Blog / GPO

To GPO, or Not to GPO.....That is the Question!

Written by
QIS Writer
Published on
April 30, 2021 at 9:00:00 AM PDT April 30, 2021 at 9:00:00 AM PDTth, April 30, 2021 at 9:00:00 AM PDT

Let’s start at the beginning.....Anyone here not know what a GPO is? In the United States, a group purchasing organization (GPO) is an entity that is created to leverage the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members.


Many GPOs are funded by administrative fees that are paid by the vendors that GPOs oversee. Some GPOs are funded by fees paid by the buying members, and some GPOs are funded by a combination of both of these methods. These fees can be set as a percentage of the purchase or set as an annual flat rate. Some GPOs set mandatory participation levels for their members, while others are completely voluntary. Members participate based on their purchasing needs and their level of confidence in what should be competitive pricing negotiated by their GPOs.


There are also various types of GPOs – Vertical Market, Horizonal Market and what’s called a Master Buyer. Vertical Market GPOs focus on one particular industry, or vertical, and examples include those in healthcare – such as MDProcure or Premier – food service or hospitality, automotive – such as the Automotive Distribution Network. GPO members in the Horizontal Market exist in different industries but purchase similar goods and services. – examples include Corcentric, who offer AP Automation, Procurement and Billing Solutions; OMNIA Partners, who focus on both the public and private sectors; and West Purchasing Group, who focus on leveraging buying power for everyday used supplies and services like ink and toner cartridges, wireless services and shredding services. A Master Buyer is one buying organization with significant contracts in place, that allow other organizations to purchase off those existing contracts.....one good example is the federal General Services Administration (GSA).


While GPOs exist to weed down the thousands of supplier options that are out there and provide you access to their competitive agreements, selecting the right GPO for your organizational needs is extremely important as not all GPOs are built the same or have the right business model that produce the best results every type of buy.


Some, like Open Market Health, specialize in healthcare equipment, so if you have a particular large capital buy for that type of equipment, going with a GPO that specializes in just that may be beneficial. If you have recurring Indirect buys such as office supplies, then becoming a member of a GPO that has strong relationships with not just the transactional “Big Box” stores but who also partner with “Out of the Box” Suppliers like Quality Imaging Solutions, that provide innovative solutions on spend for office equipment, printer cartridge supplies and printer maintenance services – then a GPO like this may be the answer.


Overall, it’s important when choosing a GPO that reflects your own organizations culture and values. One benefit of GPOs is that they’ve done the hard work for you – they’ve carefully written the RFPs, evaluated bid responses, vetted suppliers and maintain the supplier contracts and compliance. So, if your organization doesn’t have time for all of that GPOs can be a HUGE resource. UNA, another strong GPO contender, has written several articles and also engage with procurement experts like Philip Ideson with Art of Procurement, discussing how to compare and choose the right GPO for you. The bottom line is, if your procurement unit needs help....there are a number of GPOs and even consulting firms (like Contract Review Advisors and Profit Recovery Partners) who can tailor programs to the specific and wide range of buys your organization is in need of....all you need to do is ask!