Are You Asking Your GPO the Right Questions? Are You Getting the Value and Benefit You Signed Up For?

When it comes to supply chain strategy, some foodservice professionals stay away from group purchasing organizations – many times due to an unsatisfying previous encounter or misconception over how they operate. When I led the supply chain function for a large multi-national brand, I received many visits from various GPO representatives. While GPOs can certainly add value, all are not created equal, and all are not fully transparent. It’s important to ask the right questions and get past the sales pitches to understand how they’re able to generate value. Below is a list of questions I’ve found helpful in evaluating GPO offerings so you can determine the right partner for you.

Do I Need to Meet Certain Thresholds to Participate in Your GPO Program?

If you’re first exploring a partnership with a GPO, you’ll want to be sure they can deliver on their commitments before you jump in with both feet. This can help you limit your downside risk. Unfortunately, some GPOs require certain spend or program utilization minimums, forcing you to make significant changes before you are ready. It’s important to make sure you’re signing up on your terms.

You may even want to ask for references from current customers. If they’re willing to share these, you can trust that they’re being honest with you.

What Happens if Your Programs Improve Over Time? Will I Get to Participate in That Success?

A common concern involving GPOs is transparency. It’s all too easy for a group purchasing organization to hide program improvements from members to pocket extra savings. You want to be in-the-know when it comes to program changes to ensure you’re getting all the savings available. The right GPO will not only share rebate and price changes with you, but they’ll also adjust your programs to reflect improvements.

If the cost to participate appears too good to be true, it most likely is. Understanding how your GPO is compensated is critical to ensuring you are receiving all the value for your brand. Group purchasing organizations operate off volume allowance (VA) paid by suppliers. The total VA should be split by the member and GPO. Issues occur when VA rates go up, but instead of sharing the gain with members, the GPO pockets the difference. That’s why asking about these occurrences before you join is essential.

What Happens to my GPO Program if I Need to Switch my Distributor?

In today’s unpredictable economic climate, things can change quickly. You may find that you need to switch your distributor at some point due to changed circumstances or to improve service levels. However, some GPOs are not distributor neutral. If you are with one of these GPOs, you may find yourself in the position of having to change not only your distributor but your GPO as well, which can turn an already complicated situation into a nightmare.

It’s a good idea to understand up front if a GPO offers flexibility when it comes to distribution. Collaborating with a distributor-neutral GPO will allow your brand to maintain flexibility if the need arises.

How Will You Support my Business When the Unexpected Happens?

When things get tough, you want to make sure your GPO has the resources to help you weather the storm. During the recent pandemic, many companies were forced to significantly cut all departments, including supply chain resources. Those who remained were overburdened and lacked the time and capacity to deal with the wave of supply chain disruptions. One of the big benefits of a well-staffed GPO is their ability to step in during times of crisis and act as an extension of your procurement department.

Make sure your GPO of choice has all the services you would need if your department is suddenly unable to operate at full capacity. Having a suite of additional procurement services to choose if needed as your brand grows will allow you to seamlessly meet the expectations of your customers and franchisees.

Choosing Your Partners Carefully

Ultimately, my business benefitted from our partnership with a group purchasing organization, but only because we were able to identify the right one for our needs.

Navigating these questions can be daunting on your own. Reach out to the team at Foodbuy Foodservice right away. You can contact us here, or reach out to me directly on Linkedin.

Foodbuy Foodservice Is the Right Choice for Your Brand

Foodbuy Foodservice is more than a GPO. As part of Compass Group North America, we’re backed by over $25 billion in spend under management, relationships with more than 60,000 members, and products and services from over 1,500 suppliers.

We’re not an access GPO like many of our competitors, meaning Foodbuy Foodservice contracts directly with our suppliers. This ensures members get the full value of rebates. Plus, all our programs are operated with full transparency. As one of our members, you’ll have access to all transactional data as well as money-saving opportunities.

Not only that, but we offer a host of other procurement programs which can add value to your supply chain as needed. This includes:

Custom contracting

Price auditing at the DC level

Distribution management

Technology solutions

Culinary support

Foodbuy Foodservice has a team of highly experienced supply chain professionals who have faced many of the same challenges as you are currently and have the resources to address your needs.

Please reach out today. Our no-obligation onboarding process is simple and quick making the transition as seamless as possible.