The Value of Spend Consolidation

• Consolidation of spend with fewer suppliers is one of the simplest but most effective sourcing strategies available. However, many people underestimate the value that can be obtained through this strategy & overestimate the value of the relationship with their existing suppliers.

•  Consolidating your spend creates a number of changes within the prospective supplier base that is advantageous to you, specifically-

• Your combined spend will put you into a higher category of customer, which brings a lower price point. This level should not be underestimated, as a change from a small account to a large account can mean a change of pricing of up to 50% in some industries.

•  As a large customer account you will receive a dedicated account manager across the entire group, who can help with areas such as standardisation, issue escalation & price symmetry.

•  Standardisation of pricing, products, commercial terms & logistics now becomes possible. 

•  In most case, contracts can be negotiated on customer terms rather than supplier terms, leading to important commercial & legal changes.

•  Ongoing, consolidated reporting can be made available, allowing businesses to have a top down view across all sites to track total spend, product standardisation & compliance levels.

Examples, of where these principles delivered bottom value benefits:

• Tendering consumables using 80/20 parateo, we have succeeded in delivering a sustained saving of 15% across a spend of $35m

• Drilling tenders, consolidating blast and drill with core drilling, delivered an annual saving of 20% across of a spend of $150m

• Reagents, sourcing through new markets, while maintaining specification tolerances, delivered an annual saving of 10%, along with surety of supply.