Comparing Group Purchasing Organizations: What should I consider?
As I mentioned in our last digest, most suppliers quickly recognize that establishing a nationwide cooperative agreement through a public sector group purchasing organization is the most effective and lowest cost approach to pursuing public sector business. But how do you know which GPO is your best option?
Below are a few important things for you to consider when selecting your GPO:
- Timing – how long do I have to wait for a GPO to issue an RFP seeking the products and services my company sells?
- Breadth & Depth – what are the odds a GPO’s RFP specifications will include all of the products and services my company sells?
- Likelihood of Winning – how likely is it the GPO will award the contract to my company and not one of my competitors?
- Cost & Time Commitment to Winning GPO Contract – how much is it going to cost me to respond to the RFP? Is it a good investment of my resources, particularly when the specifications probably don’t include all of my products and services and my odds of winning are statistically small?
- Contract Length & Renewal Options – how long is the term of the contract? What are the renewal options, if any? Is the GPO going to bid me out in two or three years after I’ve invested all this time and money winning, implementing, and growing this book of business?
- Two’s Company, Three’s A Crowd – how many of my competitors are also going to be awarded contracts in my category?
- Flexibility in Pricing – does the GPO agreement require standardized or one-size-fits-all pricing?
- Ability to Cross-sell – is this GPO’s contract going to give me the ability to sell everything I have in my product line? Am I going to need to win multiple contracts with the GPO in order to sell all of my company’s products and services? See point three above.
- Level of Sales & Marketing Support – how effective is the GPO at marketing my products and services to its members? Does the GPO market to public sector entities that are not members? In what ways does the GPO train my sales team and actively support them throughout the sales process?
- Depth and Breadth of Membership – what types of organizations make up the GPO’s membership? Is the GPO specific to one type of public sector entity (e.g., just K-12 schools)? How many members does the GPO have?
- Geographic Coverage – will I be able to use my contract nationwide or only in certain states?
- Revenue Share – how much do I have to pay the GPO?
Now that you have the blueprint for selecting a GPO, we will move on to discussing how Sourcing Alliance took all of these key considerations into account and developed a better GPO alternative for pursuing public sector business. Stay tuned.