What is the Group Purchasing Organization Model?
In today’s evolving marketplace, procurement teams can lead the way in how they leverage their supply chain by leveraging a group purchasing organization (GPO). The benefit is that you don’t have to do everything yourself, but instead you have a GPO working as your teammate or advisor, to help drive more efficiencies, gain more spend under management, and ultimately have a better experience with your supply partner.
Three Main GPO Types:
1. Vertical Market: GPO focused on one industry or vertical. Examples of these are GPOs in the healthcare market where small and mid-sized medical centers or hospitals join to reduce their costs
2. Horizontal Market: GPO members exist in many different industries, but they purchase a lot of the same goods and services to build their products and run their companies. OMNIA Partners is an example of a horizontal market GPO.
3. Master Buyer: This is when one chief buying organization has substantial contracts in place with vendors and allows additional companies to buy off those contracts. The automotive industry is a good illustration of this where tier 1 and tier 2 suppliers access the pricing contracts that the manufacturer has negotiated with vendors.
