Supplier Rationalization: Alive and Well Across the Pond

Might the Brits be getting a bit too giddy over the benefits of supplier rationalization? In the above-linked post to E-Sourcing Forum, David Bush and his associates tipped me off to an article in Supply Management that suggests that over 75% of UK procurement organizations are looking to rationalize their supply base. Granted, the sample size is small (100 companies), but it's at least a directional indicator, if anything.

Even "green" is creeping into the benefits bucket for such initiatives. According to one UK-based practitioner quoted in the article, "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." I never thought about the sustainability angle as it relates to supplier rationalization before. But it makes sense. Fewer suppliers means fewer resources required to manage them (which means less paper and fewer flights or other polluting visits to suppliers). But at the same time, supplier rationalization efforts can also increase supply risk as well by limiting a company's options and back-up plans if a disruption, quality issue or supplier bankruptcy occurs.

- Jason Busch

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