A Guest Post by Ciara Perkins
A Group Purchasing Organization (GPO) can significantly benefit your business. That’s because it can provide you with a reliable way to get your supplies.
But first, let’s understand what a GPO is.
What is a Group Purchasing Organization?
A GPO is an organization that consolidates orders from various merchants. This is to meet a manufacturer or supplier’s minimum order quantity (MOQ).
Aside from that, buying in bulk enables group purchase discounts. Hence, you can reduce your procurement cost when joining a GPO.
On the other hand, a Group Purchasing Organization can also strike partnerships with various manufacturers. That way, the other end of the supply chain has one less thing to worry about merchant partnerships. In exchange, they will provide discounts for bulk orders.
7 Benefits of Working with a Group Purchasing Organization
Now that you know what a GPO is, your business might be interested to learn more about the benefits of working with a GPO. Here are seven advantages that your business can enjoy when working with a GPO.
Cost reduction
The most significant reason companies would want to work with a GPO is to reduce operating costs overall.
It’s common for entrepreneurs to look for ways to reduce expenses when running their companies. One way to do that is by working with a GPO to get exclusive discounts and rates that they wouldn’t otherwise have access to.
If you’re regularly buying high volumes of specific products to run your business, the costs can stack up. That’s why having reduced prices for these certain products or services can create immediate perks for you.
Otherwise, you might not have been able to get these items for a lower price at all without the GPO.
Greater purchasing power
If you run a micro, small, or medium-sized business, it can be challenging to look for suppliers with lower MOQ. You often have to settle for the usual market price of the products you have to buy, and if you’re lucky, you might get a small discount here and there.
However, if you work with a GPO, you can have greater purchasing power than purchasing items as a lone business. Even if you aren’t ordering a lot, you still get the discount you need without changing the number of things you request. Thus, it’s also good for small to mid-sized businesses to work with a GPO.
Reduced workload
When you’re purchasing supplies or the like as a business, it’s not as easy as when you’re a customer coming into a shop and buying something off the shelves. It’s more complicated given the many negotiations and contracts that you have to go through. It’s more work than you’d think.
With that said, if you are connected to a GPO, you don’t have to worry about the buy-and-sell process because they will do that for you. Thus, reducing your workload and allowing you more time to deal with more vital aspects of the work.
Mitigate risks
The more people, businesses, and companies a GPO is in contact with, the fewer risks there are when it comes to supplying you. That’s because the manufacturers and suppliers have steadier access to paying clientele that way. Meanwhile, you also have a GPO that will negotiate rates on your behalf, especially the more companies they can get to work with.
Improve supply chain
Having a GPO can help you optimize and improve your supply chain. For small to mid-sized businesses, every person counts, and time and energy are even more critical. That’s why having someone else responsible for a considerable chunk of your supply chain management is beneficial.
You can then focus on the other critical parts of running a business while still having a steady supply and inventory of all that you need.
Manage tail spend
A GPO can also help you get a better hold on your overall tail spending. Your tail spend consists of your business’s more minute expenditures that go under the radar. Hence, they are challenging to account precisely for.
By having a GPO, you can have someone else do tail spend management for you. Since your suppliers are all in one place, it will be much better for the GPO to manage your tail spend for you.
Network with other members
Working with GPOs also has the added benefit of networking with other corporations or businesses that work with the same GPO that you do. You can broaden your network while dealing with your supplies at the same time. You might even be able to get a business partnership out of this network.
Being part of a group purchasing organization is a great way to streamline your supply chain management. From reducing procurement costs to reducing your workload, it’s easier for you to run your business with the help of a GPO. So try it out for your business and get these benefits for yourself.
