[startupcfo]

The question was about the objectives of good supply chain management. One answer the computer said was a good practice was to

“To reduce the supplier base while developing supplier relationships”

Why would that be a best practice in supply chain management? If you reduce the supplier base, you potentially limit your options. Isn’t it a fundamental pillar of economics 101 that consumers benefit when they have more suppliers competing for their dollars, thus forcing suppliers to provide better goods/services at lower prices?

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[Biff-1955-Tannen]

It's getting at although you're lowering your number of suppliers, you are retaining better quality of suppliers. I see your point though

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[Missy]

Economics 101 is based on the premise of multiple consumers to multiple suppliers not the premise of one consumer to multiple suppliers. If a consumer has a relationship with one supplier they're more likely to get volume and loyalty discounts, have more leverage based on the fact there are other suppliers out there but more pressing and practical is the fact that a supplier is more compelled to meet deadlines if a substantial portion of their business depends on meeting deadlines.

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[FIFOisbetterthanLIFO]

In the real world, it is absolutely crucial to have back-up suppliers especially among items that are necessary to run the business and make money. mla is correct that you will often get better prices if you dedicate the majority of your orders to a couple suppliers, but you have to be careful. In Fortune 500 companies, you will often find they spread out the business across multiple fronts or only do business with huge companies who have low risk of going out of business, etc.

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