A GPO is an entity that unlocks the collective purchasing power of its member businesses to achieve cost-savings opportunities and reduce overall spend. This allows businesses to leverage better pricing on products and services they already buy across categories like office supplies, shop supplies, uniforms, janitorial products, maintenance, repair and operations (MRO), and other recurring business expenses.
Want to know what one of the most overlooked areas in procurement today is?
Indirect spend.
But when your business reduces vendor costs through a group purchasing organization (GPO), you can save time, align spending, and drive more profit in the back office, without adding labor.
In this CloudX® article, we'll dig deeper into how a GPO like PurchaseSmart® supports vendor spend optimization and why indirect spend often gets less attention than it deserves.
A GPO is an entity that unlocks the collective purchasing power of its member businesses to achieve cost-savings opportunities and reduce overall spend. This allows businesses to leverage better pricing on products and services they already buy across categories like office supplies, shop supplies, uniforms, janitorial products, maintenance, repair and operations (MRO), and other recurring business expenses.
When you join a GPO, you gain access to a network of pre-vetted vendors, so pricing and payment terms are already set and discounted for you. And besides streamlining the procurement process on your behalf, a GPO helps reduce your exposure to unreliable vendors and uneven pricing.
GPOs have become a proven purchase strategy for many businesses, and according to Amazon Business, organizations that use GPOs often save 10% to 25% annually across spending categories by tapping into collective purchasing power and volume discounts. On that note, the PurchaseSmart GPO by CloudX has helped some businesses uncover indirect spend savings of up to 40%.
PurchaseSmart is an automated solution by CloudX that helps businesses save up to 40% on everyday products and services. It gives you instant access to pre-negotiated pricing from over 100 trusted national vendors—without requiring you to change your current vendor relationships or internal processes.
Whether you're managing a single location or a multi-location business, PurchaseSmart uses collective purchasing power to support vendor spend optimization while giving you full visibility into where and how you're saving.
Cost savings is the most obvious benefit to becoming a member of a group purchasing organization because businesses can aggregate their purchasing power to secure discounts that individual companies might struggle to obtain. This collective buying power means that even small contracts can gain the benefits of bulk pricing.
Savings may also come from consolidating vendors, reducing price differences across locations, and directing more purchases toward pre-negotiated contracts. This not only helps businesses control costs, but it also makes spending more predictable.
When a business has multiple locations, it's usually much more difficult to understand and track the purchasing habits of teams at each location. For example, when five different SKUs are used to purchase similar products in the same category, reconciling accounts and allocating budget dollars takes procurement staff a lot of time. A GPO standardizes the purchase of goods and services, reducing product search time and the account management burden.
GPOs typically evaluate vendors before adding them to their networks, giving its members access to established providers with demonstrated capabilities. Pre-negotiated contracts can also include defined product specifications, service expectations, and performance requirements to help reduce the risk of inconsistent product or service quality.
For businesses with multiple locations, purchasing becomes more standardized since teams get directed toward approved products and suppliers. With this functionality, there's reduced reliance on unvetted vendors to help keep quality consistent across an entire organization.
Membership can give businesses access to procurement specialists with knowledge of supplier capabilities, pricing trends, and purchasing categories. By utilizing spend analysis, pricing comparisons, utilization reviews, and accounts payable data, these experts can recommend purchasing strategies that support a business’s broader supply chain goals.
An effective group purchasing partner provides support well beyond negotiated pricing and can include access to a broad supplier network, diversified contracts, and sourcing expertise. The value of this relationship becomes especially important during periods of shortages, lockdowns, and other supply chain disruptions.
By utilizing spend analysis, pricing comparisons, utilization reviews, and accounts payable data, these experts can recommend vendor spend optimization strategies that support a business’s broader supply chain goals.
How a Group Purchasing Organization Works
A group purchasing organization helps businesses reduce procurement costs by combining the buying power of many companies, so instead of negotiating vendor contracts independently, members can access pre-negotiated vendor contracts secured through the group’s collective purchasing volume.
Dedicated software makes these programs easier to manage, and customized vendor dashboards allow companies to compare vendors, review contract pricing, track category spend, and identify cost-saving opportunities. The resulting visibility supports vendor spend optimization and gives finance teams greater oversight of indirect spending.
Group purchasing automation also improves purchasing workflows by directing employees toward approved vendors and their current contract information. For businesses with multiple stores, facilities, or dealership rooftops, it can support multi-location procurement, purchasing standardization, and more consistent vendor management.
