A South African appliance producer is reviewing its motor supplier base to reduce administrative costs and concentrate volumes with fewer suppliers. One small supplier receives only 4% of current annual spend and has average delivery performance, but it is the only approved supplier able to produce a winding design required for a new energy-efficient product range planned for launch next year. Two larger suppliers offer lower current prices and stronger delivery records but would need at least 12 months to develop the same capability. Which decision is most defensible?

Question

Answer

Retain the small supplier only for the new product range, but exclude it from performance improvement because its current spend is too low to justify development.

Answer

Retain the small supplier with targeted improvement milestones because its future capability is important, but its current delivery weakness still requires management.

Answer

Keep the small supplier as an emergency backup only because its specialised capability is useful, but its low spend makes it unsuitable for planned sourcing.

Answer

Remove the small supplier after transferring its technical knowledge to the larger suppliers because future capability should be consolidated with lower-cost suppliers.

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A South African appliance producer is reviewing its motor supplier base to reduc...

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