Twenty-five years after co-founding Corporate United, the first indirect GPO in the United States, David McCarty points out an inconvenient truth: the very tools procurement once developed to leverage spend are no longer as effective in today's supplier-dominated landscape.

In this episode of "Buy: The Way…To Purposeful Procurement," David joins co-hosts Philip Ideson and Rich Ham to discuss the evolution of Group Purchasing Organizations (GPOs), from their early promises of dramatic savings (15-30% back in the early 2000s) to their current state, where GPOs are much more limited in their ability to determine and optimize spend.

With refreshing candor and a healthy dose of optimism about today's forward-thinking GPO leaders, David confirms what many procurement leaders have long suspected: most GPOs are less effective today than when they were founded, partly because they've become a kind of checkbox solution that gives procurement a "false sense of security" rather than a true route to optimized expense management.

For procurement leaders who are worried that their suppliers might be gaming the GPO system, David provides realistic guidance on how to select the right GPO partner (from looking at contract age and rebidding frequency to volume transparency and customization options). He also points out the key areas where GPOs can still deliver differentiated value, but only if they are leveraged appropriately and procurement puts the time and effort into measuring the value they expect to receive.

While there are still benefits to using this model, it's clear, says David, that in 2025, strategic procurement through GPOs requires a more discerning, purpose-driven approach than ever before.

Links:

BTW EP 09: Status Quo Harms Through the GPO Lens with David McCarty

Art of Procurement