Business Report

Managing Operations
Tamera Fluaitt
Western Governors University

Business Report
Supply Chain Strategy
The strategy I recommend is the Few Suppliers Strategy. This strategy is based on forming long-term relationships with few suppliers and they more likely understand the end user. In using the few supplier strategy your company can create value by allowing economies of scale which can lower transaction and production cost. Long term suppliers also are more likely to understand what the acquiring firm and the end customer wants.
If you can attain a few suppliers with a large commitment they may be willing to participate in the Just-in-Time (JIT) system. They also can help add to the design of the product by using their technological expertise. You may also have contracts with these suppliers that last through the products life cycle.
The reason this strategy is recommended is because it can be difficult to deal with many suppliers. Your company needs to be assured that you can get the best product for the lowest price. When you are dealing with many suppliers you are using valuable time trying to get the supplies needed at the lowest price to produce your product. This can cause a lapse in production because of late raw material shipments which converts to loss of income. The few supplier strategy can eliminate the game playing. Your agreement with the supplier can help save money by negotiating the lowest price. As your relationship trust builds and your product needs increase you can always renegotiate your agreement which can be more cost effective.
The downside to this strategy is, if a complication arises between the company and supplier the cost of changing partners is huge. Some of these problems are: (1) Poor supplier performance (2) Trade Secrets (3) Suppliers that makes alliances and venture out on their own.
Business Report