Question

What does "Rationalizing the supplier base" would mean that the purchasing firm is attempting to reduce the number of suppliers in its supplier network by eliminating poor performing suppliers in its present supplier base.

a) Increasing the number of suppliers
b) Expanding the supplier network
c) Eliminating poor-performing suppliers
d) Collaborating with competitors

Answer 1

Rationalizing the supplier base refers to the process where a purchasing firm reduces the number of suppliers, keeping only the high-performing ones to streamline operations and improve efficiency.

Step-by-step explanation:

Rationalizing the supplier base means that the purchasing firm is attempting to streamline its supplier network. This process involves eliminating poor-performing suppliers and potentially decreasing the number of suppliers to improve efficiency and quality in procurement. The strategy focuses on maintaining a supplier base that is easier to manage, increases bargaining power with fewer, more reliable partners, and seeks to reduce costs associated with managing numerous suppliers.