Buying power is everything to running an efficient business. This is whether you are intending on reselling the goods or looking to supply a business with equipment or packaging supplies.
We shall examine here the power of the GPO buying group to see just how it can help a business.
How Does GPO (Group Purchasing Organizations) Work?
A GPO situation will aggregate the volume of products being purchased for its members. This will then allow them to more easily dictate terms that will be of benefit to them as members. These terms will include contracted discounts for a whole manner of assorted products. These might be medical or nutritional supplies, for example.
When a business participates in selling a certain product, they can choose who to pass the discount on to.
In the United States, GPOS or Group Purchasing Organizations, are formed to increase the purchasing power of a group of businesses to the extent that they can obtain significant discounts from sellers. They work because of the collective buying power of the GPO members.
Discounts are a way to survive in business. The money saved can then be retained to aid company growth, shared in terms of retaining valuable employees, or passed on to a consumer. We can make lots of friends when everything is made cheaper for everyone, and it is discounts that make this possible. A company can gain a competitive edge from the discounts it receives.
Power in Numbers
There is no doubt that strength exists in numbers and much negotiation leverage can be obtained through businesses working together to influence the prices they buy at. It is in the interests of a vendor to oblige such a large group as it will mean a lot of extra business heading in their direction. Any scheme that makes this possible is something for businesses to embrace.
Working together provides a strength that can only be beneficial. Anybody working on their own does not find themselves noticed all that much. All businesses rely on bulk orders or large contracts to make most of their money and so will take more notice of those providing those kinds of orders. This is where GPO is invaluable in creating that kind of situation.
Making Business Allies
It can be good in business to create friends and associates that may then help with other areas of business concerning sharing experience and knowledge. We are not necessarily in competition with another business because the products or services of one business may well complement another. It may have the same customers or clients but ones that are buying various products that have an association.
We can be thankful for GPOs when we are in business, so it is good to know about them and how they can help us. Large discounts or any discounts will help with increasing profits for a business. If we can buy for less but still sell at the same price we would have, then we can increase our profit margin. Alternatively, we can make ourselves more competitive by being able to offer a product for less because we have bought it for less.
When furnishing a company, if we have several offices then we may be able to obtain a discount for buying furniture in bulk. If not, a GPO can help us to have that same buying power to save money from a bulk order. This applies to factories buying machinery too, whether that is for making or packing a product for distribution. If we need the same equipment as another company then we can share their buying power to have a supplier provide us with the equipment cheaper for a discount for bulk buying. GPOs’ main use, however, is in trading goods at discounted prices.