Why GPOs Matter — and How They’ve Evolved
In today’s competitive environment, businesses are under constant pressure to reduce costs, improve efficiency and maintain quality. Group purchasing organizations (GPOs) offer a proven way to achieve these goals — yet many organizations underestimate their potential.
GPOs aren’t just about discounts; they’re about leveraging scale, expertise and technology to create sustainable advantages. Over the years, they have evolved from exclusively a cost-saving technique into strategic business partners.
A Diversified Approach
GPOs have been part of the U.S. business landscape for more than a century. Their origins date back to 1910, when hospitals began pooling their purchasing power to lower costs.
Over time, GPOs faced scrutiny around antitrust, competition and compliance issues. Questions about restraint of trade and collusion were common, but the legality of GPOs was ultimately affirmed.
Today, they operate across diverse sectors and industries — manufacturing, services, hospitality and health care — helping organizations unlock economies of scale and access specialized expertise.
First-Hand Experience
My first direct encounter with a GPO came during my tenure as senior vice president of supply management for Hilton Hotels, where I led Hilton Supply Management (HSM), a wholly owned subsidiary. We were invited to join a new purchasing venture as one of the founders. That venture would later become Avendra, now one of the largest services-sector GPOs.
At the time, I resisted. Hilton had the infrastructure, scale and expertise to manage procurement independently. Why share control — or profitability — with competitors?
After rigorous evaluations using internal and external resources, we concluded that staying independent was the right move. HSM not only supported Hilton’s purchasing needs but also marketed services to franchisees and third-party operators.
That strategy paid off: HSM grew from hundreds of accounts to thousands, becoming a major GPO in hospitality.
Why I Changed My Mind
Years later, while building an integrated supply chain for Oasis Experiences — a marina management company with dispersed operations — I faced a different reality.
Limited resources and infrastructure made a GPO not just attractive, but essential. After careful due diligence of various GPOs, we selected Foodbuy, a subsidiary of Compass USA, to implement programs covering food, beverages, maintenance, equipment and more. We also introduced an e-procurement platform for seamless integration.
This experience revealed a gap: GPO adoption in the marina industry was minimal. I proposed creating a specialized GPO for this sector, and Foodbuy embraced the idea. We began laying the groundwork — until a strategic shift at Oasis prompted me to explore new opportunities.
A New Model: The Consultative GPO
Drawing on decades of experience in hospitality, food service and health care, I saw the need for something more than a traditional GPO. That need was for a consultative GPO.
Traditional GPOs focus on aggregated purchasing power. A consultative GPO, like the model that Chad West, CPSM, C.P.M., CFPM, and I developed in conjunction with Foodbuy and launched in March 2025, goes further by blending that scale with strategic consulting.
This model, called ProcurLogic, combines the GPO’s more than US$35 Billion in purchasing volume with deep expertise in operations, supply chain and analytics. This hybrid approach delivers:
Significant cost savings through aggregated purchasing power
Specialized expertise and advanced data insights for smarter decisions
Rapid implementation of multi-location operations
Strategic guidance to align procurement with business goals.
A consultative approach is inclusive of frequent engagement with company leaders and operators to ascertain the business requirements. This also involves reviewing location(s) to find operational and process improvement opportunities. Goals and actionable targets can be identified utilizing product rationalization, value analysis, performance metrics and other processes.
In short, a consultative GPO bridges the gap between scale and strategy — helping businesses not only save money, but also operate smarter through operational effectiveness.
Why does this matter now? The coronavirus pandemic and subsequent labor challenges exposed vulnerabilities in supply chains everywhere. Many operators lack the technical and operational expertise to navigate these complexities. GPOs provide access to resources, programs and market intelligence that most businesses can’t replicate on their own. A consultative GPO model amplifies these benefits by adding strategic oversight and tailored solutions.
The bottom line: GPOs have evolved from simple buying groups into sophisticated partners that deliver cost savings, efficiency and competitive advantage. If your procurement organization is not leveraging one — or the right one — it’s leaving value on the table.
The question isn’t whether a company can afford to join a GPO. It’s whether it can afford not to.
This article was originally published on Institute for Supply Management (ISM), authored by our Managing Member, Anthony Nieves, and is republished here with permission.