In the recent past, businesses contracted with countless suppliers to boost competition between suppliers and reduce costs. However, the buyer-supplier relationship was price-based. Describe five to seven methods to reduce a supplier base?
In the recent past, businesses contracted with countless suppliers to boost competition
between suppliers and reduce costs. However, the buyer-supplier relationship was price-based. Describe five to seven methods to reduce a supplier base?
Supply base optimization is the process of determining the appropriate number and mix of the suppliers to maintain. Even though it is referred to as rightsizing, it usually refers to reducing the number of the suppliers used. Optimization requires an analysis of the number of the suppliers required currently and in future for each of the purchased item.
The various methodologies and steps required to reduce the supplier base are as under,
1. Understanding the supply base:
This is achieved through reviewing the spend analytics and stratifying the current suppliers quantitatively by how much is spent with them and how often it is purchased. Qualitatively, it is important to assess the supplier's performances, services
2. Selecting suppliers based on the needs:
Once the analysis is done on the current suppliers, deciding on them is the next step on creating the efficient base and they are categorized into the following types,
a) Strategic and broadline suppliers.
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