What Is Supplier Consolidation and What It Could Mean For You?
Supplier consolidation is a supply chain management strategy that is often adopted by companies as they reach a tipping point in growth. Put simply, it’s the process of reducing the number of suppliers you order from to a select group of reliable suppliers or even a single partner.
You may be purchasing rotary dies from one supplier and steel rule dies from another. New die purchases may be provided by one supplier, but your retools or re-knives are sent to someone else entirely.
Here are 6 reasons why an analytical approach to supplier consolidation matters as you scale your operations:
- Cost Savings—By some estimates, 60% of total supply costs lie in the time it takes to procure items: find the correct supplier, identify the right product, generate a purchase order, place an order, install, test, and troubleshoot, and pay for it. Having one supplier reduces this effort significantly.
- Time Savings—One P.O., one invoice, one process, one contact that understands all of your customer requirements, fewer supplier meetings. How would you spend the extra time you would gain if you dealt with a single resource?
- Increased Buying Power—Rather than divide purchases amongst multiple suppliers, use your entire volume to buy from a single partner and drive better economies of scale for your business. Purchasing at volume allows suppliers to pass their savings along to you. You get more for less.
- Having Your Needs Understood and Anticipated—Building long-lasting relationships with a single, reliable supplier-partner builds trust, and their institutional knowledge about your operation—and your unique goals—grows over time. Having a single account manager that can anticipate your needs and proactively make recommendations is deeply valuable. They will take care of you and have a real understanding of your unique needs when issues arise.
- Improved Accounting and Reporting—On average, companies with simple processing incur $12 to $30 in costs per invoice, while more complex processing costs range from $40 to $100 an invoice. Piecing together usage reports from multiple suppliers can also be time-consuming and impact your reporting efforts. One supplier? One invoice, one report.
- Single Technical Support Team—Having a dedicated customer service team can’t be valued enough.You have one point of contact who knows your operation, and can help you eliminate downtime asap. Worry less if something goes wrong.
At the core of any supplier consolidation strategy is identifying a partner that is capable of being your one-stop-shop—a single company that can handle everything.
If you would like to explore whether IMPACT can become your one-stop solution for all your converting needs, we would love to start a conversation.