A recent survey by Supply Management magazine suggests that nearly three quarters of buyers are looking to make cuts to their vendor list and use fewer suppliers.
77 of the 100 buyers surveyed said consolidation would make the supply base more manageable and cost-effective, and while there is no doubt this is true it beholds organisations to make sure they don’t simply take a knife to the vendor list without careful analysis of the risks involved. Supplier rationalization efforts can increase supply risk as well by limiting a company's options and back-up plans if a disruption, quality issue or supplier bankruptcy occurs.
A clear and accurate picture across the supply chain is an essential pre-requisite, which is of course where purchase to pay systems play a significant part, but category expertise can be equally important and companies considering supplier rationalisation should draw heavily on the experience of their eProcurement vendors or advisers.
