Why Rationalising Suppliers Is NOT The Strategy To Reduce Costs

Posted 16/07/2018

That’s 33 swims this year and 66 in total since realising this time last year that I enjoy swimming in the sea here in Scotland! Or should that be – I enjoy and am able to cope with the cold water.

“You should buy a wet suit” is a frequent response when I say I swim in the North Sea with water temperature that ranges from 5.5 degrees in January to a heady 14 degrees in August.

Wearing a wet suit is a strategy that works for many. In fact, I’d suggest it’s an essential strategy for some swimmers wishing to swim – I know for example that my neighbour needs to wear one all year round, whereas I only needed to wear one from January to May as water temperatures dropped to below 7 degrees.

And yet, what about those firmly advocating the strategy to wear a wet suit all year round?

Without the data about me, my body’s reaction to the water, my swimming style, motivation for swimming, preferences and skills, how can anyone know that wearing a wet suit is right for me nor for which months of the year?

Without that data why should I listen to them – is this statement telling me more about their preference and skills than mine. It seems very easy to tell me I shouldn’t be swimming without a wet suit because they’d find the water temperature too cold.

That’s what some category strategies can seem like – supplier rationalisation, aligning pricing across business units, RFPs are reeled out as recommendations, and yet the data to support these options are lacking.

I remember, in my first year after graduating, attending a report writing course. The key insight from that course was that you could not make a conclusion or a recommendation in any report without the data to support it. A simple enough premise, and yet something that’s easy to forget, or discount the validity of doing it.

“But it’s common sense to rationalise the database” is not enough of a reason for recommending such rationalisation unless you can communicate the pain the current size of database is causing the organisation. Change for change sake will not win over any senior managers, neither will it ensure stakeholder compliance if the cause behind the proliferation of suppliers has been ignored. 

The answer to “Anyone can see costs will reduce if we have fewer suppliers” is “show me”.

The current situation any strategy is hoping to address has arisen from a number of factors, and most often by people who are doing their best, and really do think what they’re doing is the best option for the organisation. Which means any alternate recommendation is not “common sense” unless you provide the sense that goes with it, and can prove that the current solution is offering suboptimal performance or value. (Which also requires that you’ve spent time reviewing and understanding the current situation.)

You see, in order to persuade me to buy that wet suit you’d either have had to allow me to test one in the water to prove my arthritic knees can still swim it, or have provided data from numerous others swimmers with osteoarthritis that wet suits work, and confirm that enjoyment and connection with nature is not diminished.

Or perhaps you could come swimming with me to realise I really do enjoy it.

Next time you catch yourself forcing a solution upon an unsuspecting stakeholder without the evidence to support it remember your personal logic is not enough. If it’s a great solution the story of why will be there, it’s just hidden in the murky depths needing to be brought to the surface for all to see.

Always happy to dive into the depths and provide coaching on developing the story of the “why?” and “so what?” of your category or relationship strategies. Contact us here.

Further Reading

Knowledge Hub: Driving Up Value While Driving Down Cost.

Blog Post: The Nine Major Cost & Value Options In Procurement

Tagged by topic: Business & Stakeholder Engagement , Sourcing Strategy

  by Alison Smith

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