Over a period of time, track your suppliers’ performance against set KPIs. Ideally, you want your suppliers to deliver high quality products and services within the required timeframe at a reasonable price. Selection criteria could include quality of the product, processes, meeting business objectives, operational policies, and certifications. This is a crucial step and should be a top priority. Once you’ve analyzed your current suppliers, determine which suppliers you’d like to continue working with.
C: Suppliers who can’t meet current or future performance goals. B: Low-performing suppliers that have missed performance goals. Once you’ve completed an objective analysis, group your suppliers into: When you conduct an audit, focus on things like each supplier’s performance data, product and process management, how the company operates, the structure of their quality management system (QMS), and personal interactions with other staff. One way to assess your current supplier outlook is to conduct an onsite or offsite supplier audit. Take a look at the past three or four quarters and consider factors such as: The first thing you want to do is analyze your current supplier spend, business capabilities, and performance. Now that you know what supply base optimization is, how do you actually go about doing that? Supply base optimization requires a strategic plan so you can reduce the number of suppliers you currently have, and spend more time with the ones who are adding value to your organization. 6 steps for successful supply base optimization This way, organizations can spend more time with fewer suppliers.Įffective supply base optimization can help reduce costs, improve supply chain efficiency, better supplier performance and collaboration, and increased revenue. Supply base optimization is a strategy used to reduce the number of suppliers you work with, especially those who are inactive or limited-use suppliers. First thing’s first: what is supply base optimization? Supply base optimization ensures that you are focusing on working with suppliers that are the most productive and beneficial to your business. According to Industry Star, most businesses spend 80 percent of their cost of goods sold (COGS) with just 20 percent of their suppliers. As you grow, you want to optimize your supply base. 
As businesses grow and scale, oftentimes, so does their supply base and the number of suppliers they work with.
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