Can Vendor Consolidation Help Your Business?

vendor consolidation

As a business owner, chances are you rely on a number of suppliers and other partners to keep what you do running as smoothly as possible. When you identify a need in your business, quality and reliability are two important factors to look for in whomever you expect to fill it. Price is also a very important consideration. Although there are exceptions, a general rule of thumb is avoiding the absolute cheapest option you may find. This is because suppliers and vendors who market themselves by having the lowest price generally lack in other important areas, like quality and reliability.

Regular Reviews are Easy to Overlook

When you have a problem with a vendor or other type of partner, it’s natural to escalate that issue to the top of your to-do list. But when things are going relatively smoothly with your vendors, it’s easy to put doing regular reviews on the back burner. Given all the different priorities competing for your attention on a daily basis, overlooking regular reviews is completely understandable. However, even though they may not be immediately evident, putting off these reviews can have a negative impact on your business.

The big issue with not periodically reviewing your vendor relationships is your cost can creep up quite a bit without you even realizing it. When you’re not paying the most competitive rate with a vendor, that excess can add up over the course of months or years. And when you multiply that by additional vendors, it’s easy to see how this can become a surprisingly significant cost.

Why Consolidating May Be the Way to Go

Once a business starts to focus on this process, they may discover an opportunity to get even better results by consolidating. Vendor consolidation simply refers to looking at what’s available to fill the different needs of your business and then making an effort to work with as few vendors as possible.

There are several key reasons why using a single vendor to fill multiple needs within your business can be a smart decision. Not only does this give you greater negotiating power, but it also gives your business the benefit of having closer vendor relationships, while also reducing fulfillment complexity. Add to that the fact that consolidated vendor relationships provide savings from things like reduced handling fees, and you have a recipe for something that can benefit your business in a very meaningful way.

Use Trusted Sources to Help with Your Reviews and Consolidation

While the benefits of vendor management and consolidation are clear, getting started with this process can feel somewhat overwhelming. That’s why you should take advantage of quality resources like our company comparisons to guide you through this process. By doing so, you’ll have a clear path to optimizing all of your vendor relationships.

 

Posted on Monday, July 10th, 2017