31. Which of the following is not a major benefit of using fewer suppliers?

Question

31. Which of the following is not a major benefit of using fewer suppliers?

BlackTom AI · Accepted Answer

Consolidating purchases with fewer suppliers typically produces stronger strategic relationships, lower transaction and administrative costs, greater bargaining power for volume discounts, improved quality control through closer collaboration, and simplified logistics — all recognized major benefits of using fewer suppliers.

Relevant concepts:
- Supplier consolidation: reducing the number of suppliers used for a category of goods or services.
- Benefits of consolidation: economies of scale (volume discounts), lower overhead (fewer contracts and invoices), stronger supplier relationships (collaboration and continuous improvement), and easier supply-chain coordination.
- Supplier diversity: deliberate sourcing from small-scale, minority-owned, or disadvantaged businesses to achieve social, regulatory, or corporate-responsibility goals.

Step-by-step reasoning:
1. List typical benefits of using fewer suppliers: (a) consolidated spend → more volume per supplier → stronger negotiating leverage and lower unit price; (b) fewer relationships → fewer contracts/invoices → lower administrative and transaction costs; (c) concentrated partnership → better quality control and supplier development; (d) simplified logistics and supplier performance management.
2. Contrast these with the provided statement: "It allows the organization to work with small-scale enterprises and minority owned suppliers." Consolidation concentrates spend with a small number of suppliers that can handle large volumes; small-scale or minority-owned suppliers often rely on many smaller contracts or may lack capacity to compete for consolidated, high-volume business.
3. Illustrative example: if a company spends $1,000,000 across 10 suppliers ($100,000 each on average), reducing to 2 suppliers would allocate $500,000 each. A small supplier that could only take $100,000 worth of work would likely be excluded when contracts require larger capacity.

Why the given answer is correct:
- Working with small-scale/minority suppliers is typically easier when spend is fragmented and many sourcing opportunities exist. Consolidation works against that by favoring larger, scalable suppliers. Therefore, allowing work with small-scale/minority suppliers is not a major benefit of using fewer suppliers.

Why other (typical) options are incorrect:
- Claims about reduced transaction costs, improved bargaining power, simplified logistics, and better supplier relationships are in fact major benefits of fewer suppliers, so they would be incorrect choices if presented as "not a benefit."

Conclusion: The correct answer is "It allows the organization to work with small-scale enterprises and minority owned suppliers," which is not a major benefit of using fewer suppliers.

31. Which of the following is not a major benefit of using fewer suppliers?Single choice

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