Which of the following supply-chain strategies creates value by allowing suppliers to have economies of scale?

The strategy that creates value by allowing suppliers to achieve economies of scale is long-term partnering with a few suppliers. When a company establishes long-term relationships with a limited number of suppliers, it can lead to larger, more consistent orders over time. This, in turn, enables suppliers to optimize their production processes, lower costs, and improve efficiency by spreading fixed costs over a greater volume of goods produced.

Such partnerships foster collaboration, allowing both the buyer and supplier to invest in technology and innovations that enhance the overall supply chain efficiency. By focusing on a select group of suppliers, the purchasing organization can build stronger, more reliable, and possibly exclusive relationships, which can lead to better pricing, improved quality, and reduced lead times.

This approach contrasts with frequent supplier rotation, which typically undermines long-term commitments and steady orders, thus limiting suppliers' ability to scale their operations effectively. Decentralized sourcing can lead to inconsistent order volumes, negatively impacting suppliers' economies of scale as they cannot plan production efficiently. Single-sourcing might provide similar benefits in terms of volume, but it often lacks the variety and collaborative dynamics that come with long-term partnerships with multiple suppliers, which can lead to added value in the relationship.