Group Purchasing Organization Alternative Support Services
Source One Management Services provides custom strategic sourcing, procurement, and category management solutions in lieu of, or in addition to, a Group Purchasing Organization.
Group Purchasing Organizations (GPOs) can be integral partners for sourcing and purchasing supplies or services by leveraging buying power to drive down costs from the supply base in exchange for increased volume. Under a standard Group Buying model, Procurement organizations realize the savings the GPO obtains through their portfolio. While volume and buying power can produce savings, they do not take into consideration the unique requirements of individual members.
While GPO models offer tangible benefits, companies should also consider GPO alternative Procurement and Strategic Sourcing solutions when determining the best fit spend management program.
Source One Management Services is one of the few Procurement Services Providers able to supplement or substitute a Group Buying Organization. As an alternative cost reduction solution to a GPO, Source One acts as a true extension of your Procurement and Strategic Sourcing group to provide flexible Strategic Sourcing, Procurement, and Category Management support across a broad range of direct spend and indirect spend categories. We extend coverage to many areas Group Buying Organizations lack within their purview, acting as a well-equipped Group Purchasing Organization alternative.
Our team of Procurement and Strategic Sourcing subject matter experts will do the heavy lifting of a Group Purchasing Organization, identifying and securing suppliers unique to your needs, and managing contracting and negotiations while also monitoring for compliance, delivering strategic solutions to mitigate risks. In the instance your organization is already using a Group Purchasing model, Source One can supplement the GPO services to identify spend areas where you should be buying off of your GPO agreements, and can negotiate further pricing concessions.
Determining whether a Group Purchasing Organization is the right fit? A GPO solution may not solve your spend management challenges if any of the following apply to your organization:
- Procurement is not centralized, you have grown significantly through acquisition, or operate with multiple ERP systems; this results in an inability to access historical purchasing data, a primary requirement of most GPO’s
- The Group Purchasing Organization in consideration does not service your industry
- Your focus is on investing in specific spend categories the GPO may not be most effective in, or may not cover at all within their portfolio
- You do not have a good working relationship with the suppliers within the GPO contract
- After conducting some research, you find you may be able to produce better pricing than the GPO by cutting the profit margin out of the equation since GPO’s are paid by their supply base
- Your spend under management may not be highly commoditized in comparison to other companies
- Savings compliance and tracking is a critical component of your operations
Whether you’re considering using a Group Buying Organization, want to supplement or replace your current GPO, or simply want to explore alternative cost reduction solutions, contact our Strategic Sourcing and Procurement experts today to discuss your category management options.
Sourcing a GPO
If you decide that a GPO model is the right fit for your spend management needs, Source One’s GPO strategic sourcing experts can help you partner with a GPO best suited for your category management needs.
Case Study Highlights
A regional health system and academic medical center needed to meet aggressive cost savings targets for their fiscal year and gain greater transparency into spend activity. The organization engaged Source One to determine the appropriate sourcing strategy to achieve the following objectives
- Improve patient safety and drive operational efficiencies utilizing best practices
- Gain access to an aggressive pricing portfolio and new technology to help contain costs and better understand spend allocation
- Identify and implement innovative solutions pertaining to data/technology integration and utilization tools
Source One conducted a sourcing event to identify the best-fit Group Purchasing Organization. Multiple GPO offerings were evaluated based on spend under membership, shareback percentage, standardization rebates, specialty programs, spend analytics and benchmarking tools, networking opportunities, and other program value adds. Source One provided decision support throughout the sourcing and selection process, and completed a detailed analysis to demonstrate quantitative and qualitative benefits available through each GPO arrangement.
At the completion of final negotiations, the organization realized $10M in savings.