Supplier consolidation is a supply chain management strategy that has risen in popularity over the last decade. In simple, it’s the process of reducing the number of suppliers you order from to just a small group of reliable suppliers or even a single partner.
The ultimate aim of this approach is to reduce supply chain costs and improve efficiency, consolidating suppliers is a strategy that can be implemented by any industry. Consolidation of suppliers can also be done at the production and indirect levels. Manufacturing organizations trying to cut production costs, on the other hand, may find the most cost-cutting opportunities.
For example, instead of sourcing thousand units of a particular product from 10 to 15 suppliers, after consolidation, the purchasing company may choose to source the same products from two or three suppliers.