Supplier Rationalization

The truth is that most often people think of supplier rationalization as cutting the number of suppliers; but in reality, one needs to look beyond, to assess the supplier base beyond just the count, based on multiple factors. Supplier rationalization or consolidation can help build very valuable relationships with vendors, while also providing buyers with greater leverage for negotiations. Some of the advantages of having a good supplier rationalization program are:

1. Reduced transactional overheads
2. Better buying costs and terms
3. Develop best in class suppliers, for each category
4. Improve supply quality and reliability
5. Reduce shipping and handling costs
6. Implement stronger contractual agreements
7. Lower inventory carrying costs
8. Better integration with suppliers

The major steps in our approach on supplier rationalization

• Initial Phase
  • Analysis supplier and category wise spend
  • Categorize suppliers based on various parameters
  • Identify common suppliers across business units and locations
  • Supplier performance and pricing analysis
  • Identify opportunities for material standardization
  • Define supplier rationalization approach

• Framework Development
  • Define supplier elimination criteria
  • Identify critical suppliers
  • Review contracts with key suppliers
  • Identify economies of scale from consolidation
  • Develop a transition roadmap

• Implementation
  • Establish strategy for vendor consolidation
  • Identify and mitigate transition risks
  • Confirm buy-in from all internal stakeholders
  • Initiate transition and consolidation
  • Implement an ongoing vendor governance model

Frequently Asked Questions

What is supplier rationalization?
To assess the supplier base beyond just the count, based on multiple factors.
What is the advantage of supplier rationalization?
Supplier rationalization or consolidation can help build very valuable relationships with vendors, while also providing buyers with greater leverage for negotiations.
Do you ensure privacy of the data?
Our services ensure Asset data integrity (Static & Transactional) which is important to the maintenance of the organization.