The Five Ws of Group Purchasing Organizations

WHO
Group purchasing organizations connect businesses to suppliers with products and services. Care Purchasing Services (CPS) is one example of a GPO. CPS partners with suppliers in the senior living industry who seek assistance procuring the best goods and services for their communities. GPOs exist in a range of industries, from foodservice and healthcare to nonprofits.

WHAT
GPOs rely on what is called “purchasing power” in negotiating discounts from suppliers. GPOs combine the purchasing power of multiple businesses when they negotiate pricing, giving them more leverage than a business operating alone. Vendors are more willing to negotiate lower prices with GPOs because they offer a higher volume of customers and orders, relative to standalone businesses. GPOs also save businesses time, because vendors are pre-vetted, and contracts are pre-negotiated.

WHEN
There is no set time for a business to join a GPO, but the benefits of group purchasing may be especially fruitful if a business is looking to expand their offerings with new products or services or searching for cost efficiencies within existing products or services.

WHERE
GPO's work with local, national and international vendors and business partners. The type of GPO a business partners with depends on their unique needs and preferences. GPOs exist at many different scales; CPS partners with local and national vendor partners.

WHY
Successful group purchasing creates win-win-win outcomes for all three parties: buyers, suppliers, and the GPO itself. Buyers benefit from lower prices and a simplified negotiation process; suppliers gain new clients and expanded volume; and GPOs generally profit from member participation fees and/or supplier payments.