Question

In: Operations Management

How can a supplier with a lower price end up costing the buyer more than a...

How can a supplier with a lower price end up costing the buyer more than a supplier with a higher price?

Solutions

Expert Solution

The low price supplier can deliver poor quality services which do not match the demands and requirements of the clients. This will lead to high rate of customer complaints and customer losses.

The low price supplier can also fail to deliver products on time. In that case, the customers will have its operations disrupted leading to huge losses. This is a concern that ultimately affects the operations of the business in the market.

Moreover, low price suppliers are likely not consistent. This will cause high customer returns and loses to the business. One of the key aspects of suppliers is their reliability in delivering suppliers.

Explanation:

However, the low suppliers do not guarantee the best services to the clients in the market. This is an approach that is going to ensure that the firm is able to serve its customers well and without failure.

The low price supplier may not have the capacity to deliver the value that is needed to serve the clients well and improve their business operations. It important in the management of the clients.

The high price supplier may provide quality, reliable and the value needed to ensure that the firm is able to deliver value to the customers in the market. Consistency is a key component that supports the needs of the clients.


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