Why pharmaceutical procurement teams are consolidating logistics vendors

Procurement teams across the pharmaceutical industry are simplifying supplier networks to improve resilience, strengthen compliance oversight, reduce operational complexity and drive greater cost efficiency. Vendor consolidation is increasingly seen as a practical way to achieve these goals — helping organizations reduce the total cost of their supply chain, including costs that are often hidden within fragmented supplier networks.

Across pharma industries, procurement leaders are reassessing long-established supplier ecosystems that have grown organically over time. As companies expanded globally, new vendors were often added to support specific markets, services or operational requirements.

The result, in many cases, is a highly fragmented supplier landscape.

“Some manufacturers still have relatively small procurement teams managing hundreds of different vendors globally,” explains Koen Lieffering, Regional Head of Key Accounts Europe at Cencora Alloga. 

“That can include warehousing partners, transportation providers, packaging suppliers and regional distributors. Keeping oversight of all those relationships becomes extremely complex.”

As supply chains become more global and more regulated, procurement leaders are beginning to question whether such fragmented supplier networks remain sustainable.

From cost management to supply chain resilience

The growing interest in vendor consolidation reflects a broader transformation within procurement.

Historically, procurement functions were primarily measured on cost savings and supplier price negotiations. Today, the role has expanded significantly. Leaders are expected to manage operational risk, ensure regulatory compliance, support sustainability initiatives and enable global market access.¹

This shift is particularly visible in the pharmaceutical sector, where supply chains must operate under strict regulatory frameworks governing product handling, temperature control, documentation and traceability.

“Managing large numbers of suppliers makes supply chain oversight more difficult,” says Koen. “It also introduces hidden costs that aren’t always visible in the tender process — where complexity, fragmented processes and limited oversight can quietly drive up the total cost of the supply chain.

“Every additional partner introduces another set of processes, contracts, quality audits and communication channels. Over time, this complexity can limit visibility across the supply chain and increase the administrative burden on procurement, operational and quality teams.²

“In practice, this often translates into additional coordination, integration challenges and operational friction between vendors — inefficiencies that are rarely visible during procurement but can significantly impact performance and cost once the supply chain is live.”

The operational reality of fragmented vendor networks

For procurement leaders, this challenge often begins during the tender process itself.

Individual parts of the supply chain — such as transport, storage or distribution — are frequently sourced separately, with decisions based on the lowest cost for each specific activity.

On paper, this can appear to deliver cost savings. In reality, however, using multiple vendors across different stages of the supply chain can introduce additional costs that are not captured during procurement. These may include the handling and coordination required between providers, as well as indirect costs such as increased vendor management, invoicing complexity, IT integration, and additional operational communication.

Every logistics vendor must meet strict quality standards.

“Each supplier involved in pharmaceutical logistics needs to be qualified under good distribution practice (GDP) standards,” Koen explains. “That means audits, documentation and quality oversight for every single partner.”

As vendor numbers grow, so does the workload required to maintain compliance.

Beyond regulatory requirements, fragmented supplier ecosystems can also create operational inefficiencies across finance and supply chain teams.

“In one example we looked at, a manufacturer had around 20 different logistics vendors just for inbound shipments into Europe,” Koen says. “Each vendor was invoicing at different frequencies — some per shipment, some weekly, some monthly. Just reconciling those invoices created a significant workload for finance teams.”

Research suggests that organizations managing large supplier ecosystems often experience reduced operational visibility and coordination challenges across global supply chains — challenges that can ultimately increase the total cost of the supply chain for manufacturers.³

A real-world example of vendor consolidation

Koen points to a recent example involving a pharmaceutical manufacturer that expanded into Europe following the acquisition of a new product portfolio.

“The company inherited the supply chain that came with the acquisition,” he explains. “Suddenly they had around 30 different suppliers across Europe managing warehousing, transport and distribution.”

For the procurement team, the scale of vendor management quickly became difficult to maintain.

“They were qualifying each supplier individually, managing separate invoices and coordinating operations across multiple markets,” Koen says. “It created a lot of operational complexity.”

Working with a logistics partner, the organization explored ways to consolidate parts of its supply chain.

