What should small business owners know about GPOs?

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As a small business owner, you don't have time to oversee everything.  In addition, it can be risky to manage important business aspects such as accounting or marketing if you lack the experience.

Running a business requires excellent time management skills. Owners need to keep track of everything from employee satisfaction to customer engagement, but other details must not be lost in the process. In this article, you’ll learn more about group purchasing organizations (GPOs) and the benefits they offer small business owners.

1. Provision of Sourcing Partners

Whether the purchase comes from a procurement department or a business owner’s personal preferences, GPOs make it easier to decide where future goods will come from. After an owner joins a GPO, the organization uses a provided list of vendors to place delivery orders. Experts can also continue to use existing sourcing strategies to complement the company’s established purchasing plan.

Sometimes business owners believe that a GPO will overhaul their sourcing plans and potentially turn their management strategy upside down. However, GPOs are more than willing to work with their members to maintain existing management structures as long as they benefit the company. The experts within a chosen organization will help identify what is currently not working for a company and suggest sourcing partners who may be more helpful.

2. Result in better pricing

GPOs have the purchasing power of numerous companies working with each organization. Speaking for so many brands allows GPOs to negotiate better prices and create unique offers unavailable to those unaffiliated with GPOs. Additionally, the focus is on transactions, reducing the likelihood of spending errors impacting a company’s budget.

3. Lower prices

Price negotiations for future orders take time and are only sometimes successful. GPOs have the power to have numerous companies in their service, giving them more bargaining power to lower prices on standard large contracts. This is a significant benefit for small business owners as it generates more income that can be reinvested elsewhere.

4. Optimize shopping categories

Business owners often divide their suppliers into different categories to assess which brands bring them the most savings. GPOs save time by grouping suppliers for their members. They also check every new purchase with verified savings history to see if buying consumables elsewhere might be more cost-effective. The savings history is always up-to-date without costing the owner valuable time.

5. Increase corporate profits

Any additional GPO savings translate directly to increased profits. Business owners can use these profits to increase their emergency savings or invest in cyber attack preventive measures to protect their business from modern day threats. Every extra penny counts for small business owners, especially those just starting out with their brand.

6. Create networking opportunities

When a company joins a GPO, the owner is not only in contact with a GPO representative. You can also access the other business owners within the organization to network. Sometimes GPOs plan exclusive networking events to bring together professionals from different industries and learn from each other.

These events are not available to non-members, making them an exclusive benefit of GPO membership. Business owners can network with other entrepreneurs to learn things like budget improvements, sourcing tips, and mistakes that have become learning opportunities. These moments could lead to growth that would not have been possible without meeting these people at GPO-sponsored events.

7. Often have free memberships

Some GPOs have free memberships to support new business owners who don’t have extra income to spend. Joining a free organization provides these benefits without straining the professional budget. If the owner feels financially able, they can always join a paid GPO membership with more extensive networks to access even more incredible savings opportunities.

8. Come up with additional services

Sometimes small business owners think that GPOs only help with procurement contracts, but that’s not true. The organizations also offer additional services such as consulting or auditing. Leveraging a GPO’s auditing services could relieve the owner after an extension, as it would ensure the organization’s compliance with local and state regulations.

Gaining additional security makes running a business much more enjoyable. When considering joining a GPO, any business owner must consider the organization’s additional services to decide which membership would be most beneficial.

9. Lower purchasing risks

GPOs want to offer the best service to their members. This translates into long-term relationships and longevity for the business, so reducing purchasing risk is a priority for many GPO sourcing leaders.

These organizations take vetting seriously when adding new vendors to their vendor list—the GPO’s reputation is at stake when recommending new vendors. Members may feel more comfortable working with GPO suppliers as the verification process reduces purchasing risks such as buying from inexperienced brands or companies with unprofessional history.

10. Include vendors of all sizes

A broader web of professional relationships can lead to better sourcing. Business owners may find unique products available through their GPO connections. GPOs have ties to national and international brands, but many also value working with local businesses.

Business owners can work with minority-owned vendors or regional suppliers to order supplies or goods that are not available through other contracts. It also raises local suppliers to give them more exposure, resulting in more funding and availability for future orders from those companies. Any business owner would benefit from the opportunities that GPO member connections offer.

11. Improving supplier relationships

Suppliers often offer better service and prices to business owners who have positive relationships with them. However, this is a challenge when starting a business or building a brand. By communicating directly with them, a GPO becomes the influencer in maintaining supplier relationships, allowing business owners to focus on buying their next property or improving their existing business plan.

12. Save time for business owners

Delegating can be challenging, but GPOs could make it easier for business owners to help their brands thrive without experiencing burnout. GPOs handle all supplier communications and contract negotiations, freeing up business owners to focus on other management tasks. Depending on the organization, GPO membership may also include handling fulfillment and distribution issues.

Learn more about GPOs

Small business owners looking to grow their business without overexerting themselves can join GPOs to take advantage of these potential benefits. They could save more money and time by delegating purchasing responsibility to the GPO of their choice. It depends on what each owner needs and whether they are ready to take that potential step in their career.



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