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Group Purchasing is one of the most important aspects of procurement marketplace. Wile procurement involves bulk purchasing, Group Purchasing makes the job much easier for organizations and vendors alike.
Group Purchasing is managed by what we call a Group Purchasing Organization which enables the members to obtain a collective buying power helping secure discount from retailers.
What group purchasing does is set up GPOs which generate a buying power when people bulk purchase in groups. This helps in setting up a bulk price for products and services that vendors can implement.
Joining a GPO helps set contacts and enhance buying powers. And the more the members in the GPO, the more effective the group purchasing will be as there will be more discounts, and access to savings as well as cost cutting and revenue augmentation.
While businesses and organizations spend only a limited amount in every department, since the demands are much less. What GPO does is decrease those costs as bulk discounts are imposed on larger supplies.
This helps in leveraging collective purchases and enhances your buying power. This means you can avail bulk discounts without actually having to buy in bulk.
Read More :- Why Top and Small Businesses are Joining Group Purchasing Organization In 2018
Who all can join a GPO?
- Business houses
- Bulk buyers
- Online stores
How to negotiate with the vendors?
GPO with its huge database of members helps fix price breaks using negotiation with the vendors.
How much can you save?
GPO with its policies helps in highly discounted products and services via sharing back of contracts with members.
- Time saving
- Everyone can register and that too free of cost.
- Exclusive pricing schemes.
Avenues for availing amenities like cost comparison analysis tools, procurement partnerships, and supply chain management support and that too free of cost.
Know More – What to Look for When Choosing a Group Purchasing Organization
How do GPOs manage to earn?
While some GPOs impose a membership fee for their services, many GPOs like the UNA obtain commissions from vendors which enables funding for all their strategies.
What are the different categories of GPOs in operation?
Basically, GPOs can be grouped into 2 main categories which is:
- Horizontal Market GPOs
- Vertical Market GPOs
Vertical market GPOs are meant for specific industries and niche and are enshrined as methods for various associations to give direct benefits to their members. You will find these GPOs in the following sectors:
- Dentistry and Veterinary Sciences
- Horizontal Market GPOs
Dental and Vet GPOs focus exclusively on providing procurement support and cost savings tailored to the unique industry needs.
Horizontal Market GPOs on the other hand have a wide range of distribution and supply across all niches and industries. But their mode of working may be different and they may charge members and suppliers on different terms.
In all, group purchasing ventures significantly contributed towards minimizing operational costs and helping organizations maximize revenues and save up on their hard earned money.
Moreover, GPOs also help suppliers secure clientele and work synergistically to benefit both the communities while streamlining purchasing for most associations.