“In that case we combined warehousing and transport under one coordinated model,” Koen explains. “The client places one order, and we manage both the warehouse operations and the transport arrangements.”

The consolidation reduced administrative complexity, improved operational visibility and created a more scalable supply chain model that could support growth without adding further vendor complexity.

Instead of managing dozens of individual vendors, the procurement team gained a clearer, more integrated view of supply chain performance, compliance and the full end-to-end cost of the process — improving both operational and financial visibility.

Consolidation without increasing risk

Despite the advantages of vendor consolidation, procurement leaders must also manage an important trade-off: reducing supplier numbers without increasing supply chain vulnerability.

Many pharmaceutical companies have historically maintained multiple suppliers as part of their business continuity planning strategies.

“Some of the more traditional companies still prefer working with several logistics providers,” Koen notes. “That diversification can support business continuity planning.”

However, as supply chains become more complex, many organizations are exploring hybrid models that combine consolidation with built‑in redundancy. This is a shift from vendor‑level diversification to resilience designed into the operating model.

Rather than maintaining dozens of suppliers, companies increasingly rely on a smaller number of strategic partners — such as those under the banner of Cencora — that can design, govern, and deliver logistics services end to end across regions and functions. 

In this model, a single globally accountable partner takes ownership of operations and quality management across its wider network. This reduces the burden on the customer while maintaining consistent standards of compliance, performance, and control.

Research shows that organizations adopting strategic supplier consolidation often benefit from improved coordination, stronger accountability and clearer performance management across supply chains.³

What procurement leaders now expect

As procurement teams consolidate their supplier networks, expectations for remaining partners are rising significantly.

Logistics providers are no longer viewed purely as service vendors. Instead, they are expected to act as trusted, consultative advisors — working alongside procurement teams to challenge existing supply chain structures and develop more efficient, sustainable and consolidated networks.

“Vendor consolidation only works if the partners that remain can deliver more value,” Koen explains. “It’s about working with organizations that can support you strategically, not just operationally.”

Several capabilities are becoming increasingly important:

Cost visibility

Procurement teams require a clear, integrated view of both supply chain performance and cost — including hidden or indirect costs that may not be visible during the tender process. This level of visibility is critical for managing total supply chain spend and improving decision-making.

Operational visibility

Procurement teams require clear insight into supply chain performance, shipment status, and potential disruptions. This includes only lead time at each link in the supply chain, but end-to-end lead times that remove the additional leeway when linking across multiple providers.

Regulatory expertise

Pharmaceutical supply chains operate within strict GDP and regulatory frameworks that require specialized knowledge and consistent compliance.⁴

Global coordination

As clinical trials and commercial distribution expand across regions, logistics partners must coordinate operations across multiple markets while maintaining consistent service standards. The ability to coordinate multiple transport modes — such as air, ports, road and ultimately last-mile distribution — is also a necessity.

Proactive risk management

Increasingly, procurement leaders expect partners to identify potential risks early and recommend solutions before disruptions occur. Business continuity planning (BCP) in place ensures critical services remain in effect even during disruptive events.

“The relationship between procurement and logistics providers is evolving,” Koen says. “Organizations want partners who understand the complexity of pharmaceutical supply chains and can help manage it.”

Vendor consolidation as a strategic procurement tool

Vendor consolidation ultimately reflects a broader shift in procurement thinking.

Rather than managing large numbers of transactional suppliers, organizations are building smaller ecosystems of strategic partners capable of supporting multiple aspects of the supply chain.

This approach allows procurement leaders to simplify supplier oversight while strengthening collaboration with key partners.

At the same time, it enables organizations to maintain high standards of regulatory compliance, operational transparency and risk management.

“Consolidation isn’t just about reducing the number of vendors,” Koen says. “It’s about building stronger partnerships that help organizations manage complexity and operate more effectively — reducing QA and vendor management effort, simplifying invoicing and minimizing communication flows across the supply chain.”

As pharmaceutical supply chains continue to expand globally and regulatory expectations grow, vendor consolidation is likely to remain a central strategy for procurement leaders seeking greater resilience and control.