Many procurement professionals are familiar with the ubiquitous term, group purchasing organization. However, the connotation isn’t always positive when there is little account management, required spend commitments or the relationship is inherited from a predecessor. As a result, many indirect category buyers are left dissatisfied with a GPO, not realizing the full benefits of a true partnership with the right GPO model. So how does a top group purchasing organization work?
It is never too late to review your savings process and the effectiveness of your current Group Purchasing Organization. Savings is an economy of scale in money, time, or essential resources. If you were not privy to the process that attributed to year one savings, which produces the highest level of cost reduction initially, you might be wondering what is the value of this GPO relationship today?
Some questions to consider when evaluating your current GPO are:
- What value does my GPO partner provide today?
- Have all the savings been captured in year one of the relationship?
- How are we measuring success beyond year one?
- Are sites still complying with the program?
These strategic questions can help guide your decision-making process and the effectiveness of your GPO program. Look for a GPO partner who can address these questions and provide a long-term partnership with a hands-on approach.
The CoVest Difference
The CoVest difference starts with who we are and how we work together. CoVest is a focused GPO partner that only works with F1000 companies, builds and maintains long-term relationships with Members and has a data-driven understanding of Member needs and directives. Our ability to achieve savings in many categories beyond year one has proven to be a model for sustained growth of the group. This growth then fosters a future where Members increasingly benefit from more resources (access to our growing teams) and future category development which is built on Member input. From complex MRO categories to comprehensive office supply programs, we become a trusted business partner and extension of your team – at no cost to you! This formula answers the question of ongoing GPO value: Are there savings beyond year one? Is there transparency into site-level compliance?
The Value of CoVest
With a spotlight on Resources, Leverage and Analytics, CoVest has built a process that not only benefits individual Members and their savings initiatives, but together, enhances the buying power of the group as a whole.
Relationships are an imperative component to our success. With a CoVest Membership, you’ll be aligned with a dedicated Member Engagement Manager, along with full access to our Analyst team and Marketing team. These teams of resources are available to you free of cost, along with no category commitments or spend requirements. In addition, we routinely ask for Member input to ensure we are developing new categories that Members want and need.
Simply put, we are an extension of your team! Many of our Members have been with us for years (some relationships have held strong for well over a decade!) so our understanding of your business, cost saving initiatives and future corporate directives positions our partnership for continued success. With these benefits to Members, how do we drive savings for you beyond year one?
Active category management, manufacturer cost support, and compliance (not everyone’s favorite word) are three areas we consistently focus on to help Members succeed. Category management by your GPO is critical. Many groups simply state, “we have the largest [___] program, therefore you get the best price,” but not all leverage is created equal! CoVest actively manages group core and member core lists annually or bi-annually to make sure your items are getting the best price possible.
Through our category management process, we then generate quarterly savings reports with line-item details showing actual, reportable savings. Members can enjoy the benefits of reportable quarterly savings, along with the added time to focus resources on more strategic initiatives. The buying power of the group is utilized to make sure commonly purchased items (batteries, gloves, pens, etc.) are reviewed with manufacturers to achieve cost support for these items. Members benefit by getting a lower price from the manufacturer, which then flows through one of the various CoVest categories. No special contracting or work is required by the Members, just another tool used to drive savings beyond year one.
Compliance can be difficult to measure, but with CoVest’s monthly compliance reporting, you have insight into site-level program adoption. CoVest provides implementation assistance in conjunction with our supplier partners on new and even existing categories. If we do not collectively work with sites and suppliers to visit sites, achieving the savings demonstrated in the analysis becomes extremely difficult. Compliance reporting is the first step to see what sites are meeting program expectations while site visits by suppliers and even CoVest Member Engagement Managers are utilized to get the results expected.
For more information on CoVest, our category offering, review process and membership benefits, please contact CoVest’s Member Engagement Management Team at Memteam@covest.com
Whitepaper Download: Managing MRO With a GPO