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filler@godaddy.com
Consolidation of spend with fewer suppliers is one of the simplest but most effective sourcing strategies available. However, many people underestimate the value that can be obtained through this strategy & overestimate the value of the relationship with their existing suppliers.
Consolidating your spend creates a number of changes within the prospective supplier base that is advantageous to you, specifically-
· Your combined spend will probably put you into a higher category of customer, which brings a lower price point. This level should not be underestimated, as a change from a small account to a large account can mean a change of pricing of up to 50% in some industries.
· As a large customer account you will receive a dedicated account manager across the entire group, who can help with areas such as standardisation, issue escalation & price symmetry.
· Standardisation of pricing, products, commercial terms & logistics now becomes possible.
· In most case, contracts can be negotiated on customer terms rather than supplier terms, leading to important commercial & legal changes.
· Ongoing, consolidated reporting can be made available, allowing businesses to have a top down view across all sites to track total spend, product standardisation & compliance levels.
Recent Example
Spend Solutions recently completed a sourcing project for interstate vehicle transport on behalf of a prestigious dealership group, who had 9 sites across 3 states. Traditionally each site managed its own suppliers & as such had different suppliers and terms in place across each site.
By conducting a market tender & identifying a preferred supplier to support the entire group, Spend Solutions was able to identify a 19% annual savings for the client. In addition, Spend Solutions was able to negotiate improved commercial terms, establish ongoing reporting & appropriate performance KPI’s to ensure ongoing supplier performance.