Let's consider the case of two different electric elevator manufacturers:

Company A is a Small Medium Enterprise $($SME$)$ that employs $73$ employees and, in $2019,$ recorded $ $12$ million in revenues. They offer $20$ elevator variants using a make$-$to$-$order approach.

Company B is a bigger company that employs over $300$ employees and, in $2019,$ recorded over $ $100$ million in revenues. They offer over $100$ elevator variants using a make$-$to$-$order approach.

An elevator is designed for a specific building, considering factors such as the height of the building, the number of users on each floor and the expected usage periods. The number of components varies with the number of stories and the complexity of the design of the elevator. Customers provide functional requirements such as speed and capacity, desired style options, and the dimensions of the building. An appropriate set of elevator components is specified and ordered from the component suppliers. This is a high$-$variety, low$-$volume market in which competition is very high. As the cost of in$-$house manufacturing of components is much higher than the cost of outsourcing, manufacturers of elevators focus on design, assembly, marketing and sales, and most in$-$house component manufacturing has ceased. Due to the high number of components bought from the suppliers, it is pivotal to establish appropriate strategies to buy different categories of goods and services.

The following figure compares the Kraljic matrix for direct components for the two companies considered in our case. In both cases, the Kraljic matrix was designed using the same approach.

$2010\_$A portfolio model for component purchasing strategy and the case study of two South Korean elevator manufacturers.jpg

Which of the following statements is true?

Note: More than one can apply.

Group of answer choices

It is evident that Company A does not manage its purchases well, as they have too many bottleneck items.

Company A has a much better balance of power with its suppliers compared to Company B$.$

Company B has too many non$-$critical items and should try to move them to other quadrants.

Both companies should have collaborative relationships in place with suppliers of car sets.

If you were a buyer of direct components for Company B$,$ you would foresee that several supplier agreements would likely end up in your company's favor.Company$-$A