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Reducing the supplier base: here’s why

Many companies can save a lot of time and money by reducing the supplier base. It often happens that companies have a large database of suppliers. This means that each supplier must also be treated separately. You therefore have multiple points of contact and also multiple invoices that need to be processed. This takes a lot of time and therefore money. What are the benefits of reducing the supplier base? You can read that in this blog.

Reduce to one supplier

A major advantage of reducing your organization’s supplier base is that you go from thousands of different suppliers to one supplier. This means that you only have one point of contact, one invoice that must be paid and therefore only have one payment term. Ideal, because this way you can save a lot of time. This makes invoice management within the organization more efficient. You can spend the time on other useful things, such as optimizing other internal processes or focusing on strategic issues. This is often left behind because it is not necessarily high on the agenda.

Lower the TCO

By replacing a large group of suppliers with one large supplier, you save money. And that also lowers the TCO. TCO is an abbreviation for Total Cost of Ownership. This refers to all costs that are spent on purchasing and owning a product or service during its entire life cycle. This goes beyond the costs spent on the purchase of the product, but also the costs for maintenance, acquisition and costs for any training. It is the total amount needed to purchase, maintain and sell the product or service.

You can save time and money in several ways. For example, consider optimizing indirect procurement. This can be properly analyzed to see if this can be done even more efficiently. Indirect procurement refers to all products that support the core activities of the organization.