1. Dependence on one supplier for monopolistic goods and multiple for standard goods 2.

As a result too many uncritical suppliers tie up resources. 3. Supplier Consolidation means shifting to strategically important ones by eliminating smaller ones

4. Reduction in number should be along with an increase in communication, partnership etc with existing suppliers

How it is done?
Variety of ways of doing it but all begin with the

gathering of data. MRP run would be a good place to start Analysis to find the details pertaining to similar items The criteria for grouping should be broad based Invitation of quotes from most likely suppliers based on the package demanded Negotiation and choosing of preferred suppliers Changing over to these suppliers in a consistent manner

Results
Headcount in terms of Procurement, accounts

payable, and receiving staff is reduced The consolidated spend is leveraged and lower prices are negotiated Because they are getting a much larger part of your business, could share cost issues

Bundling Across Generations

Most applicable in project business
Avoid the treatment of project as a one time affair Concessions are obtained from suppliers on the

current project on the basis of agreement for future project Development costs can also be shared if same product WILL be required in future