What do you do if your supplier sourcing costs are too high and you need to increase resilience?

If supplier sourcing costs are too high high resilience is still possible by: i)Firstly reevaluate your requirements: Analyze performance deliverables stated in the SOW if this meets the Customer requirements or exceeds Customer performance requirements If these exceeds then plan cost avoidance by re-engineering scope deliverables just to meet or very slightly exceed Customer expectations ii)Reevaluate Procurement strategy: a)Here remove tail spend vendors and consolidate vendor base by reducing fragmented spend vendors.This will also reduce cost thru' volume leveraging b)Treat your suppliers as Partners in Progress and establish transparent Supply Chain c)Establish long term contracts d)Supplier Development e)Supplier enabled Innovation

Relaying on a single vendor may be risky. Market should not be in monopoly form. So diversify your vendors. Negotiate with existing vendor and try to know the actual root case for cost high and try to solve the problem with JV. Explore local Sourcing and try to develop new vendor Develop and invest on technology and develop strong supply chain management.

If supplier sourcing costs are too high: Negotiate Better Terms: Work with current suppliers to negotiate more favorable prices or payment terms. Alternative Suppliers: Research and secure more cost-effective suppliers without compromising quality. Volume Discounts: Consolidate orders to achieve bulk purchase discounts. Process Optimization: Streamline the sourcing process to eliminate inefficiencies. Local Sourcing: Consider local suppliers to reduce transportation costs and lead times. Automation: Implement automation tools for routine sourcing tasks to cut labor costs. Supply Chain Resilience: Diversify the supplier base to manage risks and ensure supply chain robustness.

It’s always beneficial to explore alternative suppliers, but I begin by understanding the operational model of each supplier in the category. This insight helps identify value levers to optimise the services we purchase and challenges the performance of our current suppliers. Depending on the relationship and activity level, as well as how our segmentation has evolved, this approach has often allowed me to retain a preferred supplier while managing both fixed and variable costs through their services. Where supplier engagement has not been effective I have taken the activities to market to leverage additional value and insights learnt, this initial step is fundamental in my strategy however.

To reduce high supplier sourcing costs and increase resilience, optimize logistics. Consolidate shipments to reduce transportation expenses. For example, bundle orders from multiple suppliers into one shipment. Implement just-in-time inventory management to minimize warehousing costs and inventory holding. Utilize technology like route optimization software to streamline delivery routes and reduce fuel consumption. Negotiate contracts with freight carriers for better rates. By optimizing logistics, you can lower costs and enhance resilience in your supplier sourcing process.