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I want to know how does suppliers working with the smartwear for more than 5 years ie long term.supplier contract is a weakness how it will impact smartwear and what are the mitigating actions which can be taken to control such weakness please guide
It is not necessarily a weakness and, indeed, a long term relationship with a supplier is often seen as a strength. Doubts have been sown in this question by the internal audit report on supply chain management:
“This has led to a rather complacent attitude from the buying department who do not see the point in ‘fixing something that isn’t broken’. As a result,……which led to a culture of carelessness. Supply contracts are awarded for a period of between three and five years….No effort is made by the buying department during a contract period to compare what prices the company is paying to its suppliers compared with the industry average or competition.”
In brief the relationship has become cosy, perhaps friendly and non-challenging. Smartwear needs to ensure it always gets the best quality for the best price from ethical companies. It could do this, for example, by awarding shorter contracts (eg 1 year) and critically comparing their suppliers’ performance to what is offered by other suppliers. They could insist on visiting suppliers’ premises to examine working practices etc.
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