77% of purchasers keen to cut supplier numbers

14 February 2008
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14 February 2008 | Jake Kanter

More than three-quarters of buyers are looking to use fewer suppliers, according to the latest SM poll.

In the survey of 100 buyers, 77 per cent said they were looking to make cuts to their vendor list.

Buyers considering reductions said consolidation would make the supply base more manageable and cost-effective.

"Supplier reduction is a legitimate activity enabling aggregation and optimisation, leading to cost reduction," said James Jaggard, a purchasing consultant.

Stephen Regaldo, procurement officer for the London Borough of Lambeth, agreed: "My colleagues and I advise our procurement officers in all departments to aggregate the number of suppliers we use - using aggregation as a value for money and cost savings tool."

Many purchasers spoke about the need to simply rationalise their supply base.

"The benefits of having fewer suppliers are less administration time, less logistics time, less carbon footprint, less reactive buying and becoming a bigger fish in a few suppliers' ponds rather than a small fish in a large organisation's ocean," explained Sue Fleming, head of the buying team at the Foreign and Commonwealth Office.

Dominic Jephcott, managing director at procurement firm Vendigital, said to rationalise, purchasers must have a good understanding of what each of their suppliers provide: "The challenge in supplier rationalisation is not so much in reducing the suppliers, but in developing the category strategy so that you are clear on what kind of suppliers you want to be left with."

Those buyers who weren't looking to make any reductions argued cutting suppliers was not a decision to be taken lightly, and championed the competition that small firms can bring to the supply base.

"Suppliers should not be reduced just for the fun of it or as a consequence of pressure from management," said Solomon Bassey Okon, managing consultant at materials and operations firm Nisskam and Associates.

Steve Pike, director of global supplier management at international trade consultancy ITS Global, added cuts should be part of a measured process, not a one-off or occasional exercise: "It is an integral part of the constant ongoing lifecycle of your supplier review."

Andy Foulis, contacts and procurement team leader at community and business developer Highlands and Islands, stressed the importance of small businesses: "I believe it is essential, particularly in a market supported in the main by smaller businesses, that as open an approach to competition as is possible should be maintained."



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