Top 5 Benefits of Vendor Consolidation- The Payout Solution
Are you a businessman losing track of vendor payments?
Where are your vendors located?
Who are the vendors easiest to work with?
Is managing supply orders from multiple suppliers driving you crazy?
Has it all of a sudden become running behind suppliers rather than running your business?
Then you can relate to this.
If you’re running a business that relies heavily on vendors for sourcing products, you will know all about going to multiple sources for wholesale orders.
Understanding supplier chain management is a harrowing experience in itself.
This process can make anybody feel helpless and frustrated.
Also, confusion in choosing a vendor for the same product, but with different manufacturing processes adds to the chaos.
So here is a simple breakdown of vendor consolidation, the problem without the vendor consolidation process, and its benefits of it.
- What Is Vendor Consolidation?
- Benefits of Vendor Consolidation
- Saves Money
- Saves Precious Time
- Boosts Buying Power
- Builds Strong Vendor Relationships
- Superior Accounting
- What Should Your Vendor Consolidation Strategy Be?
- The following checklist may help you conclude quickly.
- Why Karbon Payout?
What Is Vendor Consolidation?
Vendor Consolidation is a strategy under supply chain management.
Simply put, it is the process of decreasing the number of vendors to just a small group of trusted, high-quality vendors amongst your existing contacts.
What Is the Problem?
There is this hype about vendor consolidation and it isn’t for nothing.
You sell products in various categories. It could be of any kind- Physical products, software tools, services, etc.
Each of these products belong to different categories and so it will come from different vendors.
They may all offer the same product but quality for sure differ.
That’s where the confusion begins, isn’t it? You now have multiple vendors for the same category, for a product you wish to sell.
Who should you choose?
Here’s where Vendor Consolidation will make a world of a difference in your business management.
The goal is to consolidate everything– buy the majority of the products from the same vendor to depend less on other vendors.
This will help you save a lot of time and a lot more money.
Benefits of Vendor Consolidation
A whopping 60 % of procurement cost comes from logistical delays.
This could be from time lost searching for the right vendor, shortlisting products, placing a purchase order, etc.
But, once your vendors are consolidated, your cash flow is optimized,
It automatically results in capturing a higher volume of orders.
This gives you the much-needed cascading effect.
Higher order volume leads to better prices. Better prices lead to reduced shipping costs. Handling costs reduce with this.
And there you have it.
That’s a quarter of your money saved right there!
Saves Precious Time
You already know the one thing that matters for business is the growth and survival of business.
As a businessman, it is super important for you to invest your time in things that need urgent focus.
Moreover, you could do with a little bit of extra time yourself, right?
So if you have multiple vendors offering the same product, it is likely that you end up wasting time onboarding multiple vendors.
Then you will have meetings to attend, calls to take and distractions are all over the place.
Business goals will run farther and farther away from you.
Vendor consolidation, on the other hand, will help you skip right over these unnecessary processes.
Boosts Buying Power
Giving more business to fewer vendors increases the purchasing power of your own business as a whole.
You don’t have to trust us. But do trust the numbers. You will see the change yourself.
Dedicating more money to fewer vendors means a higher average budget per vendor.
When this happens, vendors get incentivized to provide you with their discounted products.
This will help you forge stronger relationships, optimize your cash flow and ultimately increase your buying power.
Builds Strong Vendor Relationships
This is no secret.
It takes more than money to retain vendors.
Trust is a crucial factor that is often overlooked.
Suppliers see the ease of doing business and prompt payment.
With vendor consolidation, it will be a cakewalk for you to achieve this.
With fewer vendors to worry about, you will naturally build stronger relationships with the few you have around you.
Automating your accounts payable processes is an excellent way to understand outbound money flow.
The manual process will be costly and time-consuming.
So making use of a powerful AP automation software will equip you with everything- from cash flow optimization to prioritization of vendors.
But bear in mind – Perfect tools mean perfect automation.
So if you want to do everything from beneficiary management to invoicing processing, payment clearance, and reconciliation, then automated Vendor consolidation is your way.
What Should Your Vendor Consolidation Strategy Be?
Let’s be real.
You cannot consolidate to a single vendor. BUT you can crunch it down to a few trusted partners.
So the real question is, where to draw the line ?
The vendor consolidation approach is crucial for the right execution.
The process almost has a strategic touch to it and is not just a managerial task.
For starters, drawing a solid vendor consolidation framework is essential.
The following checklist may help you conclude quickly.
- Solid business group: Form a team that has members from Legal, HR, IT, executive, and account departments who can provide strategic input.
- Present status: Ask yourself the following questions to know your present status.
- Who are your vendors?
- What is the location of the vendor?
- Are some vendors sourcing only a few products?
- Have you had any bad experiences with a vendor?
- Is the same product coming from a different vendor?
- Which vendor has been the most efficient for your business till now?
- Set Goals: You have a team in place to look into the above questions. Now all you have to do is set a goal with your priorities.
- You can categorize them time-wise if you prefer vendors with quick deliveries.
- Or you could prioritize the quality of service-wise – prompt responses, cost-effective, etc.
- It could even be your comfort level with a vendor for procuring multiple goods that can help drive your business.
- Compare and list them:
Compare and rank them from best to worst in the category you choose.
- Reduce: Under vendor consolidation, reduce the number of vendors to keep only those who have a history of being productive.
Make note – there is no rule set in stone for the number of vendors you should keep.
Now, why would we talk about all the problems, benefits, and even the process for vendor consolidation without giving you a real-life solution?
We wouldn’t do that to you.
So our answer is simple- Karbon Payout.
Why Karbon Payout?
The real question is why not? It provides all of the above benefits and much more.
No manual management.
No delayed payments
No more overburdened financial managers pressured to deal with Vendors.
An all-in-one solution for Vendor Consolidation is Karbon Payout.
Payout has features like 24×7 and no-holiday payments.
And what’s more!
Its intel AI system automatically selects the best payment channel for your transactions– NEFT, RTGS, IMPS to make your life easier.
The following are its main features:-
- Optimizes Cash Flow: Absolutely no hidden charges with Payout.
You will be able to spend only on what matters the most.
- Helps You Trash Manual Work: You can send payout links to your vendors and let them add themselves to your system.
- Concise Summary Reports: You will get an in-depth report of where your money is going, to whom, and for what. You can track all payments and invoices from a single dashboard in the simplest way possible.
- Accelerates Vendor Payments
Good vendor payment = Good vendor ties
Isn’t it the simplest logic?
So Karbon Payout, for vendor consolidation, offers something others don’t.
The same thing vendors see while doing business with you.
So choose smartly
The ball is in your court now.
How does payout work as a vendor consolidation tool?
Payout links – all you need to know.
Member access – Payout
Can I make payments to my vendors using Karbon Card?