SAVE MONEY BY USING A BUYING GROUP?Written by Paul Buisson
Let me give you a brief history of Group Purchasing Organizations (GPO). They have been around for decades. Do you know what types of businesses get best pricing on all of goods and services they purchase? The answer is healthcare facilities. Do you know why? I’ll tell you. Nearly any healthcare facility in nation that is making a profit belongs to a buying group. The average healthcare facility belongs to two GPOs . Thousands of facilities join together to negotiate contracts with their vendors. Vendors aggressively compete to get awarded group’s contracts. As a result each group member saves money on everything they purchase. Annual membership fees range from $250.00 - $20,000.00. The concept is slowly evolving into other industries. Today there are National GPOs for Universities, Engineers, Cable Television/Satellite Installers and one for Small & Medium Size Companies. Smaller GOPs have formed at regional, state and local level for a variety of industries.Pros and Cons of National GPOs The benefit to national buying groups is that their size gives them volume to negotiate bigger discounts with national vendors. But there are many problems with national buying groups. They have gotten greedy and charge their vendors ever-increasing percentage of their revenues generated by their members. This reduces amount of discounts offered to their members. The national GPOs do not backup their annual membership fee with a money back guarantee on member's savings. Some of these GPOs force their members to use their vendors exclusively. This has caused a backlash against GPO's because members maybe forced to use vendors that offer poor products and services. Pros and Cons of Smaller GPO's With exception of a few state GPO's most non-national GPOs are local. A group of businesses in a city in a particular industry get together and form a GPO. The advantage is that each member has say in vendors that are selected by GPO. The other advantage is that GPO is free. The problem is that a few dozen members of a local GPO don't have purchasing power to receive really big discounts from vendors. To get any decent level of volume all of members are forced to use same vendors exclusively. Thus members do not have total freedom to select their vendors. The other major problem it that it takes lots of time and coordination by members to manage GPO.
| | Is your Business Partnership about to Crash and Burn?Written by Dr. Dorene Lehavi
The Seven C's: Danger Signs not to be Ignored When Harry teamed up with Joe, everyone thought it was a business match made in heaven. Both loved clothing business. Harry was a natural salesman with good design sense and Joe was a shrewd buyer and financial whiz. Together they opened a clothing store that showed every sign of becoming a franchise. So why after just a year, when flagship store was a big hit were they struggling with a costly and acrimonious divorce? Why were they talking about bankruptcy instead of fall line -- when they talked at all? One of main reasons was a communications breakdown, which is all too common with partnerships. Few, however ever pay heed until it grows into a monster. The very things that made Harry and Joe such a perfect complement to each other were now tearing business apart. It can happen in any partnership if great care is not taken. And here is where a business partnership coach comes in. There are a number of danger signs that a business partnership may be about to crash and burn. Harry and Joe missed all of them. Visions that seemed similar differed when money was on line. For instance Joe wanted a strong foundation and measured growth, while wheeling-dealing Harry wanted to strike hard while iron was hot. As is typical in many partnerships, Joe needed a flamboyant frontman just as much as Harry needed someone steady in back room, but their contrasting work styles bred irritation then conflict. The very nature of a partnership means that things can quickly get personal even in most professional relationship. Have you missed some or all of warning signs that have spelled end of business matches?
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