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It seems like everything is more expensive these days. When that happens at the same time budgets are decreasing, it can cause significant problems. In business, it means less profitability. For higher education institutions, it typically means cutbacks.
Most higher ed procurement teams are under intense pressure to lower costs without sacrificing quality. Group purchasing organizations (GPOs) are powerful allies in helping meet these goals.
What is a group purchasing organization and how can it help you meet increasing budget constraints in higher education? We have the answers in this article.
A GPO acts as a collective bargaining unit for its members. By combining the potential purchasing power of institutions, GPOs negotiate bulk purchase agreements on behalf of members. This provides tremendous economies of scale for suppliers, who generally offer better pricing and volume discounts that exceed what colleges and universities could achieve on their own.
Aggregating spending on the common types of goods and services higher education institutions need can help meet new budget targets.
The primary benefit of using a purchasing cooperative or GPO is saving money. Academic institutions can save on essential goods and services that they would have to buy anyway. However, the savings go further than just the bottom line on products.
By streamlining procurement, you can significantly reduce the administrative burden for your procurement team. This accelerates solicitation, bidding, review, and vetting so you can tackle the items on your list faster. By freeing up time on procurement, you can turn your attention to more strategic activities.
With a GPO, you can also broaden your suppliers. GPOs have relationships with a large number of suppliers who bid on large-volume contracts. This often produces more competitive bidding, resulting in lower overall costs.
The right organization can also provide expertise. For example, E&I Cooperative Services has a team of procurement experts, many of whom come from the ranks of colleges and universities. There are product and category experts who can provide guidance and solve problems. In addition, member organizations from other schools can be powerful allies in finding innovative solutions.
GPOs can help lower your cost. Before you sign up with one, however, there are a few key factors you will want to consider.
You should make sure that the GPOs’ goals align with yours. Not all GPOs cater to the needs of colleges and universities. For example, E&I Cooperative Services focuses exclusively on the education sector, ensuring you get pricing, terms, and conditions that meet the unique needs of academic institutions.
GPOs typically require a membership fee, especially for-profit organizations. You will want to assess the fees you pay as part of your cost-benefit analysis to ensure the ROI is worth it.
E&I Cooperative Services is a non-profit, member-owned sourcing cooperative and does not charge fees. Working on behalf of its member institutions, E&I Cooperative Services procures lower costs and also provides patronage rebates for members annually based on purchasing volume.
There is no cost to become a member of E&I Cooperative Services and view available contracts.
GPOs achieve t efficiencies from standardization. While this can help you save money, it can also require members to conform to specific contracts or vendors. E&I Cooperative Services enables you to choose from competitively solicited contracts at your discretion. You can opt in to any cooperative contracts that work for you or use any supplier you want outside the available contracts.
You should pay close attention to the contractual terms and conditions of any GPO. Some require minimum spending levels or spending commitments.
E&I Cooperative Services does not have minimum spending levels. You can choose the contracts you want, and there is no obligation to use them. You have complete discretion about which cooperative agreements you use.
Procurement teams need to be creative to overcome increasing budget constraints. By exploring GPOs and sourcing cooperatives like E&I Cooperative Services, you can find new ways to save.
So, what is a group purchasing organization? It is a proven solution to lower your costs, which is more important than ever in today’s challenging budget cycles.
View available contracts through E&I Cooperative Services or contact your dedicated rep today to see how E&I can help you hit your budget targets.
