Supplier consolidation has two basic interpretations. It refers to a reduction in suppliers in an industry due to mergers and acquisitions. It also is used to describe a retail strategy of using fewer suppliers to build strong partnering relationships.

Supplier Consolidation Basics

Mergers and acquisitions were common to business and industry in the early 21st century. This affected suppliers as some companies merged, while larger businesses acquired other niche suppliers.

Supplier Rationalization Basics

Supplier rationalization is often used in lieu of supplier consolidation as a business strategy. It describes retailers or buyers trimming the quantity of suppliers they work with to have strong partnerships and to reduce ordering inefficiencies.

Supply Chain Management

An early 21st-century business strategy called supply chain management (SCM) has had a big impact on how companies look at supplier relationships. To deliver the best quality product or service at the best price possible to the end customer, retailers establish integrated, trusting partnerships with core suppliers for mutual benefit.