5 reasons you should streamline your suppliers
Now is the time to consider how streamlining your supplier base might benefit your business – and how you can do it while retaining control.
21 July 2020 Reading time: 5 minutes
As businesses start to reopen in the wake of Covid-19, we’re all looking at our ways of working in a whole new light. While the global pandemic has put huge strain on the economy and pushed many businesses to the brink of survival, it has also forced countless more into making unprecedented changes to the way they work, often with unexpected benefits. Now is the perfect time to consider how wider efficiency measures like streamlining your supplier base might benefit your business – and how you can do it while retaining control.
What we’ve learned from the challenges of Covid-19
With the huge swing towards home-working during lockdown proving largely successful and popular for many companies and colleagues, business leaders have been forced to consider whether their property expenditure can truly be justified in the post-Covid era. Enforced travel restrictions and the accelerated adoption of video conferencing has left us questioning if we’ll ever return to previous levels of business travel – something that would benefit business and the environment in equal measure.
These are just two examples of where we’ve been forced by the pandemic to stop and assess our working practices. But if you were to pause and take a look at your own business today, could you spot other opportunities to realise the benefits of thinking differently?
Why so many suppliers?
Businesses rely on suppliers, and often over the years we drift along into a situation where we’ve acquired an extensive list. Team members come and go, often bringing with them their preferred suppliers, who may stay long after the colleague leaves. In the case of telecoms and utilities, often suppliers come with new premises, and we readily accept the existing provider without question. Without proper Procurement processes in place, there’s often been little rigour placed on the selection process of many of our suppliers. We’re left with a long list of questionable quality – and at the end of the day, we all know the service offered by different suppliers can vary significantly.
The first and biggest reason for streamlining your supplier list is efficiency.
Streamline while staying in control
Streamlining your list of suppliers down to a chosen few makes good business sense on many levels – and we’ll go on to outline some of those reasons in more detail in this article – but one thing is important to remember when deciding your approach.
While you can often streamline your processes and save money by being with fewer suppliers, you want to make sure that you’re still in control of who those suppliers are. Several businesses exist which claim to offer you a one-stop-shop for a wide variety of services, and that might seem appealing at first, but by signing up with one of these providers, you’re giving up a lot of control over who actually supplies you.
You’re at the mercy of the business relationships that this aggregator has built – and they don’t always have your specific needs or best interests at heart. So, while it makes sense to streamline, it also makes sense to retain a level of control. The aim is to retain a core group of specialist suppliers, experts in their field, capable of delivering the best possible service – a service that’s right for you.
Reason 1: Efficiency
The first and biggest reason for streamlining your supplier list is efficiency. Fewer suppliers means less admin, at each stage of the operation, from ordering, through to finance and auditing. Each additional email, each extra call, every ancillary transaction adds cost and inefficiency to your business, by way of wasted time and effort.
What might not seem like a lot for one colleague, might actually add up to significant effort for other areas of the business, even more so when you add it up over months and years. Particularly in this post-Covid landscape, where many businesses are facing tough challenges, it’s more important than ever to ensure that we’re operating as efficiently as possible.
Reason 2: Lower Costs
By streamlining your supplier list, you’ll naturally find opportunities to consolidate your business with a few key providers. In doing this you’ll become more valuable to them, and often find it possible to negotiate the best possible rates. When you compound these direct cost savings with the indirect cost savings you’ll make through reduced administration, it can really start to make a big difference to your bottom line.
Reason 3: Stronger Relationships
As with the previous point, by consolidating your business you’ll often find yourself a more significant partner of many of your suppliers than you were previously. This will, in turn, often lead to the building of better business relationships between your two organisations. Whether we’re talking pre or post-Covid, in the digital age or otherwise, relationships are still hugely important in business. Strong relationships build loyalty and trust and pave the way for plain sailing long into the future.
Retain a core group of specialist suppliers, experts in their field, capable of delivering the best possible service.
Reason 4: Better Service
Often a symptom of our last point, but important nonetheless, you should be placing a better service at the top of the list of objectives from any streamlining exercise. Not all suppliers were created equal. Many will compete solely on price and profess that the product is the same regardless, but it’s simply not the case. Long-term success can be built on buying quality, and part of that is insisting on the best possible service. All the efficiency savings outlined above can fade away if you spend a lot of time and effort making queries and resolving complaints. As well as considering who’s offering a fair price, you should consider who’s most likely to deliver those strong relationships and that better service over the long haul.
Reason 5: Lower Risk
Last but by no means least, risk is a huge factor, particularly in these testing times. While we want to support our supply chains and the wider business community, it’s important to protect our own ability to provide for our customers and colleagues long into the future. In the current business climate, the risk of suppliers going into administration is higher than ever. If possible, you should consider choosing a suite of suppliers who are in robust financial shape, giving you the peace of mind that any investments or purchases you make with them are going to be as safe as they can be.