Vendor base rationalization is a crucial element of overall supplier relationship management strategy as it not only aligns but also synergizes the competencies, resulting in a win-win situation for both supplier and buyer. This is done by managing the supplier base in an effective manner by identifying and selecting suppliers for strategic long-term partnerships, involving them in early design phase of the product or new processes, allocating resources to enhance supplier performance by providing them the necessary and relevant benchmarks and continuous feedbacks. Rationalization of the supplier base requires one to create quantifiers which monitor vendor’s performance and create a platform to evaluate their progress in terms of buyer’s strategic objective. This paper aims to sensitize the need for vendor base rationalization, followed by a generic approach to achieve the same and details out a step-by-step approach.

The ‘strategic’ aspect of supply chains has become the need of the hour in the dynamic environment that we are in. Organizations have stopped evaluating suppliers on the operational matrices such as quality, cost and delivery, but have incorporated strategic dimension such as quality management practices, process and design capabilities (Srinivas and Ram, 2002). Moreover, organizations have started looking for the hygiene side of businesses such as commitment of supplier management to take risks and align according to the customer needs, cost reduction initiatives, historical data, infrastructure and practices of the suppliers. This in turn has put various types of engagement models such as profitsharing models, total cost of ownership models, mix of fixed and variable price models.

Before putting an organization on a roller-coaster ride of initiating the vendor base rationalization, one has to understand that the change in terms of new business processes shall take some time to settle down and might affect the way in which the business is being performed. For this to happen, a strategic road map has to be in place. Operational road map can be derived once strategic road map is finalized. Most of the papers have been written to evaluate how vendors are to be evaluated, be it operational or strategic parameters, but limited studies have been done on doing the strategic planning of the same. This is attributed to the fact that the strategic planning shall require inputs which are very much the function of organization DNA. We have tried to start with the basics and broadly derive a conceptual framework which shall act as a foundation for building the basic framework of vendor base rationalization.

Supply Chain Management Journal, Vendor, Base, Rationalization, An Opportunity, View, Supply, Chain, Through, Single, Pane, Glass.