How Does the C-Parts Supplier Consolidation Process Work in Practice?

Like my colleagues have already covered on The Solutionists Hub, manufacturers can easily reduce costs, boost efficiency, avoid downtime and even become more sustainable through supplier consolidation — purchasing their required parts from a smaller number of suppliers.

In this article, I want to cover the practical side of supplier consolidation and explain what the process can look like for a manufacturing company in the real world.

The exact details vary depending on the manufacturer’s C-parts needs and the end goals of the consolidation process. However, if you’re currently planning to get your unconsolidated supplier base under control, this article will help you understand the journey that lies ahead.

Let’s start at the beginning of the process, and imagine your company has started a consolidation project with a supply chain partner like Bufab.

Analysing the existing C-parts supplier base

It’s impossible for the supply chain partner to lead a successful consolidation project without first understanding your current situation. When the project begins, they will analyse your current C-parts operation, the flow of goods and the quantities of parts your company currently uses.

This background knowledge is key for developing a new consolidated approach that works. In my opinion, a good partner should listen more than they speak at this stage and focus on understanding your C-parts needs and pain points.

At this point, the scope of the consolidation project is decided. For example, you may start by consolidating three suppliers that supply your 30 most-used components. Many companies choose to start small before slowly consolidating more suppliers over time.

However, even if a limited number of suppliers are involved at the start, it’s still essential for the supply chain partner to understand the whole C-parts situation and the wider manufacturing operation before getting to work.

Building the consolidated C-parts supplier base

Once the partner has the information they need about your needs and consolidation plans, they can begin building the new C-parts solution.

Early in the collaboration, this may simply mean purchasing the required parts from your previous suppliers and delivering them in one shipment.

However, over time the partner will continuously look for better suppliers — sourcing alternatives that offer lower prices, greater reliability or increased sustainability, without interrupting the flow of C-parts.

You will probably start to notice the benefits even at this early stage. If common, standardized components are involved, it’s likely the partner has a number of other customers that use the same part. This means they can make larger orders and receive them in fewer deliveries, significantly reducing the purchase price.

Switching to the new C-parts supply solution

Once the partner has built the new supply process and sourced the correct suppliers, they will propose a date to switch over.

But before the first consolidated deliveries from the new partner arrive, you will receive the equipment you need — for example, bins for C-parts, labels, and hardware for any potential VMI solution that might be in place. Purchasers will also have time to get familiar with the new ordering process.

Once this infrastructure is established, the partner can take over as your new supplier. In my experience, companies start seeing the benefits of fewer deliveries and reduced levels of administration very quickly.

Once the new solution is up and running, it’s vital for you and the supply chain partner to spend time in the manufacturing facility to see how it’s working in practice. What do the logistics team think? Has the purchasing office noticed any benefits? Getting direct feedback is the best way to assess the current solution and refine it over time.

Improvement and expansion of the consolidated approach

Even when the initial project is complete and the new C-parts supply chain partner has taken over, the work doesn’t stop. A good partner should be working continuously to improve the process even further and suggesting ways to expand it.

Over time, many manufacturing companies choose to hand over responsibility for more and more parts to the new supplier.

If you started by consolidating only a few fasteners, you might choose to continue with your full fastener range, or introduce new articles into the consolidated solution. Even niche custom articles are open for consolidation — many companies hand their unique parts over to a supply chain partner, which can continue to work with the new supplier or use its network to find a better one that can manufacture the custom parts.

Over time, the number of C-parts suppliers continues to fall — and your financial, operational and sustainable benefits start to multiply.

Over time, this process can continue until you only have one C-parts supplier left. However, many companies prefer to keep a few suppliers in place to insure against supply chain issues.

How fast should you consolidate your C-parts supplier base?

Many company leaders see supplier consolidation as a huge change – going from a very large number of suppliers to only one in a short period of time. However, the pace of consolidation is completely up to you. It all boils down to two approaches:

• Gradual consolidation – this process starts with a limited number of suppliers and simple, commonly-used articles. Once this range is consolidated, more types of parts can be added and the total number of suppliers falls gradually over months or years.
• Direct consolidation – with this approach, a company switches from a large number of suppliers to a few very quickly, consolidating a wide range of suppliers in a single transition. This is major change for a company, and the process can be challenging. However, it means the consolidation project can be closed quickly — and can lead to major cost savings and efficiency gains in a very short period of time.

In both approaches, the consolidation process is similar — the only major difference is the speed. Most companies choose a more gradual approach, but with the right supply chain partner, it’s possible to smoothly consolidate a very large supplier base in a short amount of time.

Find out more about C-parts supplier consolidation

For a wider perspective on what C-parts mean for purchasers, make sure to read our deep dive on the topic, or download The Purchaser’s Guide to Supplier Consolidation to learn more about the implications of reducing your C-parts supplier base.

Hopefully this article helped you understand what a consolidation project could look like for your company. Don’t hesitate to get in touch if you want to take the next step and find out how we could streamline your supplier base.