GPO’s (Group Purchasing Organizations) have been around for around ten years primarily in the medical market. The basic notion of a GPO is a group of companies can come together and buy products cheaper than any single company can. This model may or might not be beneficial for your Coca-Cola’s, Wal-Mart’s, or Johnson & Johnson’s of the world, but they’re terrific for the small to medium size business because they allow the little guys to purchase their goods on the discount amount of one of these massive corporations.
As businesses are expanding and products are being developed, we’re seeing GPO’s spread to the education, printing, office equipment, and consumer products fields. Manufacturers are eager to cut their margins and deliver products at wholesale costs for the quantity of clients the GPO’s offer. In most cases GPO’s can save companies anywhere from 20% – 40% off their already competitive rates.
GPO’s are exclusive to members meaning that your company would pay a membership fee for a part of the wholesale buying group.
Two things to consider before becoming a part of a GPO.
1. Know what and how much you are buying during the year for your company ex. (brochures, catalogs, envelopes, forms, paper, ink cartridges, etc)
2. Think about the membership fees versus your current price and the savings that the GPO will provide. If you’re purchasing 500 business cards or 1,000 envelopes annually then a GPO would likely cost you more money than you’d save.
Overall a GPO is a fantastic way for you to cut price without needing to compromise quality or service.