Which of the following is the BEST course of action for supply management to undertake in order to initiate improvements?

A manufacturer must work to reduce cost of goods sold (COGS) to achieve profit objectives and remain competitive in a tight market. The manufacturer has long standing relationships with its main suppliers and a strong supply management department that conducts periodic reviews with the suppliers. Nevertheless, the manufacturer is not hitting targets.

Which of the following is the BEST course of action for supply management to undertake in order to initiate improvements?
A . Continue to operate as usual, as manufacturing and operations must focus on labor cost reduction to best impact COGS
B . Conduct a workshop with suppliers and internal stakeholders, focusing on sustainable improvements and goal alignment
C . Demand each supplier provide price concessions regardless of contract terms, as it is a tight market
D . Retender the contracts representing the main cost drivers in order to maximize COGS reduction

View Answer

Answer: B

Explanation:

Workshops facilitate collaboration and innovation, addressing cost drivers comprehensively and fostering alignment on sustainability and cost reduction goals.

Reference: Bowersox,

D. J., Closs,

D. J., & Cooper, M.

B. (2013). Supply Chain Logistics Management.