In today's evolving marketplace businesses are thinking differently about how they leverage their supply chain. Instead of a do it yourself mentality where it can be challenging to manage all sourcing and operational activities by themselves, advanced businesses are leveraging group purchasing organizations (GPO) to help them drive more efficiencies, gain more spend under management, and ultimately have a better experience with their supply partner. In the GPO model the GPO sources and manages contracts along with creating and managing relationships between the GPO, its members, and its suppliers. As membership and contract utilization grows the GPO can negotiate deeper discounts and/or improved terms and conditions.
|1. Vertical Market:||GPO focused on one industry or vertical. Examples of this 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.|