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What is Vendor Consolidation and why Does Your Business Need it?

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Dealing with multiple single vendors can create “invisible” but significant costs for small to mid-sized businesses. Conversely, your company is viewed as an “Individual sale”, so they adjust their pricing models to seek maximum profit from each account they sell.

 

Add a few more vendors to the mix, and just like that, your business is most likely paying “retail prices” for the products and services you need. Many vendors offer their products and services in a “bundle” or “volume discount” but with this, you may sacrifice the quality of the product or service they will provide to your business. Vendor consolidation can help you make both dollars and sense!

 

So, what is Vendor Consolidation? 

 

Vendor consolidation is a strategic move to reduce or consolidate the number of vendors being used from many to just 1 or 2 trusted partners.  Of course, the ability to achieve this will depend on the variety of products and services needed. Because Kismet PEO provides access to everything you need for the employee side of your business, you can quickly and efficiently consolidate vendors.  

 

Here are five benefits on why vendor consolidation with Kismet PEO can immediately help your business:

 

Reduction of Operating Costs

    • When it comes to vendor consolidation, two cost factors need to be considered – hard costs, the actual price you pay for them, and soft costs – the internal cost you pay for procurement (time, fuel, shipping, etc.).  A single-source vendor can provide volume discounts, and eliminate soft costs, resulting in an overall reduction in operating costs.  

Time Savings

    • Reducing vendors also comes with the ability to significantly reduce time spent on administrative processes. The higher the number of vendors you use, the more administrative work there is needed for each. This includes multiple meetings/negotiations to entering data into internal systems, transactions, and other communications to maintain the client-to-vendor relationship.

Increased Buying Power

    • When a business reduces its vendor base, purchasing power is increased.  By procuring more resources from a single supplier, the partnership can be leveraged to receive more for less money by achieving economies of scale.

Enhanced Business Forecasting Visibility

    • With many vendors, it’s often hard to create an accurate forecast for the years ahead. Vendor consolidation allows your business to communicate one-on-one with your trusted partner to help your business see the bigger picture, from both your side and theirs.  Working together against a multi-year plan helps to minimize and mitigate potential obstacles, on either side.

Improve Vendor Relationships

    • The more vendors your business has, the less time you have with each. One of the most significant benefits of vendor consolidation is the ability to build more robust, trustworthy, stable, and long-lasting relationships that will pay dividends over time.

 

Partnering with Kismet PEO can immediately assist you with vendor consolidation for the employee side of your business – through us, you can access necessary insurance coverages, valuable employee benefits including 401(k), assistance with Human Resources and Labor Law compliance, payroll and tax processing, powerful training solutions, employee handbook, and much more!  


Interested? To learn more about how Kismet PEO can help your business, click below! 

CONTACT US NOW!

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