Why is it desirable to reduce the number of suppliers in the supply chain? What are the risks

Answer:

Need for reducing the number of supplier in supply chain and the risks associated with multiple suppliers:

-If there are mulitple suppliers in the supply chain then if any one supplier commits mistakes then it would be diificult to identify which supplier has committed the mistake and this creates a lack of trust in all the suppliers.So only limited number of supplier should be employed for effective delivery of a product or service

-There may be some uncertainities with several suppliers and this may cause the delay for delivery of the product or service.If the number of suppliers increases then the risks also increases because every supplier has to correctly deliver the product within the schedule and there should be no delay

-By having multiple suppliers,special attention cannot be given to a customer and there is a lack of focus on customer needs and demands.So this may decrease the customer loyalty and inturn reduce the market share

-It may be difficult to pinpoint the source of defective part if there are many suppliers.So the quality of the product or service may be reduced

-As there are many players,it is difficult to control the output or performance of all the suppliers.All the suppliers have to be tracked and monitored for their performance.So it takes lot of time in maintaining and monitoring more number of suppliers.So with limited number of suppliers the effieciency increases

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