Engineering Cases
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LED lighting procurement over-squeezed suppliers are "self-harming"

2023-04


Shortly after, a certain LED lighting company promoted a purchaser to a supply chain business manager. Not long after, I heard the manager preach everywhere about how much he has reduced prices by transferring some parts from one supplier to another, and how much he can save on procurement costs annually. He is also preparing to adjust the entire supplier base to determine the extent to which procurement costs will be saved. There is nothing to criticize when a new official takes office, but its methods and methods are worth discussing.
First of all, let's take a look at the manager's price reduction method: he specifically selects the parts with the highest usage and conducts a new inquiry, which will naturally result in a good price. But he forgot that the original supplier had many other parts used by the company, with low usage but prices still maintained at high usage levels. There was no doubt that the supplier was losing money and could only make up for it with those large usage parts.

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