Q：Velma plc is a large car manufacturer that has to regularly source thousands of component parts for input into its range of vehicles. The aim of a joint project between the Finance director and the IT director is to reduce the bargaining power of key suppliers and get the best price for the inputs to the business. Several options in terms of the use of IT have been suggested.
Which two of the following will reduce the bargaining power of suppliers?
A. A database of all suppliers used by the business to date, with capability to blanket email invitation to tender requests.
B. Access to an on line market place set up as a joint venture in conjunction with other large vehicle manufacturers.
C. An extranet link to allow key suppliers access to future production schedules for Velma plc.
D. EDI links with the major suppliers that Velma plc has dealt with over the last three years to allow online ordering and payment.
A：The correct answers are: A database of all suppliers used by the business to date with capability to email invitation to tender requests; Access to an on line market place set up as a joint venture in conjunction with other large vehicle manufacturers.
Both of these options should mean that Velma plc has access to a large number of suppliers who will then have to compete on price & terms to win each contract. The other options may lead to better service and lower transaction costs for Velma plc but may increase the bargaining power of the supplier as it is more convenient for Velma plc to trade with them.
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