Reference no: EM133211251

Question: Consider a buyer organisation with a very large supply base where almost 90% of the suppliers are not strategic and are possible to be substituted by other suppliers without impacting operations. The consumer cannot see the supply chain upstream from the buyer organisation. Thus, there is no solid binding for a brand and little chance of losing customers due to changes in the supplier base as long as high quality is maintained.

The buyer organisation is considering increasing their competitive advantage against their direct competition in the same market by implementing innovative technology as part of their movement to an Industry 4.0. The current plan foresees the selection of innovative technology to strengthen their market position, increase the consumer's positive perception, and implement this across the supply chain. As the supplier base is interchangeable to a large extent, the current approach intends to force suppliers to shift towards technology to maintain a business relationship. The suppliers must cover the cost to adapt to the new requirements.