Supply Chain Management Benefits of Streamlining
We’re all familiar with the expression, “spread too thin.” That’s what trying to manage too many moving parts—literally and figuratively—of a supply chain can do to your efficiency and bottom line. What are your options? You can go the way of vendor reduction. The customer benefits of supply chain management through vendor reduction can be far reaching, but we’ve listed the top 5 here.
Top 5 Benefits of Streamlining
1. Big fish in a small pond
You get to be the big fish in a small pond. As you increase your “spend” with fewer suppliers, your leverage with the vendor increases. You are in a favorable position for situations that require an imminent need. The vendor is more apt to accommodate you when the need arises, like pulling deliveries in sooner (taking priority over other customers).
2. Cost reduction
When you rely on one vendor to supply and manage your parts, the cost reduction benefits vary—some are felt immediately, and others more subtly. They all impact the bottom line. Examples of cost reduction are:
- Reduction in purchase order requirements from several to one
- Consolidating resources through one vendor not only simplifies procurement, it sets you up to receive volume discounts
- Reducing supplier base removes multiple (and repetitive) steps, increasing productivity and overall efficiencies
- When shipped from one vendor, you save time, resource, and money
- Receiving what you need when you need it improves cash flow
- Incomplete assemblies take up space, resources, and money: you are paying for components you cannot deliver until the parts arrive, you have to “manage” the process to ensure all parts are allocated correctly, and you cannot invoice until you can deliver complete assemblies
3. Streamline services
Customers are generally looking for vendors who can provide myriad services along with the products they manufacture. By aligning with these vendors, you can take more cost out of the products. Viable solutions include sub-assemblies or kitting. By working with one vendor to supply these functions, you can alleviate infrastructure load by reducing labor, space, and processes, thereby reducing more costs. The biggest bonus here: reduced lead time through schedule sharing—and you don’t worry about the schedule, your dependable vendor does all that work.
4. Resource and personnel efficiency
Less vendors means less details that your employees need to monitor and track. As with kitting, the vendor will also track inventory, allowing your personnel to focus on their jobs, spending less of their time procuring parts, tracking inventory, or re-allocating missing parts. They can talk to one person rather than multiple people at different companies—an often understated but valuable benefit of supply chain management when you reduce your vendors.
5. Reliable partnerships
Often, companies who consider outsourcing have already established a trusting relationship with a reliable vendor. When a vendor undertakes responsibilities like the kitting, then all or some of the supply, purchasing, machining, sub-assembly, plating, and packaging concerns are taken off your shoulders. You still have control, as you set the parameters in regards to what suppliers you want used in the kitting program. Reputable kitting companies will also advise you on cost-saving and design-enhancing options for things like machining, plating, and packaging. If you really break it down, companies like CSI Group are simply managing the process you already have in place. Vendor reduction allows you to build more in-depth relationships with the key personnel of major vendors, ultimately offering a single-solution to an organized production/assembly process.
CSI as Your One-Source Solution
The CSI Group is a highly specialized group of companies offering manufacturing processes for mechanical components. CSI provides precision machining solutions for turning, milling, plastic injection molding, metal injection molding (MIM), stamping, and micro-machining, along with a full range of support services such as vendor-managed inventory programs (VMI), kitting, assembly, plating, and heat treatment.
Imagine having all that expertise at your convenience—from purchasing and quality oversight to stock room streamlining and final sub-assembly. CSI can help you reap the benefits of supply chain management through the vendor reduction services we provide. One of them is our kitting program. If you’d like more information about our kitting program, download “The One-Source Kitting Solution” now.