Supply Base Rationalisation Definition

Supply base rationalisation is the process of reducing the number of suppliers that a company uses to source its goods and services. The goal of supply base rationalisation is to streamline operations, reduce costs, and improve supplier performance.

There are several methods that companies use to rationalise their supplier base, including conducting a spend analysis, assessing supplier risk, and evaluating supplier performance. Spend analysis is a process of identifying and categorising a company’s spending in order to understand where money is being spent and identify opportunities for savings. Assessing supplier risk involves identifying which suppliers pose the greatest risk to the company in terms of quality, delivery, or price. Evaluating supplier performance involves measuring key performance indicators such as on-time delivery, quality, and cost.

Supply base rationalisation can be a complex and time-consuming process, but it can have significant benefits for companies that undertake it. By reducing the number of suppliers, companies can simplify their operations and reduce their exposure to risks. In addition, by improving supplier performance through measures such as spend analysis and vendor evaluations, companies can improve the quality of their products and services while also achieving cost savings.