This document outlines supplier rationalisation; part of the Procurement service, its benefits and the process. To minimise risk to the business, strategic measures and a disciplined approach are used to identify the optimum number of suppliers needed to fulfil the company’s requirements.

1. SamanthaCoombsJune 2012
Procurement Service: Supplier Rationalisation
Thisdocumentoutlinessupplierrationalisation;partof the Procurementservice, itsbenefitsand the
process.To minimiserisktothe business,strategicmeasures andadisciplinedapproach are usedto
identifythe optimum numberof suppliers neededtofulfil the company’srequirements.
The Process
Thisservice hasa numberof effective stepsthatcan be managedbythe Procurementdepartment.
Broadlythese stepsare as follows:
• Categorisation: placingdisparate butlike suppliersintoone commonentity, thisgenerates
immediate budgetsavingopportunitiesbackedbycorrect vendordata.
• SpendAnalysis: determine the costsaving optionsavailable fordifferentcategoriesof
spend,dependent uponthe marketdifficultyandamountof spend.
• Scorecards and KPIs:measuringsupplierperformance againstbudget,service level
agreement,statementof work,customersatisfaction,costcompetiveness,resultingin
continuous improvement.
If WorkingLinkswant accessto increasedspecial discounts,thenthe procurementdepartmentwill
advise onthe route to be taken.These stepsinclude:
 Strategicmeasures:Supplierpositioningisrankingvendorsonhow muchwe spend vs.
assessingriskshouldasupplierfail todeliver.
 Supplierrelationshipmanagement: identifywaysof workingsmarterwiththe supplierswe
have,andhow theycan workwithus to generate real gainsandmake a difference tothe
performance of ourorganisation.
 KeyPerformance Indicators:combiningdifferentmeasurementsof “quality”intoone single
measurementof overallperformance byassigning“weighted”valuestoeachkeyelement
(or KPI) performedbythe supplierandcalculatingaweightedscore that can be usedto track
the supplier’sperformance.
Choosingnewsupplierscanbe a time-consumingandriskyprocessbecause youknow solittleabout
the othersuppliers.Thisprocurementservice reducesboththe time andthe risk,because we'll only
recommendsuppliersthathave passedcompanyqualitychecksandhave a track recordwithus.
Everysavinggeneratedcanbe put towardsprojectsprovidingyoungpeoplewithanopportunityto
gainnewskillsandsustainableemployment.