Benefits of Vendor Consolidation
Vendor consolidation talks about the act of only using a single vendor to assist lower the requirement of speaking to several vendors for products. While certain companies prefer having multiple vendors for every product category that they buy, vendor consolidation offers financial and operational benefits that cannot be overlooked. Find out benefits of vendor consolidation by reading the following article.
1. Steady supply
When you work with one vendor, it is likely that the vendor will understand your organization’s needs, growth plans and production schedule. The vendor may even assist you plan for your deliveries, ensuring that you constantly have all the materials that you need for manufacturing your products. A regular supply of materials and products from one vendor means that you know whom to call any time the materials are defective or late. This makes materials management less costly and also simpler.
2. Increases quality
Organizations that have firm rules regarding vendor qualification usually benefit from great quality with regards to both their services and vendor’s products. Improving the quality of incoming materials eliminates the chance of delays in production because of returns. Furthermore, a sole vendor will be more willing to ensure that they offer the best service so as to get commendations to other businesses.
3. Enhances buying power
An instant advantage of vendor consolidation is that it increases the organization’s buying power on materials and parts. Through only dealing with one vendor, a company is basically enhancing the parts and volumes count that they purchase from the selected vendor. Moreover, the company ends up with highly promising pricing on parts and materials. An added advantage is that a company using one vendor can consolidate numerous shipping charges to a single charge.
Vendor consolidation does have some drawbacks also. In most cases, it is not easy to locate one vendor who meets all your requirements.