By Guest Editor
By Rick Bender, Sales Director, CenterPoint Group
A group purchasing organization (GPO) is a well-known buzzword in the healthcare and government industries. Do you know that using one in your business could translate into thousands of dollars of savings on the supplies and resources you use every day? Even though buying into a GPO might not be something you’ve ever considered, here’s why you need to do some serious research:
GPOs aren’t just for healthcare organizations. In the 1980s and 1990s, the federal government and healthcare organizations formed GPOs to lower costs and create efficiencies in their purchasing systems. Hospitals and free-standing nursing homes were able to consolidate their purchasing power with other facilities to create contracts with medical suppliers and other vendors. Those same practices have spilled over into other organizations. Today, many other industries are teaming up to create GPOs that bring in valuable benefits.
You can save money and time. On average, GPOs save companies 10-25% off their purchasing costs. This cost savings happens not only through reduced prices negotiated into the purchasing contracts but also by standardizing the purchasing process. Rather than going through negotiation processes with several vendors and hiring employees to keep track of those contracts, a GPO handles all of those for you. Also, administrative fees are generally paid by the suppliers and are built into the discounted price.
Know upfront what your savings will be. If you know what you purchased in the past year, the GPO can let you know what your potential cost savings will be. The GPO will take your purchasing report and give you a breakdown of the discounted price and what that will equal in cost savings. You can then take that analysis and make the decision to join.
You control your purchasing. GPOs do not purchase products or make purchasing decisions for you. You’ll have complete control over what you purchase and when, you’ll just have the purchasing power of a GPO behind you. Then, you can dedicate your time to the more profit-friendly aspects of your business and forget about constantly looking for the best deal on your supplies.
Get the attention of big-name suppliers. Small and mid-sized companies don’t have the clout needed to get good prices from well-known suppliers. With a GPO, you’ll get the good prices and the good quality because of the economies of scale. As you join up with other companies, your combined purchasing power will be attractive to those coveted suppliers.
When it comes down to it, GPOs are more than cost savers, they are sanity savers. Often, businesses get stuck in a rut with their vendors and don’t go looking for the best deal because they don’t have time. GPOs free you of the responsibility of vendor relationships, and you get the best deals on office supplies, janitorial supplies, and even services such as car rentals and fleet maintenance. You’ll also be able to take advantage of getting the best suppliers who only work with large corporations. Take the time to investigate a GPO; you may never go back to listening to sales pitches and cutting coupons.
With more than 30 years of experience working with and providing excellent customer service to companies of all sizes, Rick Bender now is the Sales Director at CenterPoint Group. CenterPoint is a management consulting firm that specializes in reducing purchasing expenses of businesses in areas such as office supplies, janitorial supplies, reducing cellular phone expense, fleet maintenance, gas and rental car expense, small parcel, and industrial supplies.
George E. Krauter
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