May 19 2025 |
What is a Top Supplier?
A list of top suppliers outlines the details of your company’s key suppliers based on their share in your procurement costs.
A list of top suppliers provides information on the key suppliers of your company, including:
- Company Details: Name, registration, geographic presence, specialization, capabilities, payment and contact details
- Procurement Contracts: Raw materials and services procured, frequency of engagement, start and end dates of their agreement with your company
- Procurement Cost Contribution: Contribution of key suppliers that accounts for more than 5% of your procurement costs
Why is Top Suppliers important for business today?
A list of top suppliers enables your company to:
- Track and assess the importance and contribution of top suppliers
- Evaluate your products’ profit margins by analyzing procurement costs (e.g.raw materials) and retail price across product segments
- Understand and evaluate supply and any fluctuations and satisfaction levels of your suppliers
- Plan retention and growth strategies for your top suppliers based on agreement end dates
- Formulate strategies to procure new products and services and diversify your supplier base
- Assign supplier relationship managers to your suppliers for effective engagement and retention
Why is Top Suppliers important for an event tomorrow?
A list of top suppliers is important for an event tomorrow, as it helps:
- Evaluate the types of products and services procured by your company and your dependence on certain suppliers across geographies
- Determine the overall costs associated with procurement and the share of top suppliers in your company’s costs
- Assess the details of your company’s top suppliers to evaluate their capability to maintain existing services as well as expansion of those services
- Analyze any variations in your company’s top suppliers’ list, and assess any reasons behind them
- Benchmark the procurement costs of your company against your competitors
- Evaluate any potential risk and the impact of loss of top suppliers on your company’s performance
Pros of addressing Top Suppliers
- Benchmark the procurement cost for top suppliers against other company suppliers
- Evaluate the lifetime value of your suppliers by analyzing historical engagement trends
- Engage effectively with your top suppliers and strengthen your relationship with them
- Increase retention of top suppliers by formulating appropriate strategies
- Ensure regular and timely supply of raw materials and products
- Negotiate better prices and payment terms
Cons of not addressing this topic
- Increase in risk of losing top suppliers due to lack of supplier management and retention strategies
- Difficult to track the contribution and performance of your top suppliers
- Negative impact on your product margins due to your company’s inability to track procurement costs
- Increase in operational risks of your company since agreement end dates of your top suppliers are not tracked
- Restriction on your company’s ability to diversify or expand your supplier base.
ALSO LEARN ABOUT
- Top Customers
- Business Projects
- Business KPI
- Project Planning Documentation
- Business Processes
- Sales Strategy
