A Group Purchasing Organization (GPO) is an entity that leverages the collective buying power of its members and the volume of their purchases to negotiate better prices or discounts with suppliers on behalf of the GPO members. Along with cost savings, GPOs often provide members with access to a network of approved suppliers, streamlined processes, and tools for contract management. They can also support with spend analysis, benchmarking, and market intelligence.
Procurement usually joins a GPO so they can achieve better cost savings for the business, reduce their administrative burdens, and gain access to a wider, pre-qualified network of suppliers or market insights. Especially for smaller entities or procurement organizations, GPOs can help them benefit from economies of scale; larger organizations leverage GPOs to supplement their existing procurement programs with additional savings, negotiating power, and market intelligence.
