MGMT 5575 Johnson & Wales University Supplier Strategy Discussion

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Business Finance

MGMT 5575

Johnson & Wales University

MGMT

Description

Examine the six supplier strategies below. It is important to know and be able to apply these strategies correctly to a business. Write a paper that examines the six supplier strategies and applies each strategy to a specific type of business.

Many Suppliers

Few Suppliers

Vertical Integration

Joint Ventures

Keiretsu Networks

Virtual Companies


Explanation & Answer:
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Supplier Strategy

Name
Prof
Course
Date

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Many Suppliers
This supplier strategy refers to having more than one supplier supplying the same product
to the buyer. According to Render, Heizer, & Munson (2020, this strategy usually depends on the
price of the product. A buyer is always obligated to take or purchase products from a cheaper
supplier and skip products from an expensive supplier. Organizations who would rather diversify
their demand among a more extensive range of suppliers with greater capacities and quicker
response times may find success with a many-suppliers approach. This approach is also required
when a single supplier is not able to supply all the purchasing company's needs. This happens,
for instance, when a product consists of several parts that no one vendor can manufacture.
Some of the major pros of this approach are that it gives buyers an alternative to getting
cheaper and high-quality products within a short period when other suppliers are unavailable.
Buyers also have ample time to react to any unexpected event in case a supplier does not deliver
the needed product on time (Christopher & Towill, 2019). Intense competition from many
suppliers yields a more substantial buyer negotiation power, innovation, better delivery, price,
and quality. There is also a higher reliance, flexibility, and fewer bottlenecks for buyers who use
this strategy. While diversifying supply sources can improve dependability, adaptability, and
capabilities, it also increases the complexity of supplier partnerships and calls for more time and
energy to oversee and supervise. A higher number of suppliers increases the complexity of
information sharing and raises costs of process execution, management, and contract negotiation.
It also lowers bargaining power due to reduced order volumes when buyers are choosing a better
supplier.
An example of a business using many suppliers is a hardware business with many
suppliers supplying cement, tanks, steel rods, and other materials. The business will always have

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several suppliers of cement. These suppliers may be companies A, B, and C. If customers prefer
cement from company A more, the hardware owner will purchase more cement from company A
than company B and company C. If company A does not supply cement, the hardware can still
purchase cement from company B and company C depending on their prices and quality. The
company with a cheaper and high-quality product will have a higher chance of their product
being purchased by the hardware store.
Few Suppliers
According to Render, Heizer, & Munson (2020), a fewer suppliers’ strategy refers to a
system where the business owner develops a long-term relationship with single or fewer
suppliers. These suppliers supply products to the buyer without compromising their product
quality and price. The buyer and the supplier always have mutual trust and respect. The supplier
will always ensure that the buyer gets their product on time, and the buyer will also not order
products from other suppliers due to their mutual respect, understanding, and work ethic. If the
supplier is reliable and well-matched, a single or fewer supplier’s strategy can bring many
benefits to the buyer.
One main advantage of this strategy is that it is easy to develop a long-term and effective
relationship with one than with multiple suppliers. This partnership also helps foster shared
benefits and trust between the buyer and supplier. There is also a lower risk of oppo...


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