Final answer:
A buyer reliant on a critical item from a single supplier should develop a category strategy to mitigate risks, such as fostering a strong supplier relationship, dual sourcing, and maintaining inventory buffers. Also, focusing on core competencies and creating contingency plans are essential to ensure a stable supply chain.
Step-by-step explanation:
If a company is dependent on a critical item supplied by only one provider, the buyer should develop a comprehensive category strategy aimed at reducing risk and ensuring a stable supply. This strategy may include establishing a close relationship with the current supplier, creating contingency plans, investing in supplier development, and exploring possibilities for product substitution or innovation. The goal is to ensure continuity of supply and to avoid disruption to the company's operations.
Core competencies within a business can offer considerable competitive advantages. Just as businesses thrive by focusing on a limited set of products that they can deliver exceptionally well, similarly, when sourcing from suppliers, it's crucial to have a strong, collaborative relationship if the supplier provides a component that is critical to the buyer's core competency.
Therefore, the buyer's category strategy could involve elements such as supplier collaboration, dual sourcing, and maintaining a level of inventory buffer to mitigate the risks associated with reliance on a single supplier. Rigorous contract management and performance monitoring are also key components to ensure supplier accountability and reliability.