• Businesses use a multi-supplier packaging strategy to cut costs by increasing competition and offering better terms and prices. 
• Through increased options and supplier competition, a multi-supplier strategy enables organizations to discover the best acceptable and affordable solution for their packaging needs. 
• Businesses should carefully examine their needs, develop clear standards and expectations for suppliers, and continuously review and assess their supplier relationships to ensure they get the best value if they want to save money on packaging through a multi-supplier strategy.

Businesses may incur high costs for packaging, particularly in the current economic context. Finding solutions to lower these expenses is more crucial than ever because of escalating material and transportation costs. Utilizing various providers for your packaging requirements is a helpful tactic. Increasing competition and securing more favorable terms might help you save money in business. Do you require assistance with rising packaging costs? For more information on the advantages of working with various suppliers and how to properly manage this strategy, continue reading.

More and more companies are making the switch to a multi-supplier strategy.

According to a Forbes article, the necessity for risk management is one of the reasons more businesses are converting from a single-supplier to a multi-supplier strategy for sourcing packaging. Companies can lessen the effect that a supplier's unavailability or issues will have on their operations by having a variety of suppliers. Multi-sourcing also gives businesses access to a wider choice of goods and services, sometimes at a reduced price, and it can promote innovation and competition. According to the article, there is space for improvement in this area, as just 31% of businesses have created backup sources of supply for 70% or more of their Tier 1 suppliers. To reduce the impact on a company's operations, the article also examines the possibility of tariffs and other disruptions to disrupt global supply chains and the significance of swiftly switching sourcing to other suppliers.

‍

Single vs. Multi-Supplier Strategy

Using a single provider for a company's packaging requirements is a single-supplier strategy. One provider provides all packaging supplies and services. On the other hand, a multi-supplier strategy is when a company uses several vendors to meet its packaging demands. This may entail using various vendors for various packaging materials or additional suppliers for different packaging process phases (such as design and production). By enhancing supplier competition, a multi-supplier strategy enables a company to diversify its supplier base and negotiate better pricing and conditions. Additionally, it may allow the business greater freedom and options when deciding which products and services best suit its requirements.

‍

Advantages of using a single supplier strategy:

• One supplier can simplify the procurement process because there is just one point of contact and one set of terms and conditions to keep track of. 
• Working with a single supplier ensures consistency in terms of quality and service. 
• Relationship building: Long-term relationships with one supplier might result in better prices and communication.

‍

Disadvantages of using a single supplier strategy:

• Lack of competition: Using just one supplier indicates no competition, which could result in higher prices and unfavorable terms. 
• Dependence: Relying on one source puts a company at risk if that provider encounters problems like delays, manufacturing concerns, or bankruptcy. 
• Limited alternatives: Using a single supplier reduces the business's possibilities for goods and services, potentially making it more difficult to find the most affordable or appropriate solution for its requirements.

‍

Advantages of using a multi-supplier strategy:

1. Cost savings: Increased supplier competition may result in more favorable pricing and conditions for the company. 
2. Flexibility: By working with several suppliers, a company can choose from a wider range of products and services, giving them the freedom to choose the most affordable and practical solution for their requirements. 
3. Risk management: By diversifying the supplier base, a company can lessen the risk of being dependent on a single supplier because it will have more contacts to turn to in case of delays or production problems.

‍

Disadvantages of using a multi-supplier strategy:

1. Complexity: Managing many suppliers might be more difficult than managing a single supplier because there are more terms and conditions to handle and additional contact points. 
2. Quality control: Utilizing numerous vendors may present more of a challenge than using a single supplier to maintain a consistent level of quality. 
3. Relationship building: Because there are fewer opportunities for frequent communication and collaboration, developing good relationships with various suppliers may take more work.

‍

Using a multi-supplier strategy to save packaging costs

First, competition among suppliers may result in more favorable terms and prices for the company. For instance, a study of a major retail chain revealed that they could negotiate a 10% savings on the cost of their packaging materials by employing various vendors for their packaging requirements. Over $500k in annual savings were made as a result of this. 

Second, using multiple suppliers enables companies to test out various materials and choose the most affordable one. For instance, a consumer goods producer could use multiple vendors and materials to cut its packaging expenses by 20%. As a result, the business annually saved over $100,000.

‍

Choosing the right amount of suppliers

When deciding how many packaging suppliers your company requires, take into account the following:

1. Depending on how complicated your packing is: You could require one or two vendors if your packaging requirements are straightforward and regular. However, you can want multiple vendors if your packaging requirements are more intricate and change depending on the product or region. 
2. Your spending plan: The amount of money you have at your disposal will also affect how many providers you require. If you have a tight budget, you should put working with fewer providers first. 
3. Your capacity for risk: If a supplier faces delays, manufacturing issues, or insolvency, consider your risk tolerance and the potential effects on your firm. If your business relies on a single supplier, it may be advisable to diversify your supplier base to mitigate this risk.
   

Assessing your existing and future packaging demands, considering your budget and risk tolerance, and speaking with specialists or peers in your business can help you determine how many providers you'll need. You can choose the number of providers who will best serve your company's needs by considering these variables.

In conclusion, using a variety of suppliers can help businesses cut costs and manage risks in their packaging operations. Companies can boost competition, gain access to a wider variety of options, and bargain for better prices and terms by working with many suppliers for their goods and services. However, successful multi-supplier strategy implementation and management demand careful planning, continuing supplier relationship review, and assessment. Ultimately, utilizing single or multiple suppliers will depend on the particular requirements and business priorities.

‍

Interested in seeing if you can adjust or start a multi-supplier strategy for your business? Have a conversation with one of our procurement and packaging experts to exchange some thoughts together.