Our 2010 study on group purchasing organizations provided a comprehensive examination of the GPO business environment in the foodservice channel. Key findings indicate that manufacturers and distributors have established good fundamental relationships with the larger, well-established segment-specific GPOs (primarily healthcare). However, GPOs continue to grow well above industry averages and are further penetrating segments that have been profitability drivers for both manufacturers and distributors.
Looking at 2012 and beyond, the GPO environment continues to evolve and will not get any easier. Manufacturers must do a better job of consistently managing GPO relationships and employing sound business practices regarding the role of GPOs in their portfolio.
Technomic is proposing new research that provides insights and recommendations on current hotspot GPO issues (see below), an update of key trends and growth drivers, and sponsor-specific strategies and best practices for operating in today's GPO environment.
Two strategically significant and emotion-evoking "hotspot issues" affect the very nature of how each manufacturer "goes to market" and impacts their cost to do business, their leverage with push accounts, and relationships with key trading partners (distributors). This study addresses these issues and the challenges surrounding them:
Hotspot Issue #1: The proliferation of GPOs focused on “local market” independent operators (LMGPOs).
Hotspot Issue #2: Price extendibility and the issues created by price extendibility when offered by large and well-established (previously segment-specific) GPOs to independent operators across a number of non-core market segments.
This study has several overarching objectives that will be common to all participating sponsors. As always, there are also opportunities for sponsors to develop customized or proprietary issues for inclusion. The primary objectives are:
For the purposes of this report, the terms group purchasing organization and GPO will be used generically to signify operator-focused buying groups and purchasing cooperatives with a variety of organizational structures.
This study, consistent with the 2010 GPO study, examines only GPOs whose members are restaurant and foodservice operators. It specifically excludes groups that serve distributors (such as Unipro); chain-specific purchasing arms (such as those of the Subway and Burger King systems); and purchasing cooperatives administered by governmental entities (such as school districts).
Based upon the primary objectives and key study issues (please request a proposal for complete details), Technomic anticipates delivering the following to each sponsor: