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Consolidating the Supply Base Is a Supply Chain Priority

May 31, 2011
Ending the practice of off-contract purchasing could help companies control costs

Supply chain and procurement professionals in attendance at the recent ISM conference agree that one of their top priorities for the next 12 months is controlling costs. But after several years of cutting spending, when asked in a survey from Rearden Commerce about where they’ll look for the next layer of savings, there’s a surprising lack of consensus:

● 32% believe more spending should be under procurement’s control.
● 28% say that enterprise-wide visibility into spending is the key to keeping costs down.
● 23% think that putting an end to off-contract purchasing will make the biggest dent.

Among survey respondents, there is one area of general consensus: 60% place consolidating the supply base at the top of their agendas. But while reducing the number of suppliers may reduce the management burden, this strategy can in fact, increase off-contract spending, as users feel that the choices they have aren’t able to meet their needs.

The key to maximizing choice, while minimizing complexity, is to create a shared environment where both the user and the procurement team can access, engage and transact with many suppliers.

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