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Cross-selling in purchasing: definition, advantages & goals
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What is cross-selling in purchasing?
Cross-selling describes the strategy of purchasing additional, complementary products or services from a supplier that go beyond the original core business. For purchasing, this enables the use of existing supplier relationships to generate synergies and improved conditions through higher overall volumes.
While cross-selling is traditionally known as a sales strategy, it also offers considerable potential for process optimization and cost savings in purchasing.
The aim is to increase the overall value of the business relationship and exploit synergies. By identifying requirements that can be covered by the extended range of supplier management services, companies benefit from more efficient procurement processes and potential cost savings.
Contents
Advantages for purchasing
Cross-selling offers considerable advantages for purchasing. By expanding the purchasing volume with a supplier, better conditions and discounts can be negotiated. In addition, the administrative effort is reduced due to fewer ordering and handling processes. Close cooperation with suppliers also promotes innovation and enables faster reactions to market changes.
- Expansion of the product portfolio: purchase of additional articles that match the main product.
- Bundling of suppliers: Reducing the number of suppliers by broadening the range offered by a single partner.
- Intensive supplier relationship: building a strategic strategic partnership for long-term cooperation.
The most important advantages and goals:
- Cost optimization: use of volume discounts and more efficient ordering processes.
- Increased efficiency: Simplified processes thanks to reduced supplier diversity.
- Strategic advantages: Stronger negotiating position and closer supplier loyalty.
- Risk minimization: Secure supply through proven partnerships.
Cross-selling in purchasing: from traditional purchasing practices to strategic cross-selling
Building on the theoretical understanding of cross-selling in purchasing, the immense importance of this strategy for modern companies is evident in practice. While conventional purchasing processes are often isolated and focused on individual transactions, cross-selling opens up the possibility of deepening existing supplier relationships and expanding the purchasing portfolio in a targeted manner. In view of increasing market requirements and the need to optimize costs, a transformation from traditional to integrative procurement approaches is becoming essential.
Traditional approach: Traditional purchasing practices
In traditional procurement, companies usually rely on individual suppliers for specific products or services. The focus is on comparing offers and selecting the most favorable supplier for each individual requirement. Tools such as manual ordering processes and separate contract negotiations are the norm. However, this approach leads to a fragmented supplier landscape and increased administrative costs. The main reason for this is a lack of synergy effects, as procurement is not bundled, which leads to missed opportunities in terms and conditions negotiations and a lack of process efficiency.
New: Cross-selling
Cross-selling: The modern approach focuses on cross-selling in purchasing, whereby companies strategically use their supplier relationships to procure complementary products or services. By expanding existing partnerships, requirements can be bundled and negotiating positions strengthened. Innovative technologies enable a holistic view of purchasing volumes and identify cross-selling potential. In practice, companies benefit from improved conditions through volume discounts, reduced transaction costs and closer cooperation with suppliers, which leads to innovations and competitive advantages.
Practical example: Automotive industry
A medium-sized manufacturer of precision tools originally only purchased carbide blanks from one material supplier for its milling tools. Annual purchasing volume: € 2.3 million.
Initial situation in 2023:
- 50,000 carbide blanks per year
- Average price per blank: 46€
- Previous supplier: specialist for hard metals with a broader portfolio
Cross-selling initiative: Purchasing identified that the supplier also offered coating systems and services - an area for which three separate suppliers had previously been commissioned.
Analysis of existing coating costs:
- Annual coating costs: € 1.8 million
- Average cost per tool: 35€
- Delivery time: 5-7 working days
- Quality defects: 3.2% reject rate
Negotiation result of the cross-selling initiative:
1. bundling of carbide blanks and coating:
- Volume discount on carbide blanks: 7% (instead of previously 4%)
- Coating costs per tool: 31€ (11% cheaper)
- Guaranteed delivery time: 4 working days
- Maximum rejection rate: 1.5% (contractually fixed)
2. additional advantages:
- One central contact for both services
- Optimized logistics thanks to fewer transport routes
- Reduced quality checks thanks to integrated processes
- Joint product development for optimum material-coating combinations
Financial impact per year:
- Savings on carbide: €69,000 (additional 3% discount)
- Savings on coating: €198,000 (reduced unit price)
- Savings on rejects: €57,600 (reduced reject rate)
- Savings in logistics/administration: €45,000Total savings: €369,600 (9% of the original total costs)
This cross-selling strategy was particularly successful because:
- Both services are technically closely linked
- The supplier has a high level of expertise in both areas
- The total volume significantly improved the negotiating position
- Synergies in logistics and quality assurance could be realized
- The integration of the processes brought technical advantages
Long-term effects:
- Development partnership for new coating technologies
- Reduced complexity in supplier management
- Improved product quality thanks to optimized material combinations
- Shorter time-to-market for new products
This example shows how cross-selling in purchasing can not only bring cost benefits, but also enable strategic and qualitative improvements.
Conclusion on cross-selling in purchasing
Cross-selling in purchasing is a valuable strategic tool for optimizing procurement processes and supplier relationships. By bundling purchasing volumes with selected suppliers, companies can not only reduce costs and streamline processes, but also build strategic partnerships. Despite potential risks such as increased supplier dependency, the benefits of increased efficiency and improved negotiating positions outweigh the risks. In view of digital developments and sustainable procurement strategies, cross-selling will continue to gain in importance in the future.
