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Typically, during a Strategic Sourcing initiative, large companies with multiple locations seek to consolidate their purchasing, particularly for indirect spend categories. If the organization has locations across the country, this means that it is ideal to identify suppliers who can provide nationwide service. If the organization has multiple locations that are all in the same general region, this might entail looking for both national and regional suppliers. If an organization only has one or two locations, and both locations are in the same region, you might be able to consider local suppliers alone.

While consolidation of suppliers generally makes sense in less‐strategic spend categories, it may a substantially higher per‐unit price for certain markets. This is particularly common for products where freight is a major component of cost, such as corrugated boxes, wooden pallets, or light bulbs. Spend categories in which services are unique to particular locations or regions may also contravene a single‐supplier strategy. A good example is janitorial services, for which on‐site presence is required daily.

In order to determine the type of supplier who makes the most sense for your Strategic Sourcing initiative, first look at how the products or services are currently being purchased. Are you currently buying from multiple suppliers across multiple locations? If so, why? It might be because different locations have different requirements or because freight costs make a local source of supply the better option. Of course, it might also mean that there is an opportunity for cost savings through supplier consolidation.

Remember that during the Research phase you are hoping to develop a long list of suppliers that will be refined as you move into the RFx phase. At this stage, including local, regional, and national suppliers on your list is better than limiting it to only one type of supplier, but it is important to understand the differences and distinguish between these supplier types when going to market.