Question

Summarize the key lessons and takeaways from the article at least 250 words:

"Don't let your supply chain control your business" by Choi and Linton, 2011

Answer 1

"Don't let your supply chain control your business" is the article published in the December 2011 issue of Harward Business Review. Thomas Choi and Tom Linton have explained in the article that it is dangerous to rely heavily on first-tier suppliers for OEM (Original Equipment Manufacturer). Companies should not let the supply chain control of the business. The main issues when the business is relying heavily on the supply chain and first-tier suppliers are as per below,

a. Less Control over Costs: Managers would have less control over cost or cost would not be transparent when they outsource their various activities such as design or production and the company would not be able to leverage in reducing costs when the company chooses a single supplier for its entire subsystem.

b. Reduce the ability to technological development: When the organization has first-tier suppliers or a single supplier, they will lose access to finding new and updated information on technological development. The organization can have a better relationship for accessing valuable information on the latest technological innovations in the industry.

c. Reduce the ability to get market information: Organizations should have better relationships with lower-tier suppliers instead of a big and single supplier to know the market information and economic development.

d. Reduce control over Sustainability: Organizations or manufacturers are the responsible to take care of sustainable environment by its activities or practices and also need to control the practices or activities of their suppliers that harm the environment. Having a single supplier that is not following sustainable practices can harm the business of manufactures as well. So the manufacturer should have ability or space to change or update the supplier when needed.

Most multinational companies such as Dell, Apple, Honda, Toyota, etc. would take their own decisions for sourcing the supply even they have comprehensive vendor list ready. They will not rely on the top tier suppliers for any components or raw material. Companies need to use different strategies in choosing their suppliers that are discussed in the below points,

a. Control on the items that have a significant effect on the product and its cost:

b. Analyze the supplier's Innovation capabilities.

c. Choosing a supplier who follows sustainable practices and activities:

d. Stay close to vendors to know internal information about the industry.

e. Reshaping the purchasing department.

So we can understand that there are various advantages of having lower-tier suppliers instead of a single or big supplier for the organization. We can easily manage and control on lower-tier suppliers and change them if needed. But it will be difficult if are relying on a single supplier for our raw material sourcing.