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Supplier optimization: definition & important aspects for buyers
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Supply Base Optimization in a nutshell:
Supply base optimization describes the strategic analysis and realignment of the supplier base with the aim of achieving the optimum number and composition of suppliers. For purchasing, this enables a reduction in complexity costs while at the same time increasing security of supply and negotiating position.
Example: An automotive supplier used systematic supply base optimization to reduce its supplier base from 380 to 220 preferred suppliers within 18 months, which led to a 25% reduction in process costs and an average price reduction of 8%.
Contents
Introduction to supply base optimization
What is supplier base optimization?
Supplier base optimization refers to the strategic process of analysing, evaluating and adjusting a company's supplier portfolio. The aim is to efficiently manage the number of suppliers in order to reduce costs, minimize risks and increase the performance of the supply chain. The targeted selection and development of suppliers makes procurement more efficient and contributes to the company's competitiveness.
Core elements of supplier base optimization
Significance for modern purchasing
In purchasing, supplier base optimization is crucial for efficiency and risk minimization. By optimizing the supplier base, buyers can reduce costs, improve the quality of procurement and increase supply chain security. It enables a stronger focus on high-performing suppliers and promotes innovation through closer cooperation.
Whitepaper: Supply Base Optimization - Strategic supplier optimization for greater competitiveness
Implementation of supplier base optimization
Companies can reduce costs, minimize risks and increase efficiency by realigning their supplier base in a targeted manner. This includes analyzing current suppliers, selecting key partners and building strategic relationships for long-term collaboration.
Case study
A production company works with 150 suppliers for similar raw materials. The purchasing department realizes that this leads to high administrative costs and inconsistent quality. Through a supplier analysis, the company identifies the top 20% of suppliers who cover 80% of the purchasing volume and consistently deliver high quality, and decides to consolidate the supplier base to these key partners. It reduces the number of suppliers from 150 to 30 and bundles the order volumes. Thanks to its improved negotiating position, it receives price discounts of 10% and agrees framework contracts for greater planning security.
The company also invests in partnership management, carries out regular performance evaluations and works together to optimize processes. The result: reduced procurement costs, increased delivery quality by 15% and a more stable supply chain.
Evaluation and strategic findings
✓ Critical success factors
→ Systematic supplier evaluation: development of a robust evaluation system with clear KPIs for quality, delivery reliability and costs
→ Stakeholder management: early involvement of all relevant departments to ensure acceptance
→ Strategic partnerships: Building long-term relationships with key suppliers through structured development programs
⚠ Challenges and limitations
→ Supply risks: Increased dependence on fewer suppliers requires robust risk management
→ Change management: overcoming internal resistance to supplier consolidation
→ Resource expenditure: Intensive personnel and time investment in the implementation phase
Future trends and implications:
"The future of supply base optimization lies in the intelligent combination of consolidation and strategic diversification."
→ Digital supplier platforms for more efficient management
→ AI-supported supplier evaluation and selection
→ Increased integration of sustainability criteria
→ Dynamic adaptation of the supplier base to market changes
Conclusion on supply base optimization
Supplier base optimization is an indispensable strategic tool in modern purchasing. By systematically analysing, consolidating and developing the supplier portfolio, companies can not only reduce costs and minimize risks, but also significantly increase the quality and efficiency of their procurement. Success lies in the balance between consolidation and strategic diversification, supported by digital technologies and sustainable supplier management. Despite initial challenges, the long-term benefits of an optimized supplier base clearly outweigh the risks.
