Shifting a significant portion of tail-end spending towards aggregator-style suppliers, such as wholesalers, can be an effective strategy to simplify procurement processes. On the surface, prices offered by these aggregators might appear marginally higher. However, when considering the administrative and operational costs of managing numerous individual suppliers, coupled with the intricacies of multiple purchase order and accounts payable flows, the economics often tilt in favor of aggregators.
Beyond mere cost considerations, aggregators significantly enhance compliance and transparency, offering a unified view of procurement operations. While they might be colloquially termed as “box movers”, this belies the sophistication and efficiency many wholesalers bring to the supply chain. Over time, they’ve honed their core competencies, transitioning from mere distributors to entities that offer a plethora of complementary services. These services not only reduce working capital requirements but also streamline both production and administrative processes.
To illustrate, many wholesalers can introduce mechanisms like vendor-managed inventory and consignment stock solutions. They’re adept at handling nuanced tasks like the pick and pack of spare parts, or even managing KanBan resupplies directly on the production floor. Some even venture into areas like goods reception, quality assurance, and light assembly tasks, including the preparation of sub-assemblies. By tapping into outsourced warehousing, companies can further augment their operational flexibility.
Furthermore, these aggregators, given their broad view of the market, are well-equipped to provide invaluable insights into consumption patterns. Such data-driven insights can become the linchpin for more informed decision-making, enhancing not just cost efficiency, but also overall business agility. By integrating with these aggregators, companies can refocus their energies on core value-adding activities, letting the “box movers” adeptly manage the complexities of the supply chain.
See our top 20 free advice for rapidly reducing supplier costs
