Consolidation in purchasing refers to the process of bundling the products and services into a single group based on common characteristics. Such an approach enables the business to procure similar products and services from a single supplier within a single PO or contract instead of procuring the items from multiple suppliers. Such practice delivers a bunch of benefits to businesses.
The most obvious benefit of the purchasing consolidation implementation is the reduction of the workload on the SCM or procurement team. Creating plenty of POs consumes a lot of the procurement staff’s time. At this point, the consolidation would enable the procurement team to spend their time on more important tasks.
Another significant benefit that stems from consolidation is the reduction of financial expenditures. Since the company is able to group many items into a single purchase, there arises an opportunity to bargain the volume discount due to the overall increase in the number of items included into a single order.
Finally, it is easier to ensure compliance. Executing the stock management, tracking the payment flow, and monitoring contract terms violations within one entity is much easier, rather than executing all these practices within multiple POs or contracts that are signed with many suppliers.
In summary, we have reviewed the main benefits that the businesses gain from implementing the consolidation approach. From the observation of our team and the buyers, the purchasing consolidation does not possess any downsides. Purchasing consolidation will benefit the businesses by enhancing the efficiency of the employees and saving financial resources without any waste or risks.
Acquirell enables businesses to consolidate their purchases by grouping the purchasing needs based on common characteristics in the product list item. You would be able to explore how the consolidation capabilities of Acquirell will benefit your procurement team and your business at large.
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