A lean supplier network offers many advantages, some monetary, others process-related. It is no wonder that more and more companies are consolidating their procurement structures and, in the rubber and plastics sector, are switching to sourcing materials from as few suppliers as possible. But this strategy also harbors risks. Before decision-makers consolidate suppliers, they should therefore analyze exactly which procurement strategy is optimal for them.
Consolidating procurement structures does not necessarily mean giving up the benefits of an extensive network. Many rubber and plastics producers have contacts with sub-suppliers and can outsource tasks if necessary. In this case, the coordination effort lies with the production partner. There are often also financial advantages, as suppliers can achieve higher economies of scale with sub-suppliers and have more leeway in contract negotiations. In this way, it is possible for customers to outsource part of their own supply chain management.
A consolidated supplier structure makes it possible to build closer relationships with individual service providers. If purchasing no longer has to divide its attention among a large number of suppliers, collaboration becomes easier. People know each other, have worked together several times in the past and know what is important to the other side. Conflicts are less likely to arise as a result. Networking of the IT systems is also possible in this scenario, so that a resource requirement on the customer side automatically appears as a purchase order in the supplier’s system and, in return, invoices are automatically made available to the customer’s accounting system.
If a production company decides to purchase non-standard injection molded parts from several suppliers in parallel, multiple molds are required, whose costs are reflected in the purchase price of the components. In this case, the advantages in terms of delivery reliability resulting from redundancy are relativized by the rising costs. A consolidated procurement strategy has financial advantages in contrast. This may be a special case that is only relevant for the rubber and plastics sector. However, decision-makers should not ignore it.
It cannot be denied that focusing on just a few suppliers always creates potential bottlenecks, in some cases even a single point of failure. If a preferred supplier has delivery problems at short notice, it is often difficult for the customer to find a replacement in time. This risk can also be minimized by choosing supply partners who themselves maintain an extensive supplier network. However, the organization of this network is not in the hands of the company, so there is always a certain degree of uncertainty here as well.
Whether the time and effort involved in supplier consolidation is worthwhile ultimately depends on the company. Many decision-makers are reluctant to give up the enormous flexibility offered by an extensive supplier network. A valid point of view. However, there is no denying that this procurement strategy generates costs and places an additional burden on purchasing. Every company must carefully weigh both sides. A good compromise is often to seek cooperation with rubber and plastics suppliers who themselves maintain an extensive network of sub-suppliers. In this way, production companies benefit from the advantages of supplier consolidation while mitigating its disadvantages.