In general, suppliers responsible for production of products specifically for the customer are within maximum scope of dealing with issues, such as pressure from client, while suppliers dealing with global commodity involve maintenance of quality and consideration of cost as major challenges (Lester, 2004).
Hence, it can be stated that even though globalization introduces a number of opportunities for supplier base, it also exposes many challenges. Improvement of the overall base of supply and the achievement of increased value is crucial for the value proposition of supply. Effectiveness in the management of supplier, in comparison with the competitors, makes a contribution of competitive edge in terms of innovation, technology, responsiveness or delivery, quality and cost (Sandström, 2011).
For dealing with these challenges, there can be an establishment of strategy for the development of supplier. Strategies focusing on supplier like reduction of supply base, contracting on longer terms, enhanced volume to the supplier base, and practices of negotiation have resulted in reductions of cost and price (Sawchuck, 2007). In the years to come, segmenting the supplier and sourcing the emerging market platform, involve the major requirement of supplier contribution in enhancement of innovation and reduction of cost. This may enable the improvement of working relationships with the base of suppliers while laying major emphasis (Carter et al., 2007).
Further ahead, the base of supply can be shrunken. Although there has been a reduction of supply bases, organizations indicate additional reductions in suppliers delivering goods directly by 51 per cent and suppliers delivering goods indirectly by 77 per cent. This is the scenario as organizations have been continuously segmenting and identifying the most significant future suppliers (Carter et al., 2007).