Implementing a World Class Purchasing Organization

Companies have hundreds of vendors, some have thousands, many have thousands, even tens of thousands. Having thousands of vendors in your system, not only takes a considerable amount of maintenance, it can also be extremely costly. If a purchasing department orders items from twenty different vendors each day, that can mean twenty purchase orders that have to be sent, twenty shipping costs that need to be paid and twenty goods receipts that need to be processed when the goods arrive. In addition the added costs, there are probably savings that are not being realized. How many of those twenty vendors sell the same or similar products. If the twenty vendors are reduced to five, then the processing costs will be reduced and probably the cost of the material has been negotiated lower.