Learn Institutional Procurement Basics

In addition to choosing whether to work with a management company, an institution may choose to join a group purchasing organization or operate individually. This is true for both public and private institutions. Sometimes, an institution may use a hybrid model, procuring some items directly and relying on a group purchasing organization for others. Values-based procurement is possible using either method, but as discussed below, direct purchasing can provide greater flexibility in choosing values-based vendors.

Group Purchasing Organizations

Self-operated institutions and management companies may join group purchasing organizations (GPOs), which aggregate purchasing power to negotiate lower prices from vendors. [67] GPOs can be independently- or association-owned, national or regional, [68] or focused on a certain industry, like education or healthcare. [69] Most GPOs require formal membership contracts and fees. [70]

While joining a GPO can lower purchasing costs and reduce administrative burdens, institutions may have less control over vendor evaluation, selection, and relationships. [71] Additionally, membership fees can partially negate savings, and GPO members often find themselves obliged to procure a majority of their food from GPO-designated distributors or vendors. [72] This can limit an institution’s flexibility to purchase food from values-based vendors and should be an important consideration in deciding whether to join a GPO.

Individual Purchasers/Direct Procurement

Institutions or their management companies can also procure directly from vendors rather than through a GPO. Direct procurement can provide more control and flexibility, making it easier to work with smaller, values-based vendors that may not be on GPO-approved vendor lists. [73] While direct procurement does not offer the same volume-based leverage that GPOs enjoy, institutions still may be able to negotiate lower prices and terms based on their specific needs and priorities. [74]

However, direct procurement may require more in-house resources to understand and navigate the supply chain. Still, by removing a middleman, institutions can build direct relationships with their vendors, creating greater opportunities for customized agreements that meet an institution’s specific needs and values. [75]