Failure to act accordingly may lead to losing bargaining power over prices through the leverage of debt strategy since you will become dependent on the supplier, who prefers such customers. The most common issues faced include the sale of old or faulty goods, delays in supply, and price inflation.
Supply Chain Risk:Â Procuring all materials from a single supplier can expose the business to significant disruption or problems in the supply chain. For instance, if the supplier goes bankrupt or encounters production issues, the business may struggle to obtain materials.
Sensitivity to Price Fluctuations:Â Procuring all materials from a single supplier can increase sensitivity to price fluctuations. In this case, if the supplier increases prices, it can raise the business’s costs and reduce profit margins.
Quality and Variety:Â Sourcing materials from different suppliers can provide the business with a wider range of products and enhance quality. However, relying on a single supplier may result in limitations in diversity and quality control.
Competitive Edge:Â Procuring materials from multiple suppliers can enhance the business’s competitive edge. By negotiating competitive prices and terms with different suppliers, the business can reduce costs and provide better service.
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