If your organization is concerned about the uncertainty of the economy ahead, an excellent way to protect your bottom line can be through the utilization of GPO programs or consortiums.  This article will help explain the savings benefits of a GPO program and whether or not this solution is a viable option for your organization.

A GPO is an acronym within the strategic sourcing community that stands for “Group Purchasing Organization.”  GPOs carry many benefits associated with them, and this article will help you identify if participating in a GPO program is suitable for your organization.

Is a GPO Right for Your Organization?

GPOs are built upon one simple core philosophy – businesses that buy similar products are able to combine their purchasing power to help establish improved savings via category discounts and unit cost reductions.  For instance, six small market businesses purchasing industrial supplies can establish immediate savings through the utilization of a GPO program connected with a national supplier such a Grainger.

If you are an organization that lacks centralized supplier purchasing within similar categories, has uncontrolled rogue spend across business units, or if you’re an organization that simply wants to understand and consolidate purchasing habits while establishing strong savings then a GPO program could be for you.

Lack of Negotiating Power

As noted above, many businesses that have low or unknown annual sales volumes over the course of a year simply don’t have the leverage to negotiate a strong contract that can provide competitive pricing and discounts.  When coming to the negotiating table with national suppliers your greatest strength is power in numbers, or in this instance annual sales volume.  In fact, many suppliers will provide very minimal unit price reductions and/or category discounts due to low spend volumes, which is where a GPO program can enter the picture and immediately eliminate this hurdle.  Corcentric’s established GPO program has the purchasing power of numerous organization rolled up within it, including strong negotiated category discounts reflective of a much higher annual spend.

Establish a Quick Win for Immediate Savings

The category discounts and unit cost reductions noted previously also help establish immediate savings for participants within a GPO program.  If your organization is concerned with the current economic uncertainties ahead, the utilization of Corcentric’s GPO program will help establish immediate savings and quick wins across multiple categories.  These savings will continue to rise as internal communication and education spreads throughout your organization which will continue to drive compliance.

Establish Greater Discounts through Data Collection & Establish CSP

As noted above, when compliance begins within your organization it will lead to the consolidation of rogue spend spread across numerous suppliers.  This consolidation will in turn give your organization the ability to review data identifying top spend items.  Once these top spend items are identified, Corcentric can help lead negotiations for unit cost reduction of these items which can lead to additional savings opportunities.

The examples in this article are just a few instances of how Corcentric’s GPO program can help your organization today.  The sky is truly the limit when it comes to utilizing a GPO for savings opportunities.    Don’t hesitate to reach out to Corcentric today to establish a quick save during tough times.

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Ryan Ganley

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