How Purchasing Organizations Can Use Data to Maximize Savings

Group purchasing organizations (GPOs) exist to leverage their buying power in order to save companies money on supplies and products. GPOs are able to utilize massive amounts of seller and client data, thereby maximizing savings for their clients. 

In order for purchasing organizations to optimize savings, they must know how to use their data. This article will explore 8 ways that GPOs can use their data in order to help their clients save money.

1. Use a Robust Analytics Software

A purchasing organization can have all the data in the world. However, unless they have a robust analytics software to give shape to the data, it won't help. GPOs can provide value to their clients by giving them the technology that can help reveal organizational needs.

A strong software system will cross platforms to gather and analyze data and aggregate it into meaningful takeaways. Powerful analytics can reveal areas of overspending and supply issues, as well as predict future trends. This type of data allows a GPO to help their clients obtain the best deals and products from suppliers. It also can help suppliers gain insight into customer trends and plan their production accordingly. 

2. Identify Supplier KPIs

Once a purchasing organization contracts a supplier, they need to have concrete data that tracks the supplier's performance. Choosing useful key performance indicators (KPIs) allows a GPO to monitor their suppliers continuously. 

KPIs to consider include lead time, ROI, and the supplier's customer service. The GPO is then able to evaluate their supplier contracts with concrete data. With meaningful KPIs, the GPO can pursue their top sellers and either update or terminate contracts with less desirable sellers. 

Tracking the KPIs of several suppliers takes a significant amount of work. When purchasing organizations can do this work for their clients, clients can trust they have contracts with top-notch sellers. The result for the client is less work, less manpower and money spent, and more value obtained.

3. Utilize Negotiation Power

A purchasing organization can utilize the data of all of its clients to strike bargains with sellers. If they know that a product is in high demand, they can often negotiate a discount with their supplier. 

Not only does a GPO have the cumulative data of several businesses, it has buying power to make meaningful bargains. This type of high level visibility and purchasing power gives the GPO an advantage over individual purchasers. In turn, clients are given back the time and energy that goes into making these bargains while also saving money.  

4. Increase Supply-Chain Transparency

GPOs can also use their data to improve supply-chain transparency, thereby adding value to their clients' product. Consumers have shown an increased interest in visible and ethical sourcing. 66% of customers will pay more for a product or service if the company is committed to positive social change. An incredible 81% of global consumers believe that corporations have a responsibility to improve the environment. 

A purchasing organization has the data and influence to gain insight into each supplier's chain. They have the leveraging power to demand visibility and even improved sourcing methods from their suppliers. 

This increase in transparency from their suppliers then lends credibility to each client. It also ensures that compliance regulations are met and that clients are getting the highest quality products possible. All of these practices add value to a client's organization, resulting in increased sales and customer satisfaction.

5. Keep Suppliers Accountable

Similarly, GPOs have the unique ability to make sure suppliers are upholding their end of a contract. They can use their data to identify quickly if a supplier is lagging on lead time or providing sub-par products. 

With several contracts at stake if they do not comply, suppliers are incentivized to provide excellent service. On the positive side, they can be assured of renewed contracts with the GPO and its clients. Having this type of influence with a supplier allows GPOs to provide clients with the most bang for their buck.

6. Optimize Logistics

GPOs should also be using their data to improve logistics for their clients. Purchasing organizations benefit from ensuring efficient transportation of goods, as it saves both them and their clients money. 

Their analytics can ensure that the best routes and shipping methods are taken. This service brings yet more value to their clients, freeing them from having to allocate resources to logistics. Especially for small businesses, allowing a GPO to handle logistics can save a significant amount of money. 

7. Predict Future Demand

Another way GPOs can help their clients save money is by using their data to predict future demand. Analytics software can identify trends in a client's purchases throughout the year. Having access to the data of comparable clients can also allow purchasing organizations to advise newer businesses on industry trends. 

GPOs can use their data to anticipate the needs of their clients and give suppliers advance notice of future demand. This step can reduce lead time by making sure suppliers are prepared for clients' needs.

8. Negotiate Valuable Contracts

With all this data at its fingertips, a GPO can create tremendous pre-made customer contracts with sellers. These contracts provide value for both the client and the seller. The client knows that the purchasing organization has negotiated a money-saving agreement. The seller gains guaranteed clients and sales from the purchasing organization. 

Once more, clients save money in a two-fold manner. They get access to less expensive products from the supplier, and they spend less time negotiating contracts.

Group purchasing organizations have a massive advantage over individual buyers from small businesses. With the data they can leverage, as well their potential buying power, they can demand the best prices from suppliers. 

They can also optimize logistical decisions, track key performance indicators, and ensure supply-train transparency. It becomes a win-win situation for clients and sellers as GPOs negotiate contracts that benefit both parties. All the time that GPOs spend on data analytics and negotiation is time that an individual company gets back. And, as we all know, time is money.