A company develops annual forecasts for key products and enters into annual contracts with key suppliers based on the forecasts. Which of the following benefits would the company most likely receive from this approach?
A company develops annual forecasts for key products and enters into annual contracts with key suppliers based on the forecasts. Which of the following benefits would the company most likely receive from this approach?
By developing annual forecasts for key products and entering into annual contracts with suppliers, the company can negotiate lower prices. This approach allows suppliers to better plan their production and operations, leading to cost savings that can be passed on to the company through lower prices. Additionally, the commitment of an annual contract provides stability and predictability to the supplier, enabling them to offer discounts or lower pricing in exchange for guaranteed business.
Why not improved service? Forecasts by themselves do not ensure lower prices as commodity inflation may play a bigger role in price escalation. However, in all cases accurate forecasts will ensure availability of material and hence better service
I don't see how it would guarantee improve service.. a company could enter annual contracts with suppliers, supplier may or may not provide excellent service. But by signing annual contracts, it will allow supplier to better understand the actual number of product and plan accordingly. As such, supplier may provide lower prices
What are you talking about? "Key Products" This means the strategic importance is high, and it is not a commodity. Therefore, this is a leverageable material, and with all leverageable materials, you try to reduce price and improve quality over time. Carefully read the question, people.