Vendor Consolidation – How It Benefits the Business (Part 2 of 2)
Ethan Healy Junior Consultant
What is the key benefit of vendor consolidation?


Welcome to the second and final blog on how you can consolidate your vendors in order to reduce the level of costs and risks placed on contractual agreements, as well as across the whole of the vendor relationship lifecycle. Take a look at part 1 of this short blog series if you haven’t yet done so, before reading this second blog.

Vendor Consolidation is the idea of selecting and reducing your vendor count in order to enable specific and targeted focus on those vendors which have the most effective contribution to the strategic alignment of your business. This is all dependent on their competency across the market, selecting the best and most suited propositions that will help to continue improvement across your organisation.

In today’s age, it can be a strain to find cost-saving initiatives, especially across the manufacturing industry for example. But, as costs continue to increase, especially with the uncertainty and speculation of the UK’s Brexit campaign, it becomes a lot harder for suppliers to reduce their costs whilst making financial gains at the same time. But with vendor consolidation, you can enhance your strategic outlook across the supply chain by reducing contractual costs, reducing process costs, reducing risk and improving upon supplier relationships.

In this second blog, I’ll be talking about how vendor consolidation can help your business reduce any risk to the relations and continuity of your business, in alignment with the vendors that are key to supplying certain services or products that matter most to the business.

Vendor Consolidation Brings:

3. The Mitigation of Risk Across the Supply Chain

If you are relying on a fewer number of vendors across your portfolio, this will reduce risk significantly, allowing your company to spend more time improving compliance and legal policies. With fewer vendors to manage on a consistent basis, you can focus on those that matter most to the business, and therefore obtain better focus on the risk and resilience mechanisms of those primary vendors. All applicable risk management can also be distributed evenly and with larger margin across the smaller, more effective set of vendors. If there isn’t an improved margin of risk management for each vendor, this can have damaging impacts to your organisation, as it may cause you to lose them due to continuity reasons, or due to a deliberate breach of security regulations from bad relationships. So, that is why consolidating your vendors is also crucial in sustaining good relations with the most key vendors, in order to maintain these relations across the long term.

4. Better Sustained Vendor Relationships

The fewer vendors there are to manage, the easier it is to focus on building relationships with the most important vendors. Consolidating your supplier base can mean that your relations retain a larger portion of the market share, which can be seen as beneficial in the long run for your vendors, which may lead to extra benefits for your business. This can include lower costs for the larger stocks or requests for service you receive from those vendors, therefore improving the overall optimisation of costs from your vendor management program. Fewer vendors also allow for more time to focus on the mid-cycle of your contractual obligations, as well as improving the quality, efficiency and overall performance of your core vendors.

This improved management of your vendors can be done through the use of a solid vendor management strategy, organising and tracking your vendor’s performance and any reviews you need to hold with them based off of specific topics, circled around the contract in place. This ultimately results in an effective branch of vendors, allowing you to continually improve upon your mission as an organisation.


We hope this short series of blogs were beneficial in learning how having a solid vendor consolidation strategy can help to improve the stability of your vendor relations. Good luck in establishing this effective consolidation strategy built around the benefits explained in this series.

What’s next?

Vendor Consolidation – How It Benefits the Business (Part 2 of 2)

Consolidating your vendors can have a positive impact towards the business. Reduce your level of costs and risks placed on contractual agreements across the whole of your vendor relationships.

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