Myths pervade our existence. Some people think you need to drink eight glasses of water every day. But in reality, you should just drink when you’re thirsty. Others think that if you shave your hair, it will grow back thicker and darker. Nope, that’s not actually something that happens.
The point is, when you fall victim to a myth, you might find yourself making some questionable decisions.
In the world of group purchasing organizations (GPOs), it's no different. There are plenty of misconceptions about what joining a buying group is like. These misconceptions often mislead companies and dissuade them from taking advantage of all the benefits buying groups can provide.
These are some of the more common myths we’ve heard over the years here at OMNIA Partners. Allow me to debunk them.
Myth #1: Group Purchasing Organizations Only Provide Standard, "Off the Shelf" Categories and Products
Fact: Group Purchasing Organizations Provide Standard Spend Solution Categories AND Categories Not Typically Managed in Procurement
Buying groups do provide standard categories and products – but they can also cover many core spend categories as well. Each GPO has a different mix of supplier offerings depending on the industries they play in and how they’re structured.
Myth #2: Buying Groups Will Displace Purchasing Departments
Fact: Group Purchasing Organizations Act as an Extension of Your Purchasing Team
This is incorrect as well. GPOs do not in any way assume the role of member purchasing departments. In reality, the opposite is true. They act as resources for and partners of purchasing departments so that procurement professionals can focus on what they do best and accomplish even more. Group purchasing organizations also don't have a say in what transactions are actually occurring.
Myth #3: You Need to Purchase From Every Supplier in the GPO
Fact: Every Purchase Needs to Make Sense for the GPO Member - No Obligations, No Fees, No Order Minimums.. Ever
Nope. You have the complete flexibility to purchase or not purchase from any supplier you choose. Group purchasing organization members can opt in or opt out of each negotiated supplier program. Suppliers are motivated to create attractive programs to win your business, but the decision of whether to purchase is ultimately yours.
Myth #4: Joining a Buying Group Will Reduce Your Level of Customer Service
Fact: Your Service-Levels are Elevated Through GPO Membership
This is another case of the opposite actually being true. As a member of a GPO, you gain access to the tools purchasing professionals use to accomplish even more. Additionally, because you’re a member, you become that much more important to suppliers, enabling them to offer you even more.
Myth #5: Every Member That's Part of the Group Purchasing Organization Gets the Same Price From Each Supplier
Fact: Elevated Service-Levels, Like Individual Rebates & Group Rebates Need to be Taken into Account
This is actually both true and false. It depends on the GPO and the spend categories it covers. When dealing with direct goods, each member can still negotiate the pricing and value-added services they're looking for from suppliers. They also have access to a rebate based on group volume in those circumstances.
Myth #6: Suppliers and Members Can Only Contact Each Other Through the Buying Group
Fact: A GPO Will Help Build Meaningful & Lasting Partnerships For All Parties Involved
This isn't true either. Even if you’re part of a GPO, it’s still business as usual. Members and suppliers still transact and correspond directly with one another.
Myth #7: Group Purchasing Organizations Are Distributors for Their Suppliers
Fact: GPOs Connect Buyers & Suppliers But the Sale Happens Between the Supplier & Member
This isn't true at all. GPOs have resources that can help facilitate relationships between buyers and sellers; however, the sale still happens directly between the supplier and the member.
Learn About the Benefits of Joining a Buying Group
After conducting a little more research, you might discover that joining one could be a huge benefit to your company.