Joining a Group Purchasing Organization can lead to savings of between 8 and 10 percent, and that power in numbers is what makes GPOs a popular way of cutting costs when purchasing products.
Institutions like schools and healthcare facilities often embrace this approach for savings purposes. And, when investing in long term assets like a commercial roof, group purchasing organizations are ideal because you’ll save significantly and have a higher return on investment.
So, what are some of the other benefits? Keep reading to learn more about group purchasing organizations, how GPOs work and their importance.
What Is a Group Purchasing Organization?
GPO refers to an entity created to leverage a group’s purchasing power to get lower prices on materials. GPOs exist to help businesses benefit from collective buying power—Collective buying is what people refer to as group purchasing.
Companies participating in a buying group often get preferable contract timelines in addition to competitive prices, and suppliers and distributors benefit from the increased market and better access to industry data and insights. As such, the advantages of group purchasing organizations are experienced by all parties involved.
For example, let’s say you’re in the market for a new commercial roofing system and have decided that between a rubber roof and a metal roof, you want a metal roof for your building. You’re confident about the decision and it’s time to find a commercial roofing contractor that’s reputable and willing to work in your area (which can take hours of research and money spent reaching out to companies, vetting out their work and then finally coming to a decision).
With a group purchasing organization, or a cooperative purchasing group, you save all that time and effort and ultimately get the industry’s best products at a great price.
*Something to note: GPOs aren’t just for the healthcare industry anymore. While they may have originated in 1910 when the United States formed the first GPO with the Hospital Bureau of New York, they’ve expanded to numerous other industries in the past several decades.
How Does A Group Purchasing Organization Work?
Purchasing groups start by creating and managing GPO contracts for commodities and services. Then they go a step further by creating and managing business relationships between the GPO, members of the group, and suppliers. The members, in this case, are companies that want to channel spend through the GPO.
When a member is in need of service, the GPO then sources agreements with relevant suppliers. It prioritizes avenues where members can get competitive pricing and contract terms, and suppliers often forego larger margins for increased access to organizations that are (or will be) in need of their service.
GPOs manage the purchasing contracts and can request additional offerings as members increase.
Why You Should Use Group Purchasing
Did you know that a group purchasing organization helps businesses save up to 80% in materials like office supplies? So, whether you’re buying supplies or roofing materials for your commercial property, utilizing a group purchasing organization can have unmatched benefits.
Here are the top reasons to consider a group purchasing organization:
1. Cost Saving
The cost-effective nature of group purchasing is arguably one of the most sought-after benefits. With collective buying power, members receive considerable discounts on goods and services. That’s because, with multiple parties involved, the purchasing volume is much higher and there’s greater leverage to negotiate lower prices.
Not only that, but you can also have confidence as part of a GPO that you’ll receive quality products each time. This is especially true if you join a group with a longstanding reputation, such as OMNIA Partners.
You also have to consider the indirect spend that your company would have used during the procurement process (think operating costs). Group purchasing organizations help to reduce this, freeing up cash and allowing the member organization to focus on growth, sustainability and additional programs.
A GPO association will vet professional services and negotiate discounts for members, only closing the deal once they are satisfied. With traditional buying on the other hand, businesses waste a significant amount of time finding the right companies and negotiating services and fees.
If you have been researching how to find the right commercial roofing contractor, working with a GPO is one of the best ways to locate quality products and services and get the job started in a timely manner. In the end, you’ll get a reliable commercial roof without wasting time hours negotiating better terms.
Companies that are open to collaboration can benefit significantly from the networks created through a group purchasing organization. When different professionals come together for a common goal, it’s easier to exchange information and share some of the best practices.
Members can also benefit from listening to the experiences and tips their peers share to improve their business operations.
4. Benefit From Multiple Offerings
GPOs have varying services that are essential in business operations. Benefits can include any of the following:
- eCommerce solutions
- Quality products for streamlined supply chain management
- Safety initiatives and risk reduction
- Fast, cost-effective procurement
When looking for a cooperative purchasing group, it’s crucial to join an organization relevant to your industry. The membership will offer greater insights into potential products and services that you probably wouldn’t have known of otherwise.
5. On-Going Support
A group purchasing organization often keeps members updated on service enhancements and offerings. The GPO has frequent reviews with the suppliers, which is a perfect way of understanding the approaches and services undertaken.
A cooperative group’s support also ensures that businesses are connecting with suppliers to know what’s happening on the ground. This approach should be by no means a barrier to the relationship between a buyer and supplier, but simply an avenue that creates better, easier access to quality products and services.
Group Purchasing Organization Is an Ideal Approach When Investing in Commercial Roofing
Projects involving commercial roofing might be overwhelming, especially if you’re sourcing and vetting out companies by yourself. While you can do this process alone, you may also be able to save yourself time and money through a GPO.
GPOs are available for a variety of industries, such as non-profits, healthcare, food service, government agencies, public education and more.
From cost-saving during the purchasing process to networking with peers, the advantages of group purchasing organizations are worth pursuing. You will get great prices for your commercial roofing and save the time you would have otherwise used to negotiate terms.
Are you looking for commercial roofing services as either part of a GPO or an individual business? TEMA Roofing Services has the experience needed to get the job done right. Contact us today to learn more.