Low cost country sourcing - Part 5

TIP 5: Consolidate the number of suppliers
When you find the right low-cost country supplier, use them. By consolidating supplier networks and focusing more spending with a handful of key suppliers, companies can generate more than $50 million in savings per $1 billion of spending and significantly reduce the cost of procurement, concludes a July report from The Hackett Group.
"As you reduce your suppliers, you will get incremental savings, as well as risk reduction, because you're spending your crucial time with a crucial few [suppliers]," notes Hackett Group Director Pierre Mitchell.
Companies will realize savings, in part, by increasing purchase volume from a single supplier; there will be fewer or no surprises, because the company will be familiar with the supplier; and, by locking in critical capacity and early availability of product, it will mitigate supply risk and the chance of a shortage.

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