One key factor to consider when selecting suppliers for their potential to sustain long-term, mutually...

When selecting suppliers for long-term, mutually profitable relationships, financial viability is crucial because:

Stability: Financially viable suppliers are more likely to be stable and reliable, ensuring continuous supply without interruptions.

Capacity for Investment: Suppliers with strong financial health can invest in technology, innovation, and capacity expansion to meet future demands.

Risk Mitigation: Financially sound suppliers are less likely to face bankruptcy or financial distress, reducing supply chain risks.

Negotiation Leverage: Buyers can negotiate better terms and conditions with financially stable suppliers, ensuring fair pricing and quality.

Support for Growth: Financially viable suppliers can support the buyer’s growth plans and collaborate on long-term strategic initiatives.

References:

Monczka, R., Handfield, R., Giunipero, L., & Patterson, J. (2015). Purchasing and Supply Chain Management. Cengage Learning.

Burt, D. N., Dobler, D. W., & Starling, S. L. (2003). World Class Supply Management: The Key to Supply Chain Management. McGraw-Hill.