PurchTips - Edition # 222

 

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Picture of Charles Dominick, SPSM, SPSM2, SPSM3

Can Supplier Consolidation Truly Save Cash?

By Charles Dominick, SPSM, SPSM2, SPSM3

Is Savings Through Supplier Consolidation A Myth?

Reducing the number of suppliers they do business with is a common procurement department goal. Driving it is the belief that supplier consolidation saves money.

But does supplier consolidation truly save money?

The answer is "maybe." Simply reducing the number of suppliers you use does not, by itself, save money. Supplier consolidation only saves money when at least one of the following three results is realized:

Result #1 - Headcount is reduced. Procurement, accounts payable, and receiving staff all deal with suppliers. So having fewer suppliers to deal with should mean that a proportional decrease in headcount - and, thus, personnel costs - is warranted, right? You may argue that having fewer suppliers will free up procurement professionals to do more strategic work. And your thinking would be safe if Result #2 is true.

Result #2 - The consolidated spend is leveraged and lower prices are negotiated. It's Procurement 101: the more volume of business you do with a supplier, the higher discounts you should be eligible for. With the same volume being supplied by fewer suppliers, you should be pushing for and receiving lower prices.

Result #3 - Work billed on a per-supplier basis is reduced. I can't think of many examples where you incur and can associate a common cost with each supplier. One thing that comes to mind is the pending legislation in the USA that will require businesses to file a 1099 form for every supplier with whom they spend $600 or more per year. Companies are likely to outsource this annual work. So, because there is a specific task done for each supplier, fewer suppliers will mean fewer tasks done which will mean lower costs.

It should now be clear that supplier consolidation is a means to an end, not an end in itself. If you have implemented, or are considering implementing, a supplier consolidation goal, be sure to have a plan on how you will direct your supplier consolidation to produce these results. If you are just doing supplier consolidation for the sake of having a lower number of suppliers, you're doing it for the wrong reason.

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Spotlight On Professional Development Opportunities

SPSM Certification

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.

You see, today's employers refuse to reward employees for yesterday's skills.They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.

Is lacking a purchasing certification keeping you from getting the results, opportunities, respect, and money that you want out of your career? Today's employers refuse to reward employees for yesterday's skills. They want you to save more money, achieve better operational performance, and reduce risk. They demand that purchasing professionals like you achieve unprecedented results and without the most modern skills that can be a challenging feat!

So how can you acquire the most modern skills, achieve meaningful results, and convincingly prove your capabilities to today's employers? There is an impressive purchasing certification program that will teach you what you need to accomplish all of this and more. It is the SPSM® Certification, earned by completing the Senior Professional in Supply Management® Program. And you could earn it in less than a year - maybe even much less than a year!

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) (with the option of getting a Study Guide on an iPad) at:

Distinguishing yourself as an achiever in purchasing is key to sustaining a rewarding career, even in these difficult economic times. Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) at:

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices  into your organization and achieve your career potential. And if you sign up for the Senior Professional in Supply Management® Program on or before May 31, 2008, SPSMSM Certification Program on or before 4/30/2007, you also get these and other bonuses valued at over $700:

  • FREE $30 gift certificate to Amazon.com!
  • FREE CD-ROM with printer-friendly versions of the class materials!
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To learn how to earn your SPSM® Certification and get these valuable bonuses, visit:

Earning your Senior Professional in Supply Management® (SPSM) Certification is the action to takeif you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSMSM Certification at:

Learn how to earn your SPSM® Certification at:

www.NextLevelPurchasing.com/spsm.html

The Latest Purchasing News

  • Purchasing Managers/Directors: Discover your team's potential! Learn how: http://goo.gl/asBg
  • Considering a career move?  Browse jobs preferring candidates with the SPSM® Certification  at:   www.NextLevelPurchasing.com/jobs  
  • The survey participant who won the $30 Amazon gift certificate is Tom Holbrook, a Senior Buyer from Shoreview, Minnesota, USA!
 

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This Starter Kit gives procurement professionals like you a clear idea on what it will take to become certified. You'll get an excellent feel for what you will need to learn and how long it will take.

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Included in your free Starter Kit:

  • Access to two lessons from courses that are part of the Senior Professional in Supply Management® Program
  • A Certification & Training Planning Template
  • Case studies
  • A free Basic Membership in the NLPA

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If you are already a member of the NLPA, click here to login and visit the "Starter Kit" tab to access these resources.