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What is described as a critical element of effective supply-chain management?
ASwitching suppliers as often as possible each year
BBidding every contract down to the lowest price
CKeeping suppliers unaware of production plans
DDeveloping tight bonds with the firm's suppliers
Answer & Solution
Correct answer: D. Developing tight bonds with the firm's suppliers
1. A critical element of effective supply-chain management is developing tight bonds with suppliers.
2. In practice this may mean reducing the number of suppliers used.
3. Those that remain are asked to offer more services or better prices in return for an ongoing relationship.
4. Frequent switching and pure price bidding work against such bonds, so options A and B describe the older approach rather than the current one.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 10 "Achieving World-Class Operations Management", section Strategies for Supply-Chain Management_
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