An Introduction to Group Purchasing Organizations (GPOs)

Group purchasing organizations (GPOs) are not a new idea. Agricultural cooperatives aggregated the buying power of farmers hundreds of years ago. That said, GPOs have evolved quite a bit, and the infusion of new digital capabilities is taking that evolution to an even higher level. This evolution also means that procurement organizations must go in “eyes wide open” to best utilize this important tool in the procurement tool belt.

Not all GPOs (or GPO models) are the same. Understanding the differences will make you a more educated, and thus likely more successful, buyer. Therefore, we’ve decided to delve a little deeper into this obscure sector of the procurement provider market and shed some light on how to best extract value from it.

This multipart Spend Matters PRO brief is designed to demystify GPOs and put procurement organizations on the same information playing field as the GPOs attempting to sign them up, expand their utilization of contracts and sell additional services. Within this series, we will explore GPOs by type, as there are several business models in play, and by industry segment, as GPOs are heavily embedded in certain markets and are little more than a supply option in others.

This first installment in our GPO coverage:

• Defines what GPOs are (and are not)
• Explains how GPOs operate
• Explores GPO “spend coverage and fit”
• Analyze the GPO market segments and how to engage them
• Offers tips and tricks for engaging GPOs based on their own constraints/models
• Provides both basic and advanced takeaways for procurement organizations that are thinking through GPOs as an alternative supply option
• Offers a checklist of activities to consider when sourcing GPOs