticed that you usually have too much or too little product, a GPO would be able to help you identify issues, set a consistent schedule, and fine tune your purchasing patterns.

2. You are Missing Deliveries

Deliveries are a critical element of properly organizing your supply chain. If your current vendors aren’t able to meet your necessary delivery schedule, or if your team isn’t able to properly receive them at the times available, it could be a sign that you need to switch to using a GPO to be your middleman.

3. Your Business is Expanding

Smaller healthcare organizations may be able to get away with relying on suppliers that don’t have as many resources available as larger shops, but when your business is expanding it becomes more important to have access to a great GPO. The purchasing power and convenience that these organizations provide can be critical for helping your healthcare business as it moves into a new phase of growth.

4. Your Vendor Relationships Have Soured

Maybe you have a new representative working for your company who your buyers don’t get along with very well, or perhaps your vendor has changed its operating procedures and now cannot meet the needs that you have for your healthcare supply chain. Whatever the case may be, it’s not wise to stick around in a negative vendor relationship that isn’t helping your healthcare company grow and succeed. A GPO would help you find another vendor easily and efficiently, not to mention one that is more reliable too! 

5. Your Vendor’s Prices are Going Up

Healthcare organizations interested in making sure that they maintain the lowest possible inventory costs have to understand that they can only cut costs so much: inventory will always be a significant portion of the budget. However, when costs rise to a level that is more than your business can afford, or if you anticipate costs reaching that level soon, it is best to work with a group purchasing organization so that you can access the best possible prices in the industry. Not to mention GPOs often can tap into better group purchase rates you may not be able to on your own.

6. You are Looking for Some Extra Capital

One of the main reasons that medical companies do business with GPOs is that many of them offer an annual rebate on the purchases that they make with the group. This means that on an annual or biannual basis, your organization may be rewarded with some extra capital that you can use to further support your mission.

These are just a few of the reasons why a group purchasing organization would be a great fit for a healthcare supply chain. To better understand whether or not a GPO is right for you, bring in experts to help make the decision. Finding the right GPO for your healthcare facility can really transform your operations and take your business to the next level.

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