In order to understand which form of a GPO is best for your company or whether you should be considering a GPO at all, you’ll need to understand the different forms of group purchasing.
There are several options to group purchasing and each will affect your business in a different way. By reviewing the different forms, you will be able to better understand which option would be best incorporated into your company. Different forms of group purchasing include:
Generally groups of consumers or small business enterprises that band together to create physical or virtual marketplaces available to members that leverage their combined purchasing power to achieve favorable pricing. They are prevalent in farming, food ingredients and insurance.
Two or more companies pool their category specific spend to leverage greater economies of scale in purchasing power and applied expertise. It is most often applied to direct materials. The process is often facilitated by third party consultants
Companies in the same industry join an externally managed organization to source a broad range of direct or indirect material and services. Vertical GPOs originated in the hospital industry, but have expanded across a broad range of industries
Companies in a variety of industries join an externally managed organization to source indirect material and service categories common to most companies, such as office supplies and equipment, MRO and temporary labor.
The Growth and Future Role of GPOs
Defining the difference between forms of group purchasing is just one step CoVest has taken to better understand cooperative purchasing. By tracing the evolution of cooperative purchasing and understanding the expected future role of Group Purchasing Organizations, we can provide value beyond price savings.
Contact us to learn more about the advantages of joining a GPO.