How one-time needs and C-parts get bundled through one central creditor in practice: the steps involved, what the introduction means and what stays unchanged.
A department urgently needs a specific spare part. Maintenance needs a tool that none of the existing suppliers can provide. Somewhere else, a small quantity of consumables has run out. The value of the goods may be 80, 200 or 500 euros. Even so, each of these orders can trigger almost the same internal process as a far larger purchase: check and create the supplier, approve the order, record the invoice and process the payment.
With C-parts and one-time needs in particular, this creates a mismatch between the purchase value and the administrative effort behind it. C-parts typically have a low value and are needed regularly, whereas one-time needs arise irregularly or genuinely only once. What both have in common is that conventional procurement processes can quickly become disproportionately expensive for small order values. The problem is then not the price of the product, but the process required to bring it into the company in a compliant way.
Many companies have already structured their recurring indirect requirements. Standard products are ordered through catalogs, frequently needed goods are covered by framework agreements, and corporate credit cards are available for certain expenses. These instruments all have their place. It becomes difficult wherever a specific requirement does not fit the intended pattern.
A catalog, for example, works particularly well for standardized and recurring requirements. Office supplies, protective equipment or regularly used consumables can be ordered quickly and on clearly defined terms. The limit of the model, however, lies in its own logic: a catalog can only show what was added to it beforehand. If production needs a specific component from a niche provider, or maintenance needs a tool outside the existing range at short notice, the question of the right procurement route starts all over again.
Framework agreements, in turn, make sense when a company orders regularly from a supplier or can consolidate a relevant purchasing volume. For a provider from whom only a single product worth a few hundred euros is likely to be purchased, the effort of negotiating, setting up and maintaining such a contract is hardly proportionate to the possible benefit.
The corporate credit card mainly solves the speed problem. An employee can order an item immediately, without first creating a new supplier in the classic purchase-to-pay process. In most cases, however, this only shifts the problem. Order, receipt, cost allocation and documentation subsequently have to be brought back into the company's intended processes. At the same time, depending on how it is set up, transparency about what was purchased from whom and on what terms decreases.
Catalogs, framework agreements and credit cards can therefore each cover part of indirect procurement efficiently. What remains is the unpredictable rest: small, short-notice or one-time needs from changing suppliers. It is precisely this long tail that generates a disproportionate amount of administrative work.
A comparison of the common strategies for consolidating small orders can be found in the article Single Creditor Model: Definition, Process, Benefits.
How does a single creditor model work in practice? From the requester's point of view, the basic sequence differs only slightly from a normal procurement transaction. The decisive difference happens in the background.
Pedlar is set up once as a creditor in your ERP system. In the steps that follow, Pedlar is that central creditor.
1. The department reports its requirement. The starting point remains the specific requirement. The department submits the item, the quantity, the source or provider if already known, and the requested delivery date. In principle it makes no difference whether this is a spare part from a specialized manufacturer, a tool or any other indirect one-time need.
2. The order runs through the creditor already on file. Instead of first creating the respective provider as a new supplier in the ERP, the order is processed through the central creditor. That creditor has already been checked and exists in the system. This removes the need to create a new supplier record internally for a single transaction.
3. The actual procurement happens in the background. The billing partner orders from the respective provider and handles the payment to them. Procurement can therefore continue to draw on different sources of supply without having to build up each of them as a separate creditor relationship inside its own organization.
4. The goods go directly to the requester. A single creditor model does not mean that products first have to be routed through an additional warehouse or a central hub. Delivery goes directly from the respective provider to the intended recipient. For the department, the physical flow of goods therefore remains largely unchanged.
5. Invoicing is consolidated. Instead of processing a multitude of small invoices from different suppliers, the company receives one consolidated, auditable invoice from the central creditor. This reduces not only the number of suppliers that accounts payable has to process, but also the complexity around numerous small individual transactions.
The decisive effect comes from separating physical procurement from the administrative supplier relationship. A company can continue to buy from many different providers. That variety no longer has to be reflected in full in its own ERP and accounts payable.
With a strategic supplier, the cost of onboarding and checking is spread across many orders and possibly several years of cooperation. With a one-time supplier, a single order carries the entire administrative effort.
This is precisely why looking at the value of the goods alone is not enough for C-parts and one-time needs. What matters is the total cost of procurement, which includes the costs that arise inside the company through the purchasing process itself.
Suppose a department needs a product for 250 euros. If a new supplier has to be created, checked and approved for it, work is generated in procurement, finance and possibly further departments. After the order there is an additional individual invoice that also has to be checked, allocated and paid.
This is why the many small transactions in the long tail are so interesting for process optimization. Not because a single order is particularly expensive, but because the same administrative effort repeats itself across hundreds of transactions.
Whether a single creditor model is worthwhile for your own company is covered in the article on the business case and limits of the model.
Consolidating C-parts and one-time needs does not mean that all of a company's supplier relationships should run through an intermediary. Strategic suppliers serve a different purpose.
Where purchasing volumes are high or recurring, direct relationships, framework agreements and individually negotiated conditions make sense. Procurement can negotiate prices, define quality requirements, manage security of supply and develop suppliers strategically.
The single creditor model instead addresses the other side of the supplier portfolio: providers with low volume and low order frequency, whose administrative upkeep causes disproportionate effort relative to their economic importance.
The model therefore complements existing purchasing structures rather than replacing them.
For the buying company, the underlying idea is deliberately simple. The central billing partner is created once as a creditor in the ERP. After that, one-time needs and C-parts run through this existing structure.
Pedlar operates this model as a managed service. Employees do not have to learn a new procurement system and companies do not have to replace their existing ERP landscape. The approach is meant to start exactly where existing purchasing processes reach their economic limits today.
This is what distinguishes the single creditor model from projects in which a new platform first has to be rolled out company-wide, integrated technically and established in the departments. When assessing the model, what matters is therefore not only which process costs are saved later, but also how much effort it takes to realize those savings in the first place.
No. C-parts are goods of comparatively low value that may well be needed regularly. One-time needs, by contrast, are characterized above all by how rarely they are ordered, often only once. In practice, the two categories can overlap.
Avoiding exactly that effort is the point of the single creditor model. The order is processed through the central creditor already on file, while operational procurement from the respective provider happens in the background.
C-parts and one-time needs do not become expensive because each individual product has a high value. What becomes expensive is the sum of hundreds of small transactions, when each of them again triggers supplier creation, checks, ordering and invoice processing.
The single creditor model therefore does not start with the variety of requirements, but with the process structure behind them. Companies can continue to procure exactly the products they need from the providers they need, while consolidating the administrative handling through one creditor.
Anyone wanting to check whether this approach is worthwhile for their own procurement should start with a simple analysis: how many creditors are used only once or twice a year, and how much internal effort do these suppliers generate?
Pedlar consolidates such one-time needs through a central creditor and takes over the operational handling with the respective providers.
Would you like to discuss how your one-time needs and C-parts could be consolidated through a single creditor? Schedule a call →
