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Business

The benefits of supplier reduction

It often happens within organizations that there is a large supplier base. Some companies have thousands of different suppliers, but of course this costs a lot of time and money. Of course, all these suppliers have their own invoice, payment term, etc. You all have to take this into account and that costs a lot of paperwork. Reducing your supplier base can therefore bring many benefits. Which are these? You can read that here.

One point of contact

By reducing your supplier base to 1 supplier, you only have one point of contact, one invoice and also only one payment term. In that case, you have a lot of time left to invest in other useful processes. For example, you can focus on optimizing internal processes or focus on strategic issues.

Save costs

You can reduce the internal costs by reducing the supplier base and you can save up to 21%. This lowers the TCO, Total Cost of Ownership. This is the total cost of purchasing and owning a product or service over its entire life cycle. Think of costs that go beyond the purchase price of a product. This also concerns the costs for acquisition, maintenance and costs that are spent on training, for example. All costs related to the entire process.

What does this mean for my business?

When you reduce your company’s suppliers, a large group of suppliers is replaced by one large supplier. This means that you only have one point of contact instead of the large group of suppliers. You relieve various departments, such as the warehouse, the financial department and the goods receipt department. This makes invoice management a lot more efficient, especially if it is fully automated and digitized. Furthermore, it is also possible to save time and money in several ways, such as indirect procurement. Indirect purchasing refers to all goods that support the core activities of your organization.

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