Cost Cutting ?
A business is a living thing. The supply chain is vital to its continuous and efficient functioning. It is also a major expense. So it becomes tempting to look into cost-cutting in an ongoing manner. For example, the businesses employ the method of just-in-time ordering and deliveries. However, when your business relies on thin inventories for Production or Maintenance, it greatly increases the chance that it will suffer disruption caused by the supply chain and driving up the cost of operation.
Short-term Costs ?
It is found by the researchers that actions taken to drive short-term costs out of the supply chain and improve operational advantage can sometimes drive greater risk into the company, causing production delays and increasing overall costs.
Long-term Agreement ?
The long-term agreements with suppliers can provide stability and enable a company to focus on the production of quality goods, but it also results in greater undue dependence. This approach also can cause delays in deliveries & disruption of the supply chain, resulting in higher cost of operation at times.
Single Supplier ?
Even trying to create leverage and lower costs by relying on a single source for the key supplies can result in increased vulnerability causing production-line delays and added costs.