Customers are taking on more suppliers because shortages have appeared
Symptom: Now that supply shortages have appeared, customers are seeking to diversify their sources of supply by taking on new suppliers.
Implications for the market:
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When current suppliers cannot meet all of a customer's supply needs, that customer will add more suppliers.
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Once new suppliers have entered a customer relationship, they can become entrenched for a long time to come and can take advantage of the situation to increase penetration at the expense of incumbent suppliers.
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The best suppliers try to prevent competitors from entering into their best customer relationships by managing their customer shortages as carefully as if the industry were still in hostility. In other words, wise suppliers avert future problems by trying to keep their best customers sufficiently satisfied so that they do not open the door to new, competing suppliers.
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Analyses: Perspectives: Conclusions we have reached as a result of our long-term study and observations.
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