If you’ve been hearing about vendor consolidation, you may be asking if it could benefit your business. It can. Here’s how.
What is vendor consolidation?
Vendor consolidation is a supply chain management strategy that involves reducing your vendor base to a few select partners. It’s an overall cost-reduction approach that relies on economies of scale to trim prices, lower incoming freight costs, improve quality, strengthen supply agreements, and enhance vendor acquisition.
What does vendor consolidation do for your business?
Vendor consolidation shrinks your supply chain management costs.
Consider not only the expense of the materials you purchase, but also think about freight, inventory management, loss, credit, and customer service costs. Surprised at the sum? Supply chain costs add up. Fast.
By consolidating your vendors, you can control your costs and enhance your services.
Why should I care about vendor consolidation?
Here are eight specific reasons.
#1.) Consolidate points of contact for sales, service, and support
Vendor consolidation makes it simple and effective to purchase products, contact a single customer service agent, or get technical support. Your team saves time when there’s only one number to dial, one leadership team to negotiate with, and one "neck to wring."
#2.) Save money
Vendors that offer consolidated solutions to customers often provide highly competitive pricing structures. Positioned to provide efficient customer support, they consider the long-term value of the vendor-to-customer relationship. That means a consolidated solutions vendor is eager to pass along concessions that will secure and retain a valued business partner.
#3.) Save time
Dealing with fewer vendors lets customers spend less time managing multiple vendor relationships and more time developing and nurturing their businesses. Reinvest time you now spend filling out forms for vendors into new activities that will enhance your revenue stream.
#4.) Better overall solutions
By offering technology that can solve multiple business challenges, vendors adopt a big-picture view of their customers’ needs and opportunities. Ultimately, this holistic understanding of their clients equips vendors to provide a solution tailored to each individual company.
#5.) Better service
Vendor consolidation nurtures the customer-vendor relationship. As a high-volume buyer, the customer’s value to the vendor increases sharply. Customer service behaviors ramp up parallel to the vendor’s perceived value of the customer.
#6.) Bridge technology solutions/Ensures seamless integration opportunities
Vendors have a laser-focus on the solutions they sell. If a customer desires a particular workflow that the vendor cannot service or sell, that vendor must walk away from the opportunity. By consolidating vendors, your business can bridge or link previously disjointed workflows and solutions.
#7.) Save on operational expenses
Does your team spend endless time on invoicing, contracts, payment processing, and other operational tasks? You can eliminate chunks of administrative work by consolidating your vendors. Working with a single vendor means streamlined invoicing, access to amenities (like a central customer portal), consolidated asset management, and more!
#8.) Regional footprint
Does your business have more than one location with each office juggling it's own set of vendors? Vendors that can offer consolidation often times have a larger regional footprint, giving you more complete, hassle-fee coverage for each of your office locations, and ensuring that you have complete territory coverage for your business.
In the end, business growth and success at any size results from streamlined internal operations and an intense focus on your company's mission. Vendor consolidation is an essential strategy to ensure that you are getting the best value, best pricing, and best solutions for your organization from a provider that can better understand and accommodate your businesses unique needs.