Have you heard of a GPO before? Depending on the type of industry you’re in, this might be a common term for you to come across.
In short, GPO is simply a way of saying Group Purchasing Organization. These organizations exist for an easy to understand reason. GPOs help companies that are looking to purchase similar products gain discounts on bulk orders from suppliers because of their collective purchasing power.
Why Use a GPO?
A GPO can serve companies as well as suppliers.
For companies, a GPO can find the best prices and terms of contracts from suppliers, along with save the company time and free up the internal resources it would usually take to handle large ordering tasks.
For suppliers, a GPO can help suppliers gain a larger market share, create great relationships with ongoing purchasers, and give the supplier access to data and insights about their industry.
All sorts of industries use GPO organizations to help them find the best prices and save time on getting products in bulk as soon as they’re needed. Some of the industries regularly using GPOs include:
· The healthcare industry.
· Food service companies.
· Retail chains.
· Nonprofit organizations.
· Electrical and plumbing companies.
· Manufacturing companies.
· The hospitality industry.
All of these industries can benefit greatly from the reduced costs and speed of handling, as well as the good business relationships that working with a GPO can provide.
How it Works
How a GPO works is very simple. Basically, GPOs will create contracts for a client (whether it is a company or a supplier), for expected services or products. The GPO will also manage the contract, handling communication between three different entities that include the GPO itself, the company looking for goods, and the suppliers selling those goods.
In short, GPOs manage contracts and purchasing between companies seeking products or services and the suppliers that offload these products and services. It is an efficient system that can save the companies, as well as the suppliers, valuable time and money.