GPO’s (Group Purchasing Organizations) have been around for about ten years primarily in the healthcare industry. The basic concept of a GPO is that a group of businesses can come together and buy products cheaper than any single company can. This model may or may not be beneficial for the Coca-Cola’s, Wal-Mart’s, or Johnson & Johnson’s of the world, but they are great for the small to medium size business because they allow the little guys to buy their products on the discount level of one of these huge corporations.
As industries are expanding and products are being developed, we are seeing GPO’s spread into the education, printing, office supplies, and consumer products fields. Manufacturers are willing to cut their margins and deliver products at wholesale prices for the volume of customers the GPO’s offer. In most scenarios GPO’s can save businesses anywhere from 20% – 40% off their already competitive prices.
GPO’s are exclusive to members meaning that your business would pay a membership fee to be a part of the wholesale buying group.
Two things to consider before becoming a member of a GPO.
1. Know what and how much you’re buying throughout the year for your business ex. (brochures, catalogs, envelopes, forms, paper, ink cartridges, etc)
2. Consider the membership fees versus your current cost and the savings that the GPO would deliver. If you are buying 500 business cards or 1,000 envelopes a year then a GPO would probably cost you more money than you would save.
All in all a GPO is a good way for you to effectively cut cost without having to compromise quality or service.