I have quite a lot of suppliers for different areas of my business. How do I go about organising them and focusing my energy?
Start by placing your suppliers into different spend buckets!
By tom lauren . Published: 2019/03/25 11:48:21 AM, Last Updated: 2019/03/25 11:49:15 AM Answer URL
Start with the value. Collate your spend data and allocate it by individual supplier, this will then show you where you are spending your money.
Place your suppliers into tiers based on this value. Typically this is 4 tiers, 1 being the highest, 4 the lowest.
We are not saying ignore your lowest tier but these will deliver the least return for your time. Start with the highest ones – a few % saving on a lot of money is always worth having!
We would recommend placing as an overall tier – i.e total supplier spend Irrespective of what they do for you.
Then, place into separate categories based on spend type – do not change the tier!
Once you can see what you are spending by type and how many suppliers you are using to do this, more often or not it makes sense to consolidate your spend. Fewer suppliers who receive more work will generally provide a better service at a better price.
You might find that there are suppliers you really rely on although they don’t get much in the way of money from your business – don’t ignore them and note any key dependencies as you go.