Top Suppliers

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.