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Supplier AnalysisView Template for: SHU Supplier Analysis The purpose of this section is to highlight the suppliers of the horizontal unit. Monitoring suppliers should be viewed as a key activity. Exercising buyer power can often improve profitability quickly. The degree to which companies exercise buyer power varies widely. At a minimum, every horizontal unit should analyze their top ten suppliers. For each supplier, the horizontal unit should evaluate potential alternatives and consider ways to bargain down prices and improve the product (or service) purchased. Especially given the volatility of today's business climate, many vendors will lower their prices when asked. Technological changes have given rise to over capacity in many industries. From the point of view of many vendors, their marginal cost for keeping a customer is low. In addition, many sales representatives are paid on commission of total sales, and their fear of losing the whole relationship is often high enough that negotiating proves successful. The horizontal unit should also judge how dependent it is on each vendor. In essence, the question becomes, "If vendor X suddenly disappeared, what impact would that have?" The goals of the horizontal unit should be to minimize its dependence on as many vendors as possible and to plan for alternative vendors in order to minimize costs and raise vendor performance. Example of Supplier Analysis for I/S Department of Pharmaceutical Company XYZ
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