Deloitte’s 2025 Global CPO Survey found that digitally advanced procurement organizations were more likely to meet or exceed their cost-savings plans—96% compared with 80% of other organizations.
Some contracts require case quantities, pallet purchases, or minimum spending levels, so these types of requirements can force smaller businesses to buy more than they need, tie up cash, and increase storage or waste. A lower unit price then doesn't provide much value since receiving it requires purchasing unnecessary inventory.
Available contracts sometimes don't include the exact products a business uses. For example, a service department may rely on a specific nitrile glove for its fit, thickness, and chemical resistance, but if that glove isn’t available through the program, a business will have to either switch products or continue purchasing outside the contract.
Some purchasing organizations charge enrollment fees, annual dues, or administrative costs that reduce the value of membership. CloudX removes this particular drawback because businesses don’t have to pay to join PurchaseSmart or maintain a membership. With PurchaseSmart, companies can explore available savings without adding another recurring procurement expense.
Negotiated pricing only creates savings when employees use the available contracts, so if a business has multiple locations and each location continues buying from the same vendors, there’s no gain from a group purchasing contract. Businesses may need to update purchasing procedures, communicate new options, and monitor participation so spending only moves through contracted suppliers.
The procurement world carries with it a lot of tasks, from sourcing and managing vendors to negotiating contracts, approving purchases, and tracking spend.
Ideally a procurement strategy should involve optimizing savings across spend categories and controlling maverick spend, but performing these tasks is usually easier said than done. Many back office teams are supporting multiple locations, and that creates a definitive spend visibility problem.
One location might be buying supplies and services from certain vendors, while another location is buying similar goods and services from entirely separate vendors. Without a centralized view of purchasing activities, employees can't manage indirect spend categories effectively, and securing optimized pricing becomes impossible.
Another reason indirect spend gets overlooked is because it usually involves a culmination of many low-dollar purchases—unlike direct spend, which often includes inventory, production, resale, and core operations. Indirect spend doesn't get the same level of scrutiny, so the cost-saving opportunities aren't noticed.
According to 2025 research from Efficio, only 19% of CPOs and CFOs were fully confident that they had an accurate picture of their organizations’ indirect spending.
We have agreements with over 100 national vendors including companies like Uline, Grainger, Cintas, Unifirst, UPS, Staples, Office Depot, Amazon Business, Hertz … and more.
Absolutely. You are free to enroll with any vendors we have pre-negotiated pricing with.
To begin, we will present potential savings opportunities for your organization. Then, simply tell us which opportunities you are interested in and we will instruct vendor representatives to load our pre-negotiated pricing to your vendor account. If you don’t currently buy from a vendor we have pre-negotiated pricing with, we’ll introduce you to a vendor representative and they can onboard your organization if you choose to use them.
It costs your business nothing. There are no start-up costs or ongoing fees to clients who leverage our pre-negotiated contract savings. Simply enroll with the vendors of your choosing and enjoy the savings.
As soon as the vendor loads the pre-negotiated pricing to your account, which is generally 1-5 business days after you ask us to activate a pre-negotiated contract.
Our PurchaseSmart platform will report the ongoing savings to you whenever possible.
Not at all. For vendors where we already have pre-negotiated contracts in place, you can access better pricing simply by enrolling—no changes to your current purchasing process are needed. In some cases, we may offer like-for-like pricing from competitive vendors that provide additional savings opportunities. It’s entirely up to you whether to switch or stay with an existing vendor, but overall, PurchaseSmart is designed to optimize spend without disrupting your procurement workflows.
That’s not a problem. Simply revert back to the contract pricing you had previously.
No, you are free to activate the vendors you want to transact with and you are free to stop using any or all of them at your discretion.
Just contact our support team and they will ensure that vendors are honoring the pricing on your account so your savings accrue quickly.
We keep expanding our pool of negotiated vendors and can even look into driving opportunities specific to your organization. Let us know which vendors you’d like to see more favorable pricing with, and we’ll work to include them so you can achieve maximum supply chain benefits.
If your business is tired of chasing discounts or overpaying on essential supplies, it’s time to rethink vendor management and take advantage of collective purchasing power and spend optimization—without the hassle of negotiating better pricing.
Become a member today to access pre-negotiated pricing with 100+ trusted vendors and unlock real savings across your organization. Why pay more for the products and services you need when GPO contracts can leverage collective buying power?
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