The primary benefit of supply base rationalization is that with fewer suppliers, the chances of larger volume discounts are increased. Consolidating purchases with fewer suppliers allows the organization to leverage its buying power to negotiate better pricing and terms. While reducing the number of suppliers can also potentially decrease purchase order errors (Option A) and quality issues (Option D), and reduce the need for supply management personnel (Option B), the most significant financial benefit is the potential for larger volume discounts.
References:
Supply Chain Management: A Logistics Perspective by John J. Coyle, C. John Langley, and Robert A. Novack
Strategic Supply Management by Robert J. Trent
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