Why Group Purchasing Organizations Are Important to You
When it comes to buying services and products, most companies tend to look at the price tag first. They will then try to negotiate for a lower price or find ways to reduce the cost. While this can be effective with some purchases, there are other situations where trying to cut costs is not the best course of action.
If you’re considering creating a group purchasing organization (GPO) for your business, here are some reasons why you should embrace them instead of avoiding them.
A GPO can be a great benefit if your company frequently finds itself in an expensive bidding war with vendors who know their customers need them and will pay almost anything to keep supplying them with their services and products. A group purchasing organization like GPOPlus helps businesses do just that—purchase items as a group so they get better prices than any one of them could get on their own. A GPO is essentially an association of businesses that band together so they can leverage their combined buying power and drive favorable terms and conditions from vendors.
You can set better standards
In addition to the obvious cost-saving benefits that come with buying in larger quantities, businesses that join forces through a GPO can negotiate better terms and conditions for the services and products they purchase. When buying in bulk, it’s easier to set standards for delivery times and ensure products comply with applicable industry standards.
This lets you know how much product you’ll need and when it will arrive, so there’s no guessing involved. If your company purchases a wide range of products or services, you may have to deal with several different vendors.
You’re not just buying their product or service; you’re also buying into the way they do business. This can be a problem if those vendors don’t share your values or you don’t see eye-to-eye on what’s important. You may have difficulty setting standards and getting the level of service you need as a result. A GPO can help you avoid these kinds of issues.
Save Money On Constantly Rising Costs
As industries evolve and technology changes, the way products, and services are provided is also likely to shift in some way. As a result, prices for many services and products are constantly rising. This may be because fewer providers are offering the service and the remaining companies are therefore able to charge more.
At the same time, some industries are experiencing a shortage of labor as workers retire. This drives up wages and other costs as companies compete for fewer workers by offering higher salaries. You may be able to negotiate for lower rates when you purchase services and products individually.
However, if you’re constantly having to go back to the well for more, you’re setting yourself up for a costly situation. If you’re part of a GPO, you can purchase products and services at a set price. This gives you certainty and helps you avoid constantly having to go back to the well.
You can reduce your risk
With so many risks involved in purchasing and contracting for services and products, it’s important to minimize your exposure. A GPO can help you do just that. When you join a group purchasing organization, you’re joining a group that contracts for volume purchases with suppliers.
This provides you with a hedge against supply issues or other factors that might cause you to miss out on a purchase. A GPO can also help you reduce risk by allowing you to negotiate better terms and conditions.
In some cases, this may even include pricing options that are guaranteed for a certain period. If you have to cancel or amend the terms of an order, you might have to deal with a costly cancellation fee. With a guaranteed pricing option, you’re protected.
Ensure more transparency
One of the biggest benefits associated with purchasing in bulk is the ability to avoid purchasing shortages and outages. You can avoid shortages by ordering more products than you need for one particular period. This can also help you avoid price increases—especially if you purchase during periods of high demand when prices are likely to rise.
However, it can be challenging to accurately predict how much of a product you need and when you need it. You may be able to avoid these issues by working with a group purchasing organization. A GPO can help you forecast demand and decide how much product to order to ensure you don’t overstock or understock. This level of transparency can help your company operate more smoothly.
Group Purchasing Organizations Are An Excellent Way To Manage Risk
When you join a GPO, you’re pooling your purchasing power with other businesses. This can help you negotiate lower prices, get additional discounts, and increase the number of products you order. A GPO can provide you with several benefits. It can help you manage risk and increase profitability. You can also expect a higher level of service and better communication with your vendors as a result.
By now, you should have a better understanding of why group purchasing organizations are important to you and your company. It’s important to note that while they are sometimes referred to as “GPs,” not all of them are “groups” of companies.
Some are “networks” of companies that provide a centralized purchasing platform for their members. No matter what type of organization you join, there are many reasons why it’s better to embrace them instead of avoiding them.