To reduce the supply base from three to two suppliers, the firm should evaluate the past performance of the current suppliers and select the two that have consistently met or exceeded performance expectations. This ensures that the firm retains reliable and high-performing suppliers. Once the selection is made, the firm can negotiate more favorable pricing with the chosen suppliers, leveraging the increased business volume that comes with consolidating orders.
References
* Purchasing and Supply Chain Management by Robert M. Monczka, Robert B. Handfield, Larry C.
Giunipero, and James L. Patterson
* "Supplier Performance and Evaluation" - Chartered Institute of Procurement & Supply (CIPS)