The notion of having friends in life is powerful. But even more powerful is the importance of supply-chain management. In a recent
article, Apple, Inc’s various suppliers are readily learning the importance of inviting other mobile devices companies as friends into their supply
chain management circle. According to the article “Down the Apple food chain, profits and some worry”, Apple, Inc’s suppliers are so hung over their relationship
with Apple that business elsewhere has nearly gone extinct.
For example, Tri-Quint, a supplier of power amplifiers that help Iphones communicate with cell towers are experiencing growth due to
its decreasing shares of stock by 58% in 2011. A good reason is due to the fact that Tri-Quintis so focused on its biggest customer rather than leveraging its
relationship with Apple, Inc’s many competitors. According to the Chron.com, “things have gotten so bad for Tri-Quint that the company had to help makers of Android mobil devices find new suppliers.
Despite the problematic concerns over Apple, Inc’s various suppliers, one suppliers of the technology company (Cirrus, Inc) has seen the better days–since its price of stock has risen 39% this year. The success of Cirrus, Inc is due to the intorduction of Apple 4S–whose intro is mainly due to the Cirrus technology. However, Cirrus has plenty of other suppliers. It is easy to claim that if indeed Cirrus keeps Apple, Inc as its only market, then stock prices will indeed fall.
As a question to my classmates, what is the importance of keeping many buyers in hand instead of dealing with one big buyer?
Below is the link to the article:
http://www.chron.com/news/article/Down-the-Apple-food-chain-profits-and-some-worry-2697299.php
I think it is extremely important to keep many buyers in hand, rather than just one. If ANYTHING happens to your one and only buyer, then your business will be in shambles, if not ruined. This goes the same way for the buyer as well. I feel that a buyer should always have a few suppliers to rely on, rather than just one. In case anything happens to one supplier, they should be able to have someone else rather than being forced to search for another supplier that can offer them goods at their standards.
Also, for the purpose of negotiating, it is important to have many buyers. If your buyers are competing for your business, you are likely to receive a better price. It is good for trying to control costs. Of course, with a company as large and influential as large and influential as Apple, they have a lot more control over their suppliers. Sometimes huge companies can take advantage of small suppliers. However, those suppliers are also receiving a huge portion, if not all of their business from Apple.
Like Jennifer said, there is risk in having only one big buyer. It is never a good idea to put all of your eggs in one basket. Spreading your risk among many suppliers dramatically reduces risk and makes a diversified portfolio. Think about the example of Japan and the earthquake. Many auto manufacturers were scrambling to get parts or paint from their Japanese manufacturers. In fact, most of the world’s automakers purchased their paint from one Japanese company and were faced with massive shortages and production interruptions because they only had one paint supplier. It is important for companies to make sure they have a contingency plan in case something major happens.
I think it is important to keep many buyers in your pocket. In your example, not that Apple will fail, but if the one big customer was to fail, then all your previous customers have already found new suppliers and they will not be coming back anytime soon. You want to build relationships and have a portfolio of customers so that if one company is doing well, and the company isn’t, you are still producing and making the bottom line.
I think that it is better to keep many buyers. When you limit yourself with one buyer, you are putting all of your faith into that one company. Would you invest all your money into one stock? When you keep many buyers you are giving yourself more opportunity to build connections and success. I also agree with the first comment. More buyers equals more competition in your favor. If they are competing for you, you are going to build up your price and make more profit.
I think having many buyers is much, much better and important than just having one. When you have more buyers, they will be competing for your purchase, and this will lead to a reduction in the price of the product, which will lead to reduction in cost. This will learnt in class as an effective way of increasing profit margin. On the other hand, one buyer will dictate the price knowing that you don’t have a choice, but to buy from him. Also, when something happened to that one buyer, and he can’t supply you, what happens to your business? With many buyers, at least you are assured of other source of supply. It is always good to have more than one friend, as the saying goes, “two heads are better than one”.
Having more buyers is the obvious choice rather than only having one buyer. Like everyone said you should not risk having only one buyer, because if they fail, you will fail. However with that, you also have to make sure that you do not have too many buyers. If you have too many buyers, you have the chance of not being able to come with the guaranteed amount of supplies or anything else you are selling, because you have to make so many for many different buyers. If you miss your quota then the buyers will not trust you anymore and you will lose more business.