Focus On Vendor Support Structure

Fundamental to achieving financial improvement and reducing expenses is the need for an organization to implement vendor best practices by focusing on the support structure created by its external vendors and suppliers. The quality of this structure typically dictates how efficient (or inefficient) an organization’s business processes are. For example:

  • Relying on too many (or too few) vendors can often lead an organization to take on increased costs and unnecessary operational risks.
  • Having inflexible vendors generally causes an organization to implement inefficient internal processes, thereby impeding scalability and future operational growth.
  • Using vendors that only provide “commodities” and not “solutions” often prevents an organization from taking advantage of leading best practices.

For all these reasons, an effective and sustainable cost reduction program must first start at the base of the supplier tree and continue its way through the organizational branches that rely on it.

 

 

 

 


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