Developing relationships with a small number of suppliers can provide several advantages, but the best reason in a supply management context is:
To identify innovation opportunities: While important, this can be achieved with both few and many suppliers.
To obtain pricing improvements: Focusing on fewer suppliers often results in better negotiation leverage and volume discounts, leading to pricing improvements.
To decrease internal cultural barriers: This is less directly related to supplier relationship management.
To improve sourcing opportunities: This can be done with multiple suppliers as well.
Thus, the best reason to develop relationships with a small number of suppliers is to obtain pricing improvements.
References:
Supply chain management textbooks on supplier relationship management.
Articles on the benefits of strategic supplier partnerships.
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