Which of the following benefits of supplier relationship management typically results from collaboration with a few critical suppliers?

Which of the following benefits of supplier relationship management typically results from collaboration with a few critical suppliers?
A . Automation of supplier sales activities
B . Elimination of formal contracts
C . Reduction in customer and supplier inventories
D . Standardization of communications

View Answer

Answer: C

Explanation:

Supplier relationship management (SRM) emphasizes collaboration with key suppliers, which can lead to significant inventory reductions.

The detailed explanation includes:

Collaborative Planning: Working closely with critical suppliers to synchronize production schedules and inventory levels, aligning them with actual demand.

Improved Forecasting: Sharing accurate demand forecasts and sales data helps suppliers plan their production more effectively, reducing the need for safety stock.

Just-in-Time (JIT) Practices: Implementing JIT practices where materials and components are delivered precisely when needed, minimizing inventory holding costs for both the customer and the

supplier.

Vendor-Managed Inventory (VMI): Allowing suppliers to manage inventory levels based on real-time

data, ensuring optimal stock levels and reducing excess inventory.

Lean Practices: Adopting lean inventory management techniques to eliminate waste, streamline processes, and enhance overall supply chain efficiency.

Reference: Dyer, J. H., & Singh, H. (1998). The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage. Academy of Management Review, 23(4), 660-679. Christopher, M. (2016). Logistics & Supply Chain Management. Pearson UK.