Supply Base Consolidation

Jul 25, 2023

Why Supply Base Consolidation is Important

Consolidating your supplier base can be a very worthwhile objective.  Businesses can attain a competitive advantage by relying on fewer approved suppliers, therefore today many companies are looking for ways to consolidate their supply base.  Through the consolidation process, businesses see improvements in pricing, such as reduced transaction costs and cost reductions by cutting unnecessary logistics and warehousing expenses.  Businesses see an increased focus on product development, quality, and overall service responsiveness.  These are just a few benefits when companies start implementing supply-base consolidation.

What is Supply-Base Consolidation?

In order to fully understand the benefits of supply-base consolidation we must first define what exactly it is. Supply base consolidation is the process of reducing the number of suppliers your company uses to receive products from. You continue to buy the same amount or more products, just from a fewer number of suppliers. Whether you decide to consolidate your parts supply base or you are consolidating a process within your company, they both need to follow a set process. You should think about this process in three similar steps to these three A’s.

  • Analysis
  • Application
  • Assessment
Analysis

During the analysis stage, you should work with current suppliers to understand your parts needs. A strong supplier should understand your current usage, what kinds of parts you use, and how you take your deliveries. Keeping suppliers that intimately know the needs of your company will help you produce parts faster and cost-effectively. Another important aspect in the analysis stage is understanding the relationship which you have with that supplier. A trusting relationship with your suppliers will help take your company to the next level, knowing these suppliers will come through for you during tough times will help you make effective business decisions.

Application

In the application stage, you will put the decided-upon strategy into effect. This strategy consists of cutting off old/dead suppliers and building relationships with the picked suppliers that will help your company grow into the future. Developing a deeper relationship with your supplier will help you better understand the long-run capabilities that each has when going into the assessment phase.

Assessment

The main question in the assessment phase is “Did we make the right decision”? After a set amount of time, you should be able to look back on your decisions as a company and see what/who did and did not work. Do more suppliers need to be cut because they can’t handle an increase in activity with your account? Do new and more capable suppliers need to be added? These questions will help with continuous development, and turn your supply base into a well-oiled machine.

Supply-Base Consolidation at AxisNorth.

At AxisNorth, we take pride in and promote our ability to successfully consolidate our current and new customer supply base.  Rather than managing dozens of vendor relationships, our customers can narrow down their supplier base and turn that task over to us.  Executed correctly, vendor consolidation provides immediate benefits to an organization.

How does the consolidation process work with AxisNorth?  We work with several different vendors in the polymer world, with capabilities in many different processes.  We start off by taking the smoothest transition possible, we work with our customer’s current suppliers and take over that particular component(s) with the existing supplier.  If the part(s) are deemed to be moved right away, we work with many ISO-certified manufacturers in all processes so that we are able to confidently find a suitable supplier for a particular polymer component.  We have been involved in helping with supplier consolidation for many years, we know the course.  AxisNorth is a single source of supply for all polymer components.  In the polymer world, our options are numerous.

When you reduce your supplier base, you lay the groundwork for continually reducing your costs to run your supply chain.  Get started today and let us help with your supply base consolidation task.