Supplier Performance Impact on Cost Reduction in Supply Chain Mgmt

This essay explores the beneficial relationship between supplier performance and cost reduction within a supply chain context. It highlights how reduced quality defects and warranty costs, resulting from improved supplier performance, minimize risks associated with inventory loss and foster trust between suppliers and businesses. The essay also emphasizes the advantages of Just-in-Time (JIT) delivery, which lowers inventory carrying costs for buyers by delivering products directly to consumers upon order, eliminating warehousing and maintenance expenses. Furthermore, the discussion extends to how suppliers' economies of scale, coupled with efficient machine operations and reduced material handling costs, lead to lower per-unit purchase prices for consumers, enhancing overall supply chain efficiency and profitability. Desklib provides access to similar essays and study resources for students.

Running head: SUPPLY CHAIN 1
Supply Chain
Name
Institutional Affiliation

SUPPLY CHAIN 2
Reduced quality defects and warranty cost is beneficial in supplier performance because
it lowers the numerous risks associated with the loss of inventories. Supply of products that are
faulty creates mistrust between the supplier and the business entities hence losing the good will.
It is therefore important for a supplier to deliver non-defective products in order maintain a good
relationship in the supply process (Monczka, Handfield, Giunipero, & & Patterson, 2015). Non-
defective products will reduce the incidences of consumer returns which would otherwise
disadvantage the seller by refunding the goods.
Improved Just-in time delivery performance leads to reduced inventory carrying costs to
the buyer. Supplies that are made based on orders by customers are convenient because the
consumer will not incur any transportation cost. The products will be delivered promptly to the
consumers by the suppliers who will incur the cost of transportation. Consumers that depend on
the suppliers will be absolved from storage costs that are associated with product’s shelf life
(Christopher, 2016). Just-in-time deliveries are made upon an order by the consumers. In that
regard, there are no costs relating to warehousing, product maintenance and faulty products.
Lower per unit purchase price due to purchasing economies at the supplier, machine
inefficiencies and reduced material handling costs from improved layout. The supplier enjoys the
economies of scale while supplying to many customers and therefore the transportation costs is
distributed annually to the prospective businesses and consumers (Christopher, 2016). As a result
the purchase price for the consumers is minimized because the supplier is bound to make huge
profits due to low operational costs.

SUPPLY CHAIN 3
Reeferences
Christopher, M. (2016). Logistics & supply chain management. London: Pearson UK.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & & Patterson, J. L. (2015). Purchasing and supply
chain management. Boston: Cengage Learning.