Supplier consolidation: How to simplify, save, and stay in control

Supplier lists often grow faster than procurement teams expect. For instance, one department might bring in a preferred vendor, while another adds a niche supplier to solve an urgent need. Over time, those decisions build a long tail of contracts, terms, and service levels that compete for attention.

As your supplier list expands, daily work becomes harder to navigate. Teams lose time chasing invoices, comparing pricing, or clarifying who owns each relationship. And leaders try to keep operations moving while also protecting budgets, reducing risk, and guiding everyone toward responsible purchasing. The pace rarely slows, so seeing the full picture becomes even more difficult.

These pressures often signal the same root problem: Too many suppliers are covering similar needs. When supplier bloat grows in this way, efficiency, compliance, and visibility slip and supplier management becomes more complex than it needs to be. That shift pushes leaders to look for a simpler, more controlled way to work.

Supplier consolidation creates the space that leaders need by reducing duplicate relationships, strengthening spend insight, and supporting more predictable buying across the organization. It also helps them shift from reacting to daily friction to shaping a clearer, more resilient procurement strategy. Read on to learn how that’s possible.

What is supplier consolidation?

Supplier consolidation means reducing the number of suppliers an organization relies on so procurement teams can focus on the relationships that matter most. That way, instead of spreading purchases across dozens or even hundreds of vendors, leaders can intentionally streamline their supplier base, strengthen their oversight, and direct more spend toward partners who consistently deliver on pricing, quality, and service.

This strategy carries real weight in today’s volatile, digital-first environment since procurement teams already balance rising costs, shifting supply conditions, and pressure for faster decision-making. When supplier lists expand without structure, visibility slips and supplier relationship management becomes harder to sustain. 

The urgency is clear. According to the 2025 Deloitte Global Chief Procurement Officer Survey, nearly two-thirds of procurement leaders identify stronger supply chain visibility as a top priority for mitigating risk. Supplier consolidation helps address that challenge by creating a clearer foundation for spend insight, performance tracking, and risk management. With amore focused supplier network, leaders gain the control they need to navigate change with confidence and support long-term strategy.

The benefits of supplier consolidation

Supplier consolidation creates measurable value across procurement by reducing complexity and giving teams more control over how they buy. By following vendor consolidation best practices, you can achieve the following benefits:

• Reduce operational friction: Streamline purchasing workflows, cut down on duplicate vendors, and lower administrative work for buyers and AP teams.

• Increase cost savings and improve pricing: Concentrate spend with reliable partners to access stronger pricing, volume incentives, and more predictable budgeting.

• Improve supplier performance and compliance: Focus on fewer suppliers to set clearer expectations, maintain procurement compliance, and encourage better service outcomes.

• Strengthen strategic supplier relationships: Invest time and attention in partners that are capable of supporting your long-term goals. 

• Gain better visibility into spend and risk: Make reporting more accurate, uncover spending patterns more quickly, and identify risk hotspots earlier by simplifying supplier data.

• Support more resilient purchasing decisions: Create a foundation that helps your organization respond faster when market conditions change without adding complexity.

Together, these benefits help procurement teams work with more confidence and thus shape a supplier ecosystem that supports long-term success.

A step-by-step supplier consolidation process

A clear process helps teams simplify their supplier base without disrupting day-to-day operations. The following steps offer a practical framework that you can use to guide your internal planning and build momentum across teams:

Analyze your supplier and spend data

To get started, map every supplier you work with across spend categories, order volume, contract terms, and performance. This will give you a single view of where money flows, which teams own which relationships, and where duplicate or low-value suppliers create unnecessary friction.

As you review this data, balance cost opportunities with your organization’s commitment to supplier diversity. These goals work together more often than they compete. When visibility improves, teams can spot diverse suppliers who already perform well, then strengthen those relationships instead of spreading spend across many vendors. This approach keeps budgets in check while still supporting socially responsible procurement. This step also helps you prepare for more consistent supplier onboarding in the future.

Segment and rationalize your supplier base

Next, you’ll want to segment suppliers by their strategic importance. A simple A/B/C model works well here. “A” suppliers typically support mission-critical categories or long-term goals. “B” suppliers deliver solid value for routine purchasing. And “C” suppliers tend to fall into the tail spend category.

Next, you can use this segmentation to rationalize your base. This means combining tail-spend suppliers where possible, replacing one-off vendors with preferred partners, and steering more volume to reliable suppliers that support your long-term consolidation strategy.

Stronger segmentation matters because it supports the broader maturity of your procurement function. McKinsey’s 2024 procurement benchmarking analysis found that companies with top-quartile procurement maturity achieved EBITDA margins at least five percentage points higher than peers with less-developed capabilities. Their findings highlight a simple idea—mature procurement teams excel at getting the fundamentals right, and supplier segmentation is one of those fundamentals.

When teams clearly understand which suppliers contribute the most strategic value, they can direct time, budget, and oversight where it creates the strongest impact. Segmentation turns a long list of suppliers into a structured view of priorities, which makes the next steps of consolidation, like rationalizing tail spend or strengthening core partnerships, far more effective.

Consolidate and contract with preferred suppliers

Once you identify your preferred suppliers, evaluate them against clear criteria, such as product quality, pricing consistency, delivery reliability, sustainability certifications, and their ability to support future demand. This helps ensure you direct spend toward partners that can scale with you.

Afterward, you’ll want to establish detailed SLAs that define performance expectations, service levels, and escalation paths. Then, pair those agreements with integrated procurement workflows so buyers know exactly when to use each supplier and how to stay aligned with your policies.

