Acme’s primary raw material is PVC sheet that is produced by three major vendors within the United States. Acme, a small consumer products manufacturer, is consolidating down to a single vendor. Continued growth by this vendor assures Acme that it will be able to meet its needs in the future.
Assume that Acme’s chosen vendor will grow as forecast. Offer a scenario to Acme management that might convince them that they should rethink their decision to rely on a single vendor. What do you recommend that Acme do to minimize the risk(s) that you have identified? Are there any drawbacks with your recommendation?