Question

What are the advantages to firms of supply base rationalization programs? How does it support strategic alliance development?

Answer 1

Answer:

Supplier-based rationalization is reducing purchase from marginal or poor performing suppliers and increasing concentration on purchases among their most desirable top performing suppliers.

Advantages: Reduced purchase prices due to quantity discounts, fewer supplier’s management problems, and close and frequent collaborations between buyer and suppliers.Disadvantage: Future research into supply base reduction efforts requires detailed inputs from the suppliers, elimination of qualitative suppliers due to low returns, and capacity and time have given.

Strategic alliances allow two organizations, individuals or other entities to work toward common or correlating goals. The idea is for all parties to benefit in the short term, long term or both. The agreement may be formal or informal, but each party's responsibilities must be clear.

The results of forming a strategic alliance can include allowing each of the businesses to achieve organic growth at a quicker pace than would happen if they acted alone. The partnership could provide access to resources and knowledge that one company owns but the other does not. As an example, if a small printing company allied with another that could provide access to high-speed presses, the small business could reduce their cost of production and capture more of the local printing business.

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