There is some very simple maths involved in consolidating your business’ supply chain – the smaller the number of suppliers your organisation is dealing with, the more efficient you can be. This has become a growing trend over the past decade thanks to the benefits that it offers and many enterprises today choose to work either with a small group of trusted suppliers or a a single company. These are some of the advantages of opting for this approach.
Improving cost-effectiveness while reducing your environmental impact
Consolidating your business’ supply chain offers many opportunities to help streamline your costs. For example, Having fewer suppliers reduces shipping and transport costs, and its associated carbon emissions impact, as well as maximising your purchasing power and not allowing it to be spread too thinly across multiple vendors.
Freeing up more available time
Managing suppliers can be incredibly time-consuming and take a lot of valuable attention away from the core functions of the business. Multiple suppliers can be a major headache, especially if every relationship is different or when relations become challenging. The alternative is to consolidate your business’ supply chain so that you are dealing with either a single supplier or small number of suppliers. Much less time is required internally to manage supplier relationships and employees are free to add more value elsewhere in the business.
Fewer suppliers mean better relationships
Where a business has relationships with many different suppliers this can leave those connections stretched really thin. There is little time to really engage with suppliers and build genuine, strong relationships with providers and, as a result, everything tends to be very surface level. This is not a strong foundation on which to build relationships that are long lasting and which can easily transition the challenges that every supplier relationship inevitably goes through at some point. A consolidated supply chain means higher quality, strong relationships going forward.
Simplicity and clarity in accounting and reporting
The financials of any business can be complex enough without factoring in multiple suppliers, each with different invoices, payment times and conditions and reporting mechanisms. Where there is a single relationship (or a small number), accounting is much less of a burden and it’s much easier to ensure that payments and invoices don’t go astray or fall out of time. Reporting is essential for gaining perspective on how the current supply chain (and business in general) is operating but this is much harder to do with a large number of supplier businesses to focus on and gather data on. A consolidated business supply chain provides a much cleaner and more transparent perspective and is much easier to quantify when it comes to financial forecasts and decision-making.
Switching from a large and unwieldy business supply chain to a consolidated version that consists of just one – or a few relationships – is simpler, more cost effective and a much more sustainable approach to providing for your organisation.
