Why Large Company Would Have To Ensure The Multiple Suppliers?
Posted by China Sourcing CommentatorAug 24
Why large company would have to ensure that multiple suppliers are available for raw materials like source from different manufacturer. Can save cost????
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You would never want to purchase materials from just one source. The *what ifs* are to numerous. What if that company had a fire or something happens that would defer delivery to you? What if their supplier had problems. What if they knew you only purchased from them so they raised their price above what others would normally charge? If they knew you bought from several different suppliers, it would keep them *in-check*. They would offer very competitive pricing otherwise, they know you would buy from someone else.Hope this helps.
If you rely on one source of supply, and that company gets knocked out by shortages of supply, or a tornado, or a strike, or bankruptcy, then you are in big trouble. Let’s say that you make cars, and that you need leather for the seats. Well, if you rely on one source of supply, and that company decides to significantly raise prices or if it goes out of business, it will be difficult and take time to find new suppliers.