A group purchasing organization can be extremely beneficial to companies looking to buy top-quality products from dependable vendors at the most competitive price possible. The popularity of these GPOs speaks to how effective they can be: In healthcare, for example, it's estimated that between 96% and 98% of all hospitals in the U.S. are a member of at least one GPO
Becoming a member of a group purchasing organization can make procurement management much easier and more cost-efficient. However, if you are not carefully considering your GPO and what it can offer you, your organization might be losing value. There are several important things that your GPO must be doing in order for it to provide a sufficient ROI to your organization.
1. Access to Great Products
A group purchasing organization usually has restrictions on the types of products that members are allowed to buy under their contract. This is fine, as long as your GPO has vendors on the contract that you can trust to provide top-quality products that you can depend on.
It's important that you have a good understanding of the vendors on your GPO. Take some time to do a competitive comparison between the products available under your GPO and other similar ones in the industry. Make sure that the things you buy under your GPO are in line with what other top vendors are providing.
2. An Easy Purchasing Process
In complicated fields like healthcare, procurement management can be a huge challenge. After labor costs, supply chains are the 2nd biggest part of a hospital's operating budget. Facility managers have to make sure that they are ordering what they need, receiving it, and storing it properly.
Even if your group purchasing organization provides good pricing, it's important to consider how easy it is to buy from them. The top GPOs should make the process easy: many of the best ones have streamlined purchasing processes that reduce the amount of work required by healthcare procurement specialists. If your GPO has a cumbersome buying process that requires lots of time and extra forms, it may be time to re-evaluate the relationship.
3. Hearing Your Voice
Members of a GPO are what allow them to stay in business. The more organizations that purchase things from a GPO, the more revenue they stand to bring in.
Many GPO administrators forget this fact when it comes time to decide how to run their organization. The best GPOs will listen to their members on all sorts of topics, from competitive pricing to tips on order processing to choosing vendors. They know that by satisfying their customers, they will have a much better chance at winning their business consistently. If your group purchasing organization isn't taking your organization's beliefs or needs into account, it might be time to look for another provider.
After getting into an established relationship with a GPO, it can be easy to get complacent and hope that things will continue to work out. It's important to fight this urge and carve out some time that allows you to evaluate your GPO and how they are benefiting your organization’s procurement management process. With a strong understanding of the impact that your GPO is having on your bottom line, it's much easier to make a wise decision about your purchasing needs.
About Michael Wilson
Michael Wilson is AFFLINK'S Vice President of Marketing and Communications. He has been with the organization since 2005 and provides strategic leadership for the entire supply chain team. In his free time, Michael enjoys working with the Wounded Warrior Project, fishing, and improving his cooking skills.