Supplier relationships can be a slippery slope. Organizations often get busy and neglect revisiting ongoing savings plans once a contract is set. A favorable contract today may not equal one tomorrow, especially for a multi-year agreement. Many companies fall prey to inaccurate counsel that leaves them stuck in faulty contracts. Keep these 3 myths in your back pocket to ensure your organization has the best contract terms possible.
Group Purchasing Organizations (GPOs) will always get you the lowest price
Although GPOs have the benefit of providing upfront savings and large returns on ROI, there still could be opportunities left on the table. All terms still need to be thoroughly vetted to ensure your company’s needs are being met. Shared benefits and reduced risks may only last for a short season if your organization has not explored long term options.
You are asking the right questions in your RFPs
Your organization may be missing out on some crucial questions to ask potential suppliers. How transparent is the supplier about their competition? What are their implementation processes and are there any hidden fees you should be aware of? Are there already plans for innovation in the pipeline? If so, what do those plans entail? Asking all the right questions upfront will help alleviate unnecessary stress for your organization in the long run.
National pricing agreements are always better than local/regional agreements with the same supplier
There could be substantial discounts that your organization may be missing out on. The local/regional agreements should be compared to potential national pricing agreements to weigh the pros and cons. Price creep over time and even compliance review costs are prone to be higher with a national pricing agreement. Don’t assume that national agreements equal better agreements with your supplier.
Download our full Becoming Best in Class whitepaper today to gain an advantage for navigating contract terms with your supplier.