To maintain production and prevent delays due to raw material outages and quality issues, the manufacturing firm should ensure a reliable supply chain strategy.
* Add 25% to raw material purchases to ensure there is enough inventory in case of supplier delays or quality problems: This increases inventory costs and may not address quality issues effectively.
* Contract with multiple suppliers rather than depend upon one supplier to provide raw materials:
Diversifying suppliers is beneficial but may complicate logistics and quality control.
* Develop a strategic relationship with its main supplier: This can enhance collaboration and reliability but does not address immediate operational needs.
* Maintain safety stock and implement an automatic reordering process when inventory drops below a certain level: This is the best course of action as it ensures that there is always enough inventory to prevent production delays and manages reorder points efficiently to maintain continuous supply.
Therefore, the best course of action is to maintain safety stock and implement an automatic reordering process when inventory drops below a certain level.
References:
* Inventory management principles.
* Supply chain risk management strategies.