cal popken

I used to love going to my local True Value store when in need of hardware. I much preferred it to the big box Home Depot and Lowe’s stores. I figured my time was worth more than having to navigate those huge stores assisted by indifferent people who knew less about my project than I did. I knew that I might pay a bit more for the product, but factoring in superior assistance and significantly less time spent in the store, I felt it was worth it. Now that my little store is no longer in business, I will frequently go online to purchase the products I need, since I consider this a much better use of my time.

In business, where time is truly money, we still see antiquated purchasing processes whereby several procurement employees are spending an inordinate amount of time shopping for the lowest possible price. A simple exercise in totaling up these employees’ salaries and benefits factored against any monies saved on purchases will no doubt reveal that the company is actually losing money on these endeavors. A business must ask itself this question: What if these employees’ time was spent on growing the business rather than saving few dollars here and there? Further, it should ask if these purchasing employees are even needed at all.

In this economy a vendor must be competitive in price to stay in business. To spend much time shopping for the lowest possible price is a waste of one’s resources. Instead a business must find a vendor that offers a system which makes purchasing an efficient and effective process, requiring as little time as possible to complete the task. GPnet™, an online supply chain efficiency system, is one such system. The time required to procure an item a business needs is drastically reduced, and prices are often lower due to the purchasing power of the vendor.

Cal Popken
COO

You may be surprised that the answer is one. Well, maybe more than one but certainly far fewer than typically found in most organizations. In our experience, we find that many companies manage relationships with 20 and up to 100 vendors. Considering the hard and soft dollar costs associated with managing multiple vendors, organizations should clearly invest time in consolidating their purchases.

Consider the following benefits. There are many other compelling reasons to consolidate vendors but I think these are the top three.

One Place to Call
As with any vendor relationship there will be occasions when problems and questions arise. It is far less costly and fosters much better communication to hold accountable one contact source as opposed to many within your supply chain.

Simplified, Repeatable Processes
Fewer vendors result in ordering procedures that are greatly simplified and easily retained as opposed to all the differing methods of ordering with multiple vendors. The benefit is clear with the resulting savings in time to process an order.

Negotiation
There are always times when prices must be negotiated and re-negotiated. It is much easier to negotiate with one or two vendors that you do considerable volume with rather than 20 or more from whom you purchase much less. You’ll also have better results.

What to Keep in Mind

A few organizations are hesitant to “put all their purchasing eggs in one basket,” because problems can arise if a vendor doesn’t continuously innovate and bring new capabilities to market or struggles to remain financially viable. To minimize the downside of working with fewer vendors, companies must make sure that the technology and services offered by those few vendors address their requirements. Customers shouldn’t settle for average technology and service just to reduce the number of vendors they work with, since the savings will just be offset by higher operating costs (manually completing tasks, external counsel fees, etc.).

Golden Pacific Systems and its flagship product GPnet™ are continuously innovating in order to offer service levels unsurpassed in the industry. This supply chain technology can make your dream to consolidate vendors a reality.

Cal Popken
COO