There are many benefits when an organization reduces its supplier base. Many companies have a large and extensive database with all kinds of different suppliers. Each supplier uses its own price, has its own invoice and subsequently its own payment term. All this has to be taken into account and that costs a lot of time and money. So it brings many advantages if this file is reduced. What are these benefits? Read on quick.
One supplier, one invoice and one payment term
Replacing a large group of suppliers with one supplier means that there is only one point of contact, one invoice and therefore only one payment term. Because this supplier base is reduced, this saves a lot of time. Only one invoice needs to be taken into account and this time can therefore be spent on other useful matters. Think of things like improving internal processes. Often these kinds of things are not put at the top of the agenda and therefore often snowed under by other tasks. The time left by reducing the supplier base can be used for this. Invoice management can therefore be arranged much more efficiently.
In addition, a lot of costs can be saved. Time is money, but that’s not all. Internal costs can be saved by up to 21%. This allows you to limit the total costs, this is also called the TCO: Total Costs of Ownership. This includes costs that go beyond the purchase price of a product, such as costs for maintenance, acquisition or any training that must be done by employees. By reducing the supplier base, you ensure that a large part of the internal costs are saved.
What does this mean?
This means that both money and time can be saved by replacing the large group of suppliers with one large supplier. There are of course many more ways to save time and money, such as analyzing the indirect purchasing process. Indirect procurement refers to all goods that support the core activities of the organization.