Tuesday, June 04, 2002

You don't need e-procurement to consolidate suppliers, but the suppliers who "win" will want enforcement. In recent meetings with software vendors in the e-procurement and enterprise asset management market, they admit that you don't really need new systems in order to consolidate suppliers. However, the suppliers that win in your consolidation are not going to give up price concessions without having some assurance that they are going to see an increase in volume. Their fear is that, without a formal system for enforcing their favored supplier status, "maverick spending" will continue to divert business to old local suppliers. Therefore, companies should aggressively pursue supplier consolidation efforts, but be prepared to implement some sort of formal system to enforce rules that really give the business to approved suppliers. Otherwise, you may find suppliers reluctant to give better prices, terms, and conditions.

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