Benefits of consolidating suppliers

Supplier consolidation only saves money when at least one of the following three results is realized: Result #1 - Headcount is reduced.

Procurement, accounts payable, and receiving staff all deal with suppliers.

The vendors have a vested interest in making sure the company succeeds, and the company doesn't have to work with a massive number of contracts and purchase agreements.

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It may seem like using fewer suppliers would put a manufacturer in a less stable position, both in terms of bidding competitively and risking the possibility of one of those suppliers going out of bidding process, that shouldn’t be an issue – and if you’re only using trusted suppliers, you shouldn’t have to worry about them going out of business.

Due diligence goes a long way in making supplier consolidation a reality, and once you’ve decided to do it, you can reap the following four benefits.

Done correctly, vendor consolidation provides specific and often immediate benefits to the organization.

One reason companies choose to consolidate vendors is to control costs.

Rather than managing dozens or even hundreds of vendor relationships, a company can narrow the field to just a few.

Those vendors become more than simple suppliers or service providers; they become partners.

With fewer suppliers, the number of separate transactions falls, as does the amount of time it takes to manage those suppliers.

Large companies across Australia and New Zealand have strategically partnered with RWW Group to reduce their supplier base and consolidate essential business requirements.

By limiting purchases to a specific vendor pool, companies can contain costs within certain limits. By limiting the pool of vendors through vendor consolidation, a company can make certain that the products and services it purchases meet certain quality and performance standards.

This doesn't mean companies will always have access to the lowest available costs, but rather that costs become a known quantity by dealing with the same pool of vendors on a repeat basis. Vendors who can't meet and guarantee those standards are removed from the vendor pool.

Over the long haul, this saves the organization both time and money by limiting its expenditures on vendor location activities. Companies need to be able to respond quickly to business needs.

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