On a Total Cost of Ownership basis, savings of 22 to 28 percent can be achieved by working with fewer suppliers. This includes both one-time and recurring cost reductions. For example, one-time costs can be reduced 35 to 40 percent by working with existing suppliers instead of new suppliers, through savings in specifying, tendering, evaluating, selecting, negotiating, contracting, transitioning, managing and governing the additional work. These are largely hidden costs, since buyers often aren't aware of them or don't quantify them. The Everest research does that.

Recurring costs can be reduced 20 to 25 percent as fewer contracts, fewer invoices, and fewer compliance relations are managed, but mostly from economies of scale that enable fewer providers to offshore more and more senior roles into their global delivery networks.

Approach to Manage Complexity Arising From Multiple Suppliers

Where do we start? The first item of consideration involves the buyer adopting several "no regrets" approach for building their ADM supplier portfolio. These include:

Three Necessary Steps to Consider