How GPOs Work: A Deep Dive into Group Purchasing Organizations

A GPO, or group purchasing organization, is a group that negotiates contracts on behalf of its members. By aggregating purchasing volume across multiple institutions, GPOs are able to secure pricing and contract terms that would be difficult, for any single institution to obtain on its own.

In higher education, this model has significant appeal.

Academic institutions face strict procurement policies, limited staff capacity, and increasing demand for transparency. GPOs offer a solution that delivers cost savings, improves procurement efficiency, and enhances compliance.

With the current budget challenges facing higher education, and the potential for even greater disruption to funding sources ahead, academic institutions need all the support they can get. GPOs can help.

How Do Group Purchasing Organizations Work?

So, how do group purchasing organizations work?

Here’s a quick breakdown:

1. Membership: Colleges and universities join a GPO voluntarily, gaining access to a wide range of competitively solicited contracts.
2. Contract Development: The GPO aggregates demand from its members and works with suppliers to negotiate pricing, terms, and service levels that reflect that combined volume.
3. Contract Access: Once finalized, member institutions can begin purchasing through the contracts, often with no need for additional RFPs or bidding.
4. Ongoing Support: GPOs provide reporting, supplier management, and advisory services to ensure institutions continue getting value from the contracts.

The result?

A streamlined procurement that cuts costs and administrative burden while maintaining compliance with purchasing regulations.

Behind the Scenes: Key Players and Processes

E&I’s member-owned structure creates a unique network of stakeholders working in alignment. Member institutions provide direct input into sourcing needs and priorities, while E&I’s sourcing experts manage competitive solicitations, evaluate proposals, and ensure that contracts align with member expectations and regulatory standards. This level of member involvement sets E&I apart from traditional GPOs.

A GPO group purchasing organization also vets suppliers to ensure quality, service, and pricing standards are met.  Transparency is crucial throughout the process. You’ll get documentation around contract terms, pricing structures, and compliance requirements to support institutional procurement audits and reporting.

Beyond Price: The Broader Benefits of GPO Participation

While savings are a major benefit, the value of a GPO goes beyond pricing. Here are just a few of the big advantages you see when working with a GPO:

• Time Savings: Access to competitively solicited contracts reduces the time spent on RFPs, vendor negotiations, and internal approvals.
• Risk Reduction: GPO contracts are designed to meet legal and regulatory standards, helping institutions remain audit-ready.
• Supplier Diversity and Sustainability: Many GPOs include options that support broader institutional goals, such as partnering with minority-owned businesses or selecting environmentally responsible vendors.
• Contract Support: GPOs often provide reporting tools and supplier engagement strategies to help institutions make the most of each agreement.

Together, these benefits transform purchasing from a reactive function to a strategic approach to procurement.

Streamlining your procurement creates significant benefits. When Cornell University made process improvements, it reduced the administrative burden for 41% of its procurement transactions.

Making the Most of Your GPO Membership

To unlock the full potential of group purchasing, institutions should approach GPO membership as a partnership. Here are a few tips:

• Make cooperative contracts part of your procurement playbook.
• Become an active member, joining advisory boards and engaging with other members to help shape sourcing and ensure your needs are met.
• Provide regular feedback on performance and needs to shape future sourcing and contract procurement.
• Leverage GPO category specialists to help guide strategic procurement.
• Take advantage of spend analysis and data to identify further cost-saving opportunities.

GPOs: Strategic Procurement Partners

Today, every dollar and decision counts. GPOs offer a smart, scalable way for you to optimize procurement. Whether you’re looking to stretch your budget, streamline sourcing, or support long-term institutional goals, partnering with a GPO can provide the structure and support you need.

Unlike general-use purchasing models, education-focused GPOs are uniquely attuned to the specific needs of colleges and universities. This specialization shows up in the types of contracts they offer as well as in their understanding of sector-specific procurement challenges.

Because these contracts are built for educational environments, they often include terms that align with academic calendars, data security requirements, and grant funding stipulations. This ensures procurement is easy to integrate into institutional workflows.

E&I Cooperative Services is the only member-owned nonprofit sourcing cooperative focused exclusively on education. With E&I, you get dedicated attention from educational procurement experts who understand the unique landscape of academic institutions, helping craft contracts with terms and conditions favorable to you.

Ready to start saving on procurement costs today? Connect with your E&I representative to access hundreds of competitively solicited contracts and discover how E&I Cooperative Services can transform your institution’s purchasing power.