Tim Llewellyn of FSE Caskets shares this about a Group Purchasing Organization: 

fse_caskets002003.gifI would like to add my two cents to this interesting subject. First of all I have had experience with GPOs with a previous medical business that I had owned. My business served as a primary vendor to over 8,000 nursing homes nationwide buy way of a vendor for a GPO. Our company changed the dynamics of how business was conducted with GPO members a contributed to the value of the organization.

The pros and cons of a GPO can be equally balanced in many cases but keeping the balance heavy to the beneficial side is strategic battle that takes careful planning and innovation. The value for independent funeral homes to gain the purchasing power to improve profitability and longevity rests in the ability to understand and participate in an active and beneficial Group Purchasing program.

Here are a few things that I can share:

• Providing discounted products to members can and is being accomplished at no extra cost to the members in many cases.
• Manufacturers and vendors (bound by signed agreements) participate in the GPO because they have something to gain that is offered by the GPO.
• Directors purchase directly from the manufacturers and vendors under the new GPO program structures. (The GPO has no need to be a re-seller of products and services, just a coordinator and implementer of benefits).
• The sales are tracked in a simple way that account for GPO fees.
• The GPO offers much more than better pricing on products and services, it enables both the director and the manufacturer/vendor to obtain advantages beyond product procurement.

I am sure as you continue in the research of GPO implementation you find that many of the large manufacturers do not want to see a GPO in place. This means that the manufacturers will have to compete with or join the GPO, and if they do join they would have to discount products and pay a set percentage of the sales back to the GPO.

Example: Batesville would have to take a 12% drop in profit for all the members participating in the GPO, many of which may be present customers of theirs.

Even though this is a difficult challenge to implement a convincing GPO program, it is totally possible with the right business structure and marketing plan. Creating benefits that are equally enticing and compelling for both the manufacturer/vendor and members takes more than great pricing and catalogs.

As I step down off my soap box I would like to add that a GPO is over due for the funeral industry and the benefits can be a strong advantage for independent businesses that require better pricing and support. I would be interested in assisting in the development of a GPO to ensure the health of the industry and the insurance of sustainability for continued growth.

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