Group Purchasing 101

Before you can compare GPO candidates, it’s important to understand which type of GPO best fits your organization’s needs. Three main types of GPOs exist: 

1. Vertical Market GPOs: These focus on a single industry or vertical, like healthcare, and tailor their contracts and services to the specific needs of that sector. 
2. Horizontal Market GPOs: These serve members across multiple industries that purchase similar goods and services to support day-to-day operations. OMNIA Partners is an example of a horizontal GPO. 
3. Master Buyer GPOs: In this model, a primary buying organization negotiates contracts that others can purchase from. This is common in industries like automotive, where tier 1 and tier 2 suppliers access pricing from contracts negotiated by the manufacturer. 

GPOs, buying groups, and cooperatives all leverage collective buying power on behalf of their members to secure lower prices and better terms for suppliers. This strength in numbers also gives members access to solutions they might not be able to secure on their own.  

Common benefits of participating in these models include: 

• Bypassing the lengthy and complicated RFP process 
• Access to analytics and reporting tools for better spend management and forecasting 
• Stronger, more responsive supplier partnerships 

Cooperative purchasing is a term commonly used term in the public sector, particularly in education, government and nonprofit settings. It refers to a group of public entities joining forces to aggregate their purchasing power.  

Contracts within cooperative purchasing models are awarded by a public agency using a formal solicitation and evaluation process. These often follow a lead public agency model, where one designated government entity oversees the competitive bidding process and awards the contract on behalf of the cooperative. 

Once awarded, other eligible public agencies can purchase directly from the contract without having to conduct their own RFPs. This streamlines the buying process, ensures compliance with procurement regulations, and often requires no obligation or minimum usage from the participating agencies. 

What makes a great cooperative purchasing agency? 

• Fully documented, open competition 
• Clearly defined scope of goods or services 
• Compliance with public sector procurement requirements 
• Fair, contracted pricing 
• Established timelines for delivery and performance 

In the private sector, the term “group purchasing organization” (GPO) is commonly used to describe entities that negotiate contracts on behalf of their members to drive cost savings, efficiency, and supplier value. 

GPOs exist so you don’t have to navigate the sourcing and procurement process alone. Acting as a strategic partner, a GPO helps centralize spend, streamline supplier engagement, and improve procurement outcomes across your organization. 

Unlike public-sector cooperatives, private-sector GPOs manage the sourcing process internally. Members gain access to a portfolio of pre-negotiated contracts, eliminating the need to run separate RFPs or lengthy negotiations. This not only accelerates purchasing, but also provides immediate access to vetted suppliers, while suppliers benefit from exposure to a wider customer base. 

What makes a great GPO? 

• Advanced spend visibility tools 
• Fast, measurable savings 
• Access to dedicated category experts and SMEs 
• Support for the full procurement lifecycle 

More questions about GPOs? Check out our GPO FAQ blog. 

There are more than 600 group purchasing entities in the U.S., each varying in size, structure, and focus. When selecting a procurement partner, it’s critical to find one that aligns with your organization’s goals, purchasing habits, and long-term strategy. 

Key considerations when evaluating a GPO: 

• Contract categories and suppliers that meet your needs 
• Transparent contract terms, supplier details, and fee structures 
• Clear understanding of your business and purchasing patterns 
• Preferred or priority access to key suppliers 
• Minimum order thresholds (if applicable) 
• Membership requirements tied to size, spend volume, or industry focus 
• Flexibility to explore and utilize a range of available contracts 

GPOs leverage the collective buying power of their members to secure competitive pricing, favorable terms, and added value across a broad portfolio of goods and services. By partnering with a GPO, you gain immediate access to pre-negotiated contracts and procurement solutions that streamline purchasing and reduce administrative burden. 

Not all GPOs operate the same way. The right partner will offer far more than cost savings, delivering strategic guidance, supplier connectivity, and tools that align with broader business goals. 

The best GPOs serve as an extension of your internal purchasing function. Even though private companies aren’t bound by the same procurement compliance standards as public entities, many still face challenges related to decentralized spend and lack of visibility. GPOs bring structure, oversight, and expertise to help close those gaps and prevent unmanaged spend from slipping through the cracks. 

Building and maintaining individual supplier relationships takes time—and in today’s fast-paced, volatile markets, delays cost money. A GPO uses the collective purchasing power of its members to negotiate improved pricing, better service levels, and stronger supplier partnerships. These relationships are more stable and influential than those any single organization could maintain on its own. 

When sourcing products and services during challenging times, prioritize total cost of ownership (TCO) analysis to account for all potential lifetime costs. Relying on your GPO’s supplier relationships can reduce risks and let experts guide you through TCO management in your transactions. 

Procurement leaders are often stretched thin across multiple categories and vendors. GPOs ease that burden by managing continuous supplier engagement—facilitating innovation, resolving issues, and driving value over time. Especially in times of market disruption or supply shortages, this sustained communication between the GPO and its supplier base helps ensure operational continuity and resiliency. 

GPOs are used by businesses of all sizes and across nearly every industry—from small and mid-sized companies to large enterprises, real estate operators, and private equity firms. While needs vary, the goals are often the same: reduce costs, improve efficiency, and redirect internal resources toward growth. A strong GPO partnership helps organizations meet those goals by delivering cost savings, expert support, and access to high-performing suppliers.