Which tactic is recommended to combat powerful suppliers?

• A. Lower your switching costs amongst vendors by adopting more generic specifications to encourage price competition.
• B. Enter into long-term exclusive contracts with a single supplier to secure stability.
• C. Increase product differentiation only through branding, ignoring price competition.
• D. Restrict supplier options to a narrow geographic region.

Answer: (A)

To weaken supplier power you want to boost competition among suppliers by making procurement less dependent on any single source. Adopting generic specifications lowers switching costs and broadens the pool of potential vendors, so multiple suppliers can confidently compete on price. When parts or materials are interchangeable across several vendors, you gain leverage in negotiations, reduce the risk of price hikes, and improve supply agility.

Think of it this way: standardized, non-differentiated specifications turn procurement into a competitive market. That taps into price competition, secures better terms, and reduces the risk of disruption if a supplier faces problems.

The other ideas tend to increase dependence or ignore price competition: exclusive contracts lock you into one supplier, raising bargaining risk; focusing on branding without price competition doesn’t address supplier leverage; and restricting options narrows the supplier base, which can actually strengthen supplier power rather than diminish it.