Question

Why might an organization strive to form​ long-term relationships with a few dedicated​ suppliers?

Part 2

A.

The organization needs the flexibility to meet rapidly increasing demand.

B.

Suppliers are encouraged to provide design innovations and technological expertise.

C.

The organization wishes to take advantage of diseconomies of scale.

D.

Suppliers must quote the lowest cost to retain the​ organization's business.

Answer 1

An organization might strive to form long-term relationships with a few dedicated suppliers in order to encourage design innovations, meet rapidly increasing demand, and take advantage of diseconomies of scale.

Step-by-step explanation:

An organization might strive to form long-term relationships with a few dedicated suppliers for several reasons:

1. Suppliers are encouraged to provide design innovations and technological expertise. By maintaining long-term relationships, organizations can foster collaboration with suppliers, enabling them to offer valuable input and contribute to product design and technological advancements.
2. The organization needs the flexibility to meet rapidly increasing demand. Having established relationships with dedicated suppliers can ensure a reliable and efficient supply chain, allowing the organization to scale up production and meet increased demand without disruptions.
3. The organization wishes to take advantage of diseconomies of scale. By working closely with a few dedicated suppliers, organizations can negotiate favorable pricing and volume discounts, taking advantage of economies of scale and reducing costs.

Answer 2

An organization may form long-term relationships with suppliers to foster design innovations, technological expertise, cost savings over time, and collaborative planning, which enhances overall efficiency and competitive position rather than solely focusing on the lowest initial costs.

Step-by-step explanation:

An organization might strive to form long-term relationships with a few dedicated suppliers for several strategic reasons, one of which could be the encouragement for suppliers to provide design innovations and technological expertise as suggested by option B. When suppliers are involved in a long-term partnership, they often invest more in the relationship, sharing knowledge that could lead to product improvements and streamlined processes, enhancing overall efficiency and possibly leading to a better competitive position. This type of relationship can also foster better quality assurance, supply chain stability, and collaborative planning which can be crucial in complex or rapidly evolving markets.

Another reason for the establishment of long-term relationships is reducing the total cost of ownership over time, even if it doesn't always mean having the lowest initial costs as stated in option D. Suppliers, as part of a long-term relationship, may be more willing to invest in cost-saving measures that benefit both parties over time. However, it's not just about the costs. Close relationships can enable organizations and suppliers to plan and work together more effectively, managing lead times, inventory levels, and even collaborating on new projects or expansions, resulting in overall benefits that outweigh the benefits of continually switching suppliers in pursuit of the lowest quote.

Options A and C are generally not the focus of forming long-term supplier relationships. The need for flexibility to meet increasing demand (A) may require broader relationships rather than deep ones with a few suppliers, and aiming to take advantage of diseconomies of scale (C) contradicts the general goals of efficiency and cost reduction in supply chain management.