Monitor, manage, and optimize continuously

Supplier consolidation isn’t a one-time project. After you streamline your supplier base, ongoing monitoring helps confirm the changes work as intended. Use analytics dashboards to track performance, delivery accuracy, responsiveness, and compliance so you can see how suppliers operate under the new structure. These metrics give early insight into potential issues and help you verify that your consolidation efforts deliver consistent, long-term value. 

Long-term, you should also schedule quarterly reviews to revisit suppliers’ performance, adjust supplier tiers, and refine contracts where necessary. This rhythm helps you stay agile, respond to changing market conditions, and keep your supplier ecosystem aligned with organizational goals.

6 supplier consolidation best practices 

Consolidating suppliers works best when teams balance long-term strategy with day-to-day execution. The following six practices help leaders streamline sourcing decisions without losing sight of resilience, responsible purchasing, or internal alignment:

1. Prioritize strategic suppliers

Start by identifying the suppliers who create the most value for your organization. During this process, however, you’ll want to remember that consolidation doesn’t mean having the smallest number of vendors possible. Instead, you should focus on partners who consistently support innovation, deliver reliably, and help you streamline operations. These relationships often become the foundation for stronger service quality and long-term growth.

2. Don’t over-consolidate

Reducing your supplier base can be efficient, but narrowing it too far introduces potential risks. While having a single source for key categories seems easier to manage, it actually increases your vulnerability when demand shifts or supply chain disruptions emerge. Instead, you should maintain backup suppliers or pre-vetted alternatives to keep your supply chain flexible and ready to adapt.

3. Include diversity and sustainability criteria

Consolidation still leaves room for diversity and sustainability commitments. When you strengthen partnerships with certified local, diverse, or environmentally responsible suppliers who already perform well, you direct spend toward partners whose mission aligns with your organizational goals. This approach supports responsible purchasing and reinforces your broader mission and community impact at the same time.

4. Implement performance management

After you consolidate your suppliers, performance management becomes even more important because you rely more heavily on a smaller set of partners to meet daily demand. Clear visibility helps ensure early gains do not erode as buying patterns shift or volume increases. Track performance metrics like delivery accuracy, responsiveness, and contract compliance so teams can spot issues early, prevent small problems from compounding, and make more informed adjustments over time.

5. Align stakeholders before making changes

Before adjusting how many vendors you purchase from, you’ll want to bring finance, operations, and functional leaders into the conversation. This alignment prevents confusion later and builds trust across the organization. Creating shared goals also helps your purchasing teams adopt new buying patterns more quickly, which then strengthens the impact of your consolidation efforts.

6. Perform data hygiene before consolidation

Consolidation decisions only work when they start with accurate data. Poor or fragmented spend records, on the other hand, can cause teams to retain the wrong suppliers or overlook strong performers. That’s why it’s important to audit your data up front to confirm it’s complete, consistent, and high-quality. This gives you a reliable base for selecting suppliers and reducing risk as you move forward.

How technology helps you scale supplier consolidation

Technology makes achieving a consolidated supplier base easier to manage by giving procurement teams clearer visibility, stronger controls, and a more consistent experience across every department. When supplier management software connects purchasing, analytics, and policy enforcement, teams spend less time reconciling data and more time shaping strategy.

A strong supplier network becomes a key part of that technology foundation because it lets teams simplify purchasing without limiting choice.

Consolidate purchasing through a supplier network

A large, diverse supplier network helps leaders reduce complexity without limiting their buyers’ choices. Amazon Business supports this goal by connecting organizations to hundreds of thousands of business sellers, including certified local suppliers and certified sustainable suppliers. This broad selection helps teams meet their supplier diversity goals and maintain responsible purchasing commitments while still simplifying how buyers can source what they need.

The same network also makes buy local programs easier to support. That’s because with Amazon Business, organizations that want to strengthen their community ties can source from nearby businesses without adding more suppliers to their internal systems. 

Sustainability goals fit naturally into this model as well. Many teams want to increase their share of certified sustainable products or partner with suppliers that follow responsible practices. Amazon Business offers a clear way to do this through curated sustainability selections and transparent supplier credentials. 

Together, these options help organizations advance their goals without creating new administrative work or introducing more complexity to supplier management.

Integrate seamlessly with existing procurement systems

Most mid to large organizations rely on multiple procurement, finance, and compliance tools, but integrating these tools becomes critical when many departments and buyers need to follow one procurement policy. That’s why Amazon Business integrates with more than 300 procurement systems, which helps organizations unify their purchasing across teams while preserving existing workflows.

This integration also strengthens procurement analytics by bringing purchasing activity into one connected environment. With cleaner, centralized data, leaders can use Spend Visibility to uncover purchasing trends, track compliance, and measure progress against organizational goals. Its interactive, ready-to-use dashboards help teams identify savings opportunities and confirm that consolidation efforts deliver the expected impact. This level of insight supports better decision-making and reinforces the long-term value of a more focused supplier base.

Consolidate with confidence

Supplier consolidation gives procurement leaders the room they need to streamline their procurement initiatives with greater clarity and control. That’s because when organizations move toward fewer vendors, their teams can reduce administrative friction, improve visibility, and create stronger compliance across purchasing. This shift also helps organizations redirect attention to key suppliers who consistently deliver on quality, service, and long-term partnership value.

Ultimately, consolidation is about strengthening purchasing power, removing unnecessary complexity, and building a foundation for responsible and efficient growth. With clearer data and a more focused supplier ecosystem, leaders can gain the confidence to navigate change, support internal stakeholders, and plan further ahead.

Contact sales today to explore how Amazon Business can help your organization streamline procurement, consolidate suppliers, and gain visibility across every purchase.