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Five reasons to work with a Group Purchasing Organization

Presented by Chris Penny
in Procurement

Sponsored by Kinetic GPO

A Group Purchasing Organization (GPO) combines the purchasing needs and requirements of multiple Broader Public Sector (BPS) and MASH (Municipal, Academic, Schools, and Hospitals) operations, as well as non-profits, on a single contract to aggregate volume and raise the purchasing power of each participating company.

Through GPOs, entities can often benefit from best value while also reducing time spent on procurement processes and establishing contracts. Vendors benefit from the large volume and efficient competitive bid process resulting from multiple awards on a single contract. This group purchasing therefore provides a model that can offer incentives for both organizations and suppliers alike. And, those benefits aren’t simply limited to group buying power.

The Mayor by George B. Cuff

If you’re a procurement professional, here are five reasons why you’ll want to work with a GPO.

1. To Ensure Compliance

Compliance should be the top priority for a GPO. Without compliance, nothing else matters. GPOs hire compliance, legal, and contract experts to ensure agreements are “fair, open, and transparent,” as required by the Canadian Free Trade Agreement. GPOs also often work with awarded suppliers to help train their public sector leadership teams on compliance and public sector procurement needs.

2. To Save Time

If your organization is strapped for resources and staff, you’re not alone. It’s not uncommon to manage hundreds of contracts, with each one typically requiring a lengthy solicitation and review process. Even a straightforward contract could take three to four months. GPOs help ease the strain on BPS purchasing staff, minimizing countless hours spent on the solicitation process and ongoing maintenance of individual contracts.

3. To Save Money

One of the most powerful benefits of GPOs is aggregated national pricing. This means that even the smallest of public agencies get the same buying power and contracts as a large province. This can help any organization’s budget because the money you save by using a GPO can be spent in other critical areas. Furthermore, GPO contracts are frequently broad in scope, covering an awarded supplier’s entire category offering.

4. To Get Long-Term Value

GPOs can provide long-term value with multi-year supplier contracts. Once you lock in pricing with a GPO, you benefit from a long-term price guarantee. GPOs actively manage those contracts, holding business reviews with suppliers and obtaining feedback from agencies on their performance. The value they deliver is enhanced by that feedback. As more agencies join, it’s also not uncommon to see pricing go down.

5. To Get National Expertise and a Commitment to Best Practices

To offer top value, GPOs should offer national expertise and a commitment to best practices. GPOs work with thought leaders and respected organizations across Canada to ensure they stay on top of current procurement trends and guidelines. Furthermore, GPOs can join the National Cooperative Procurement Partners (NCPP) association, which requires a code of conduct pledge that they will share and follow best practices with other colleagues and suppliers.

The Mayor by George B. Cuff

Not All GPOs Are the Same

There are many reasons to hire a GPO, but not all GPOs are the same. Make sure you ask a GPO how it delivers these benefits to find the right fit for your organization. MW

 Municipal World Insider and Executive Members: You might also be interested in Barbara Everdene and Alyssa McDonald’s article: #BuildBackBetter with sustainable procurement. Note that you can now access the complete collection of past articles (and more) from your membership dashboard.

Chris Penny is the CEO of Kinetic GPO, which is based in Cambridge, Ontario. Chris has more than 15 years of group purchasing experience. This includes roles from a supplier perspective, where he has held senior leadership positions focused on public sector.

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