Brief
Sapphire warns excess suppliers raise procurement costs
Sapphire says spreading purchases across several vendors can erode buying power and lift costs, citing a retailer case that saved about a quarter of annual spend after consolidation.
By Felo News Desk · Published
Sapphire, a procurement and logistics solutions firm, warns that using multiple suppliers for the same product can increase overall procurement costs, according to sales director Brendon Bain.
Bain explains that dividing volume among three or four suppliers dilutes buying power, leads to shorter production runs and fragmented deliveries, and adds administrative complexity. He cites a 2017 case where a major retailer bought shopper bags from three suppliers; after a tender that consolidated the category with a single manufacturer, the retailer saved roughly 25% of its annual gross purchase value for that category.
The firm also references a McKinsey study showing a global food company cut its supplier base for a key ingredient from eight to four, achieving a 10% category‑cost saving within three months.
Key facts
- Sapphire says using three or four suppliers for the same item can dilute buying power and raise costs. (bizcommunity.com)
- A retailer that consolidated shopper‑bag procurement to one manufacturer saved about 25% of its annual gross purchase value for the category. (bizcommunity.com)
- McKinsey documented a global food company reducing its supplier base from eight to four, achieving a 10% cost saving in three months. (bizcommunity.com)
Sources
- [1] bizcommunity.com — originally reported as “Too many suppliers can raise procurement costs, Sapphire warns”
