{"id":3025,"date":"2011-01-24T20:50:00","date_gmt":"2011-01-24T20:50:00","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2011\/01\/24\/will-supplier-consolidation-be-a-by-product-of-us-healthcare-legislation\/"},"modified":"2021-07-13T22:22:26","modified_gmt":"2021-07-14T02:22:26","slug":"will-supplier-consolidation-be-a-by-product-of-us-healthcare-legislation","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/will-supplier-consolidation-be-a-by-product-of-us-healthcare-legislation\/","title":{"rendered":"Will Supplier Consolidation Be A By-Product of US Healthcare Legislation?"},"content":{"rendered":"

I hope that you have enjoyed the article Can Supplier Consolidation Truly Save Cash?<\/a><\/p>\n

In the article, I referred to \u201cpending legislation in the USA that will require businesses to file a 1099 form for every supplier with whom they spend $600 or more per year.\u201d You can read more about that brilliant idea here if you\u2019re not familiar with the legislation or the 1099 form process.<\/p>\n

As I tried to convey in the article, it is hard to assign verifiable costs to the number of suppliers. One exception would be having to hire a contractor to create and distribute 1099\u2019s to those suppliers with whom you\u2019ve done business under the law that goes into effect in 2012. I would guess that these contractors that will pop up unless our congressmen and women get this looming debacle will probably charge on a per-1099 or per-supplier basis.<\/p>\n

Because there will be now some verifiable, reduceable cost associated with the number of suppliers a company has \u2013 even if it only represents a small cost of doing business with a supplier \u2013 there will be some degree of push from executives for supplier consolidation. \u201cHey, if we don\u2019t have to pay for a 1099, let\u2019s not.\u201d<\/p>\n

Obviously, this is a disadvantage to the niche suppliers \u2013 primarily small businesses \u2013 who focus on doing one thing well instead of 50 things poorly. If a business can buy 50 things from the same place and only have the burden of issuing one 1099, that business may sacrifice quality, cost, delivery, and\/or service to do so in order to avoid having to issue fifty 1099\u2019s.<\/p>\n

That sounds akin to a government-sanctioned plea to buy from Wal-Mart so that the local bike shop, pet store, pharmacy, etc. go out of business. And, if that wasn\u2019t enough, this legislation discourages small transactions that are the lifeblood of small businesses. Some businesses will think \u201cIt will cost more to generate 1099 for this item than to buy it, so I will not buy it at all.\u201d<\/p>\n

If no one noticed, \u201cnot buying\u201d has been kind of bad for the economy in the past couple of years. It\u2019s scary to think that our government \u2013 in addition to encouraging doing business only with the big guys \u2013 is also encouraging a situation where businesses will think twice about making small purchases.<\/p>\n

It makes me wonder how much of the total business spend in the US is the low value (e.g., less than $50). I think that is an area that is very important to the economy and very vulnerable to this legislation.<\/p>\n

Circling back around to the article, the point is that whether demanded by management or influenced by dumb legislation, supplier consolidation is likely to be a goal of yours. So, when you engage in it, be sure to aim for the three results listed in the article.<\/p>\n

Recommended Reading<\/b><\/p>\n