In multi-branch and franchise location companies, single sourcing has been proven to lower product costs over the past decade by leveraging purchasing with fewer suppliers. However, this is just a small portion of the savings possible when strategically outsourcing to a single, trusted provider.
A symbiotic relationship between a company and committed supplier allows both parties to learn about one another. This results in an in depth exploration of all costs that go into procurement, distribution and the accounting process that surrounds the efforts resulting in the development of solutions to drive those costs down. Potential areas of savings include:
- Labor costs through accounting simplification and branch ordering simplification
- Worker’s compensation costs
- Office space utilization
- Inventory obsolescence
- Brand consistency improvement
- Elimination of rush charges
- And of course reduced item costs
When considering a single-source strategy, if your potential provider promises only a reduction in hard dollar costs, ask them how much proven cost savings beyond those hard dollars you can expect. If they don’t have an answer, they might not be the right partner for you.
President and CEO