A fundamental change in supplier base management has been under way in the industry in recent years. Since 1991, the supplier base has been reduced significantly (by 50% or more) across all sectors of the industry. Many firms have taken proactive steps to consolidate and restructure their supplier networks in order to reduce cost, improve quality, and strengthen their competitiveness. A major change has been the delegation of greater responsibilities to key suppliers, such as the production of major parts and components, laboratory and inspection functions, and management of lower tier suppliers. The reduction in the supplier base, rather than being confined to the upper-tiers, appears to have permeated all layers of the industry.
The paper investigates the transactions costs and optimal number of suppliers for transport logistics using electronic commerce technologies