Optimize Supply Base
Effective and efficient management of buyer-supplier relationships
starts with determining the number and most suitable suppliers for
the company, i.e., the optimization of the supply base. Monczka
et al. (1993) discuss several strategies to improve the supply base,
such as setting higher performance expectations and direct supplier
development. As a prerequisite to pursue supply base improvements
the results of the existing purchasing processes and strategies
have to be measured. According to Cousins (1999), extensive supply
base reduction strategies have been witnessed in a wide range of
firms in various sectors. Many of these companies have claimed
they had to reduce the size of their supplier bases to become more
competitive and flexible, and to reduce costs. Companies need a
systematic approach to realize these goals, and several frameworks
have contributed significantly to an effective and efficient optimization
of the supply base, for example the portfolio models presented
by Kraljic (1983), Krapfel et al. (1991), and Bensaou
(1999). The Kraljic model is a product-oriented model, whereas
the models of Krapfel et al. and Bensaou are relationship-oriented.
In the Kraljic model, purchased items can be classified into four
different categories: strategic, bottleneck, leverage, and noncritical
items. Each of these categories require a different purchasing strategy.
Gelderman and Semeijn (2006) argue that the Kraljic model is
not only useful for developing effective purchasing strategies, but
also for managing a supply base. In using this product-oriented
model, the company applies a one-sided buyer perspective for
the development of the purchasing strategies and managing the
supply base. The relationship-oriented models apply a two-sided
perspective in which the position of the own company in the
client-portfolio of the supplier also is taken into account.
In this study, “optimize supply base” is defined as a process to
determine the correct number and most suitable suppliers for a
company. This includes ensuring that the supply base is kept
up-to-date. Ideally, the optimization of the supply base would be
driven by product group strategies. In addition to paying attention
to the number of suppliers, it is important to focus on the policy of
the company regarding the supply base. For instance, a company
can have a policy to use only regional suppliers, or can demand
certain certifications from suppliers.