Question

What are the benefits of reducing the number of suppliers? (min 125 words)

Answer 1

Some of the advantages of decreasing suppliers are:

(1) Enhances purchasing power-The Company increases the volume purchased to suppliers by reducing the supplier number and can be negotiated as a result of this more favorable price. It thus enhances the company 's buying capacity.

(2) Lower freight costs – the volume per supplier purchased is high, and thus many products from one location will be shipped. This helps to reduce the cost of freight per unit.

(3) Improve quality – the quality of products and services from providers can be beneficial to the company. Improved product quality will help to reduce the cost of holdings and inventory.

(4) Signifying reduces soft costs – As the number of providers has fallen, the number of bill payments will also be reduced. This practice will help to reduce billing costs. The company's credit rating will also improve as providers are less and more often paid.