The supply chain is in disarray. More than two years of chaos and disruption has resulted in unprecedented shipping container backlogs, product deficiencies, labor shortages, and inflated prices. Companies around the world are scrambling to find solutions as they strive to strengthen their procurement strategies and build a more resilient supply chain.
One smart solution that is becoming increasingly common is joining a group purchasing organization (GPO). Here’s how becoming a GPO member can help your organization refine its supply chain.
Access Exclusive Prices
No matter how intensely you negotiate with a vendor, as an individual organization you have limited leverage. However, with a GPO, it’s a different matter.
GPOs leverage the purchasing power of their entire membership to secure discounted prices with suppliers. The lure of selling to many organizations — potentially thousands in the case of larger GPOs — convinces suppliers to offer special pricing. As a GPO member, you gain access to rates that you would not otherwise be able to attain, getting more for your money and improving the efficiency of your supply chain.
Combat Product Shortages
The supply chain disruptions taking place since 2020 have been characterized by product shortages, which have been keenly felt across many industries. Some businesses, however, have been affected more than others, especially those that relied on a single supplier for their goods. Joining a GPO is a great way to protect your organization from product shortages.
GPOs negotiate contracts with a range of suppliers, building a portfolio that provides their members with a variety of options and protection against shortages. Should the supply chain of one supplier dry up, your GPO will be proactive in finding you an alternative supplier and swiftly connecting you with them to ensure you secure the inventory you need.
Protection Against Inflated Prices
Inflation continues to rise in the United States, and with it the prices of goods also increase. The effects of growing prices will be felt throughout the supply chain, and your suppliers are likely to raise their prices soon, if they haven’t already. Being part of a GPO, however, can protect you from the worst effects of inflation.
In most contracts with suppliers, GPOs agree to pricing protection. Though the rates differ by contract, pricing protection prevents the supplier from raising their prices by more than a predetermined amount, usually shown as a percentage, for the duration of the agreement. As your competitors see their procurement prices going through the roof, your GPO membership will give you the advantage of experiencing only limited increases.
Immediate Access to Vetted Suppliers
A resilient, refined supply chain takes time to nurture. You need suppliers that you can trust; that offer great prices, quality products, and a reliable service. Ensuring you have partnered with the right suppliers is imperative, but vetting potential options can be very time and labor intensive. Why not let someone else do it?
Group purchasing organizations conduct thorough due diligence procedures to ensure that all contracted suppliers, as well as their products and services, meet high standards. In short, GPOs vet every supplier their members have access to. So, when you turn to your GPO, you can rest assured that the supplier you choose is worthy of your trust.
Support from Experts
Utilizing a GPO membership will help you to develop a strong, resilient supply chain and a robust procurement strategy, as we’ve outlined above. However, there’s more to it than that.
Being part of a group purchasing organization means having the support of true industry experts. Every GPO wants their members to achieve their goals, master procurement, and save money in the process. So, whether you need advice on building your supply chain or assistance in keeping up with the latest industry news, a GPO partner will be there to help.
At CNECT, for example, we empower our members with a variety of resources, including bi-weekly newsletters highlighting great opportunities to save; blog posts providing advice and news updates; and webinars offering valuable industry insights.
If you’d like to improve the resiliency of your supply chain and experience all the benefits of joining a GPO, contact the CNECT team today to get started.
