I just read Jason Busch’s post on Spend Matters about Group Purchasing Organizations. One of my favorite war stories stems from an indirect bad experience with a Group Purchasing Organization.

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In one of the companies I worked for, one of our purchasing teams was having all kinds of problems with our office supplies vendor. It seemed like the employees of that vendor had a personal vendetta against our company: our employees got terrible service, orders would go unfulfilled, and we even had several instances when packages of office supplies would arrive and in the box was garbage (e.g., dirty Corn Flakes) and dust swept off of a floor!

Well, needless to say, that vendor (we’ll call them ABC Company) was replaced with another vendor who was awarded a one-year contract after a swift sourcing process.

During the year we were working with the new vendor, top management decided that the company should use a Group Purchasing Organization for the sourcing of our office supplies. One particular Group Purchasing Organization was going to be going out to bid right around the time that our office supplies contract expired.

For some reason, the purchasing group from our company was not involved in the selection of the successful bidder. We just had to go along with the result.

Can you guess who the Group Purchasing Organization selected as our office supplies vendor?

Yup. ABC Company!!!

Although I was not in the office supplies purchasing group, as an arm-chair quarterback, I think that these were the lessons learned:

1. Always work with a Group Purchasing Organization that uses performance as a criterion, not just price, in making its selections.

2. If you can, always ensure that you have input into the decision. My company was a Fortune 500 Company whose spend comprised a significant portion of the award in this story. There was no reason they should have not been involved in the decision.

The moral of the story is *not* that Group Purchasing Organizations are bad. Rather, it is to make sure that using a Group Purchasing Organization doesn’t mean sacrificing control of your destiny.

Charles Dominick, SPSM
Next Level Purchasing, Inc.
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Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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