CPIM Practice Exam

What is a benefit of supplier partnerships from the suppliers' perspective?

1. Short-term contracts with variable terms

2. Fewer deliveries in larger quantities

3. Minimized service feedback cycles

4. Reduced competition in the marketplace

The correct answer is: Fewer deliveries in larger quantities

From the suppliers' perspective, fewer deliveries in larger quantities is beneficial because it leads to increased operational efficiency and reduced transportation costs. When suppliers work in partnership with their customers, they can plan their production and logistics more effectively. This arrangement allows suppliers to consolidate shipments, decreasing the frequency of deliveries, which saves time and reduces the burden on their workforce and resources. Additionally, larger order quantities can lead to economies of scale, which can potentially result in lower costs for both the supplier and the customer. Suppliers can also minimize their handling and administrative costs associated with multiple smaller deliveries, ultimately contributing to improved profitability. In contrast, short-term contracts with variable terms can create uncertainty and might require suppliers to remain agile without the stability needed for efficient long-term planning. Conversely, minimized service feedback cycles may not necessarily be aligned with the need for responsive action based on customer needs, and reduced competition in the marketplace could have different implications that don’t offer direct benefits to suppliers, such as potential complacency or reduced market differentiation.