Do You Have Too Many Vendors? Here’s What You Can Do
Here’s a question too many businesses can’t answer, do you know how many vendors you have? Too many vendors can be a challenge for businesses as vendor management becomes overwhelming. More vendors mean more contracts to manage, more contracts to manage often leads to many contracts with less-than-preferred terms, and all of these vendors and contracts take the one thing businesses are frequently short on, time. Time spent following up on previous orders or tracking down missing invoices. Businesses need to know that their vendors are reliable and are supplying them with quality items. If your supply base has become too large to properly monitor, there are steps you can take to manage the problem.
What is Vendor Consolidation?
Spend less time managing vendors, negotiate better terms, and increase your buying power all through vendor consolidation. Very simply, vendor consolidation involves lowering the number of vendors from which your company buys. Rather than spreading out your spend across a large number of vendors, you focus your buying power on a limited number of select vendors.
Benefits of Vendor Consolidation
Vendor consolidation offers a wide range of benefits to businesses, but the top 3 benefits are:
Cost savings
Time savings
Stronger partnerships
Cost savings
Consolidating your pool of vendors will increase your buying power. When you place higher volume orders, you can take advantage of more discounts, better pricing, and lower freight expenses. Put these all together, and they add up to cost savings for your business.
Time savings
It’s pretty simple, with fewer vendors to manage, you will spend less time on vendor management. Fewer vendors mean less paperwork, fewer meetings, and less time spent overseeing each step in the procurement process. That means your procurement team will have more time to devote to other, potentially more lucrative tasks.
Stronger partnerships
When we use words like quality, we tend to think about the quality of the supplies purchased. Equally important is the quality of the partnerships with your vendors. Successful vendor relationships are dependent on the quality of your relationships. If you want to get the best service, most favorable terms, and the best delivery times, it’s important to maintain positive relationships.
Vendor consolidation bolsters positive relationships. As you continue to place higher volume orders, vendors will reciprocate by providing you with a higher level of service. By consolidating vendors, you can build stronger, more robust partnerships with those businesses you trust. Stronger partnerships promote longevity and are beneficial for both you and your vendor.
How to Consolidate Vendors
Vendor consolidation can be done in-house or through outsourcing. When you handle vendor consolidation in-house, your employees are responsible for deciding which vendors are best for your company. An advantage of in-house vendor consolidation is that your employees may have more personal knowledge of the parties involved. On the other hand, sometimes it can be a challenge to be objective, and relationships and patterns are often difficult to change.
Vendor consolidation starts by identifying which supplier relationships are the most profitable for your company, and that doesn’t mean just looking at which vendor offers the lowest price. Consider reliability, quality, and communication. Think about which vendors are the ones you trust with your business, the ones which will help you reduce your supply chain costs or the ones which will improve your quality. Suppliers need to deliver when they say they will and provide you items that function in the way you need them to. And, if something goes wrong, you need a supplier that you can reach when you need them. In the end, vendor consolidation is about rewarding your best vendors with your business volume.
It should be clear to see; fewer vendors can be a great benefit to your business. Even better, is one single trusted partner who can take on a multitude of responsibilities. When you work with Safeguard, you get a trusted partner with economies of scale as well as an extensive breadth of services and products. All while getting the personal attention of your local advisor. Contact us today to see how you can find marketing and run-your-business solutions from a single source.
Key Takeaways
Too many vendors can be a challenge for businesses as vendor management becomes overwhelming
Vendor consolidation offers a wide range of benefits to businesses, but the top 3 benefits are cost savings, time savings, and stronger partnerships.
Safeguard offers customers the benefit of a trusted partner with economies of scale as well as an extensive breadth of services and products. All while getting the personal attention of your local advisor. Contact us
