Question

Why would companies in general benefit from reducing their supply base? Explain

Answer 1

general benefit from reducing their supply base :

1. Easier to manage : It is always Fewer the better. Less no of supplier will be easy to manage. Less administration cost.

2. Lesser Cost of Purchase : Less Supplier means lesser administration cost. Various cost involved in setting up a supplier , fewer people in Purchase department will bring down overall purchase cost.

3. Reduced Risk : Less Suplier means less people to manage will bring down reduction in overall process i supply chain. Company can more focus in existing fewer supplier. Help to maintain better quality of inputs.

4. Strong Supplier Relationship : Less supplier means company can focus more on existing supplier. Help to improve long term business relationship.

5. Managing Account payble Better - Lesser supplier will give clear visibility in billings and account payables