Streamlining Suppliers in Procurement

By reducing the total number of active suppliers and reallocating the procurement to existing partners, businesses can bolster their negotiating power, ensuring better commercial terms. Additionally, this shift often results in enhanced adherence to established procurement protocols and existing contract terms as the complexities of managing numerous suppliers get trimmed down.

It’s not uncommon for departments to resist this shift, particularly when they’ve developed preferences for specific products from certain suppliers. While their concerns are valid, it’s essential to discern between genuine necessities and mere preferences. In cases where a unique product is crucial, an innovative solution is to have one of the consolidated suppliers manage that particular item, essentially acting as an intermediary. This can be done without additional costs, leveraging the increased business volume as a negotiating point. It’s a principle worth emphasizing: while individual departments discern what, when, and how much they need, it’s the procurement’s prerogative to determine where and how to purchase.

Beyond cost management, reducing supplier count simplifies the procurement process. It enables the team to hone their focus on fostering deeper relationships with high-value suppliers rather than dissipating energy on infrequent, low-volume transactions. A concentrated approach invariably yields better outcomes, enhancing both efficiency and cost-effectiveness.

See our top 20 free advice for rapidly reducing supplier costs