How to (Actually) Transform Your Business with Group Purchasing

Back in 2020, I refinanced my mortgage. Thanks to historically low-interest rates, my monthly payment decreased by about 12.5%, or a few hundred dollars. It might not seem like much but at the time, that meant more wiggle room in our household budget as a young family. We maybe didn’t need to stress quite so much about buying new shoes for the kids or going out to eat.

The opportunity to refinance was a no-brainer; we could do it relatively quickly and it didn't cost us anything out of pocket. I also like a good deal. I’m known to buy things on sale and shop around for the best price when making a larger purchase. Every year, I compare car insurance rates and have no problem switching providers if it means I can save some money - even if changing and updating documents can be a hassle.

Some of these things have a greater impact on my day-to-day than others but they all put extra money back in the bank.

Bettering your bottom line

As a procurement leader, I’m sure you’re often (always?) looking for innovative ways to reduce costs for your business. You also know that finding a great deal isn’t as easy as entering some coupon code during the checkout process or changing suppliers on a whim.

But what could you do with an extra 12.5% in savings? What about an extra 18 or 22% savings - in multiple categories? For me, one change equated to a few extra thousand dollars a year. For your business? That could mean hundreds of thousands of dollars, if not more, added to your bottom line.

What could you do with the money saved? Avoid layoffs, add to the team, invest in new technology, and/or promote employee growth are a few things that come to mind.

Just sit around in piles of cash? Yeah, you could do that, too, I suppose!

Not to be dramatic, but that amount of money added back into your budget has the potential to literally transform your business.

The fundamentals of group purchasing

Incorporating group purchasing into your procurement strategy is one way to realize such savings. It’s important to stress that working with a group purchasing organization (GPO) is not meant to be a replacement for your procurement function. Rather, your GPO works alongside your team to complement your procurement efforts and elevate your existing strategy. It's merely one piece of the puzzle.

As a group purchasing organization, Una leverages the collective buying power of our members to negotiate favorable contracts with suppliers. Similar to a buying group, Una acts as the middleman. Our team does the legwork to establish supplier relationships and build a contract portfolio to meet our members’ needs. Over the last 12 years, our team has refined the connection process to facilitate a faster way for members to save money on the things they need to run their businesses.

Group purchasing works best when optimizing indirect procurement categories as these are often left unmanaged and not part of a company’s more strategic, direct spend amounts.

The not-so-obvious benefits of group purchasing

Without a doubt, saving money is the primary motivation for working with a group purchasing organization. The real value, however, is found when you look beyond cost savings.

Additional benefits of partnering with a GPO include:

1. Supply chain management assistance: GPOs provide valuable cost-avoidance solutions when trying to manage the purchasing and negotiation process with suppliers.
2. Access to resources: GPOs act as an extension of your procurement team and are experts when it comes to indirect spend optimization and maintaining supplier relationships.
3. Data insights & spend analytics: Most GPOs have access to tools and software that can quickly analyze spend files, help eliminate product and service duplications, identify potential savings, and evaluate competitive purchasing behavior.
4. Streamline procurement processes: GPOs can handle the complexities of vendor management, contract negotiation, and risk management. This frees up valuable time and resources for businesses to focus on their core competencies.
5. Category management expertise: Allowing a GPO to manage nonstrategic or indirect spend categories encourages full spend visibility and the opportunity to capture value and savings that would have otherwise gone unnoticed.
6. Personalized consulting: Every business has unique requirements and goals; the right GPO partner will create a customized experience to meet your needs.
7. Enhanced quality and reliability: GPOs carefully vet and monitor suppliers to ensure consistent product quality, use KPIs to monitor performance, and work to reduce the risk of supply chain disruptions.
8. Speed to savings: GPOs allow you to skip the RFx process to drastically reduce the amount of time it takes to source goods and services.
9. Free membership: As a GPO, Una offers all of these services and more for free. We never impose purchasing requirements or require members to use specified contracts.

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Still on the fence? We get it. Take your time understanding the ins and outs of group purchasing (and how it works within your existing strategy).

Let’s sort through the noise and debunk some common misconceptions next:

1. My business is too large (or too small): The capacity in which we work together may vary depending on the size of your organization. We may tackle different categories of spend, for example, but any business of any size can benefit from working with a GPO.
2. The C-Suite won’t buy it: Bringing in a third party might make stakeholders uneasy at first but this is where education comes in. Together, we can present a cost analysis that highlights the potential savings opportunities, in addition to the amount of time saved when it comes to managing certain areas of spend.
3. The GPO will replace me: One of our goals at Una is to reiterate the idea that this not a replacement – it’s a supplement or an add-on at no additional cost.
4. Loss of control: Members are not obligated to use the GPO suppliers and can pick and choose which contracts to use based on their needs.
5. One-size-fits-all approach: Every business is different so most GPOs operate within a framework that allows for customized experiences and flexibility.
6. We can get better savings on our own: In some cases, that may be true! Remember, there is a time and a place for group purchasing and a GPO helps level the playing field when it comes to optimizing indirect spend categories and creating value.
7. Hidden fees and agendas: When choosing a GPO, transparency is key. If they can’t (or won’t) provide upfront and clear communication regarding membership fees and requirements, they aren’t the right fit for you.

Transform your business with group purchasing

Now, I know I might have sounded a bit over-the-top earlier when I said group purchasing has the power to transform your business, but can you see it all coming together? Between the potential savings amounts and other value that a GPO can provide, a business like yours is set to experience a major shift - in a good way.

We can’t speak for the other GPOs out there but at Una, we’re passionate about what we do. At the end of the day, it’s about empowering procurement to make the best sourcing decision for their organizations. That includes deciding if group purchasing is the right thing for your business or not.

In case you're ready for next steps, our process is simple:

1. Discovery call: This first conversation is about getting to know each other, define what success looks like, and set expectations.
2. Cost Analysis: This is where we can show real value. We’ll send your spend data directly to our supplier base to compare cost and identify savings.
3. Connect to Suppliers: After the cost analysis, we’ll work quickly to get you connected so you can start saving as a GPO member right away.

Keep in mind, Una membership is free to join and our contracts are free to use. There are never any purchasing requirements or contract obligations.

Need more information? Our resource center is full of free articles and guides that are designed to educate and inform. A quick search will bring up everything from learning how to convince your boss you should work with a GPO and when to outsource procurement to maximizing your potential as a procurement leader and things you can look forward to doing once a GPO steps in to help.