PurchTips - Edition # 109
Demystifying Group Purchasing Organizations
By Charles Dominick, SPSM, SPSM2, SPSM3
Can A GPO Help Your Purchasing Department?
A group purchasing organization (GPO) is "a group that's responsible for sourcing and managing aggregated contracts on behalf of a discrete group of companies," according to David Clevenger, VP of a large GPO, Corporate United. So, instead of a purchasing department sourcing for a category of goods or services to establish a favorable contract with a supplier, joining a GPO will give that purchasing department access to an existing contract with favorable pricing and terms.
Purchasing departments join GPO's primarily for savings. By combining its spend with that of other companies, a purchasing department gets the buying power and leverage of a much larger organization.
But using a GPO can also help a purchasing department address under-managed and unmanaged categories.
"Most organizations are responsible for buying 150+ different categories and those responsible for indirect procurement simply cannot handle that," says Clevenger. "In managing less strategic categories, like office supplies, office equipment, or safety supplies, (a GPO) allows the internal resources at these organizations to tackle more of those strategic, larger spends."
Also, smaller companies who've struggled to get suppliers to correct problems can have more success when their spend is part of a GPO contract. Large GPO's have "the ability to go up the ladder within those supplier organizations because (large GPO's) represent such a significant spend. So it's frequently easier for (large GPO's) to get the attention of senior leadership on the supply side than it is for an individual member."
Using a GPO doesn't necessarily mean totally sacrificing control. When sourcing a new category, some GPO's utilize a steering committee consisting of members' procurement specialists to identify and qualify suppliers and vote on the selected supplier.
Like any investment, an investment in a GPO should produce a satisfactory return on that investment.
To determine your return on investment requires baselining your current spend and comparing it to the pricing available through the GPO. Your actual savings will depend on how well-managed the categories are currently as well as how effective you are at getting end users to channel their spend through the GPO contracts.
If the savings exceeds the investment, a purchasing department can count the net savings towards its goals for the year. And, if the category wasn't going to be addressed due to an already full workload, using a GPO can multiply the success of a purchasing department.
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Spotlight On Professional Development Opportunities
Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.
You see, today's employers refuse to reward employees for yesterday's skills.They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.
Is lacking a purchasing certification keeping you from getting the results, opportunities, respect, and money that you want out of your career? Today's employers refuse to reward employees for yesterday's skills. They want you to save more money, achieve better operational performance, and reduce risk. They demand that purchasing professionals like you achieve unprecedented results and without the most modern skills that can be a challenging feat!
So how can you acquire the most modern skills, achieve meaningful results, and convincingly prove your capabilities to today's employers? There is an impressive purchasing certification program that will teach you what you need to accomplish all of this and more. It is the SPSM® Certification, earned by completing the Senior Professional in Supply Management® Program. And you could earn it in less than a year - maybe even much less than a year!
Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) (with the option of getting a Study Guide on an iPad) at:
Distinguishing yourself as an achiever in purchasing is key to sustaining a rewarding career, even in these difficult economic times. Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) at:
Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. And if you sign up for the Senior Professional in Supply Management® Program on or before May 31, 2008, SPSMSM Certification Program on or before 4/30/2007, you also get these and other bonuses valued at over $700:
To learn how to earn your SPSM® Certification and get these valuable bonuses, visit:
Earning your Senior Professional in Supply Management® (SPSM) Certification is the action to takeif you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSMSM Certification at:
Learn how to earn your SPSM® Certification at:
The Latest Purchasing News!
Want to learn more about today's topic? Then check out my podcast interview with Bill Dorn! Podcasts are audio files that you can listen to on your PC, download to your iPod/MP3 player, or burn to CD. Our Purchasing & Supply Management Podcast SeriesSM is a new way for us to help you succeed!
It's absolutely FREE to download the audio. Add it to your collection of great purchasing learning material!
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Together, these materials will help you decide how well the SPSM® Certification can help you achieve your career goals.
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