How Multi Supplier Consolidation Works

Multi supplier consolidation gathers goods from several vendors at one point and ships them together to the buyer. Instead of receiving many small deliveries, the buyer receives fewer, fuller loads.

The buyer usually sets up and controls the program, since it benefits most from the combined loads.

The Basic Setup

• The buyer chooses a consolidation point
• Each supplier ships its goods to that point
• The point checks and holds each shipment
• Combined loads ship to the buyer on a schedule

Suppliers need clear instructions. Where to ship, how to label, what to send in advance and by when.

Why Buyers Use It

To begin with, fewer deliveries mean fewer receiving appointments and less dock congestion. Fuller trucks often cost less per pallet than many partial loads.

In addition, the buyer gains visibility. One point sees every supplier’s freight before it ships, so problems surface earlier.

Multi Supplier Consolidation Records

Each supplier’s shipment needs its own record at the consolidation point. That record should show what arrived, in what condition and when.

Then the outbound bill of lading needs to list the combined freight. Federal rules require motor carrier bills to show items such as the number of packages and a description of the goods. The receipts and bills regulation sets those terms. Many buyers also want each supplier’s purchase order listed.

Where Multi Supplier Consolidation Breaks

Late suppliers cause the most trouble. If one vendor misses the cutoff, the load either waits or leaves without its freight.

Labels cause trouble too. When each supplier uses a different format, staff must research cartons. The guide on consolidation mistakes lists other common errors.

Who Pays

Programs differ. Some buyers pay for consolidation and charge suppliers less for freight. Others pass costs back. The supply agreement should say who pays for inbound freight to the point, handling there and the combined load.

Starting a Program

Start small. Pick a few suppliers in one region and run a trial for a few weeks. Then compare overall freight and receiving costs with the old approach.

For example, a hypothetical home goods retailer might begin with five suppliers in one area before adding more. The results from that trial would show whether multi supplier consolidation saves enough to expand. The article on consolidation costs explains how to compare the numbers.

Supplier Communication

Success depends on suppliers following one set of rules. Send a short guide with the address, hours, label format and cutoff day. Then review each supplier’s first few shipments with them.

When problems repeat, talk to the supplier directly instead of letting the consolidation point absorb the extra work.