Leverage Items
What are they?
Many suppliers & the item is readily available
Standard item
Your annual expenditure on the item is high
The item is low risk to your company
Your relatively high expenditure makes your purchases
attractive to suppliers
ITC M4:U5:5.1-1
, Leverage Items
Since the value is high & risks are low,
you will focus on price
Price changes can have a significant
impact on your company
Since the value is high, a degree of
switching costs can be tolerated
ITC M4:U5:5.1-2
, Leverage Items
Supply strategy options depend on:
The volatility of the market
Your knowledge of the supply market
The degree of price variation amongst suppliers
The level of “switching costs”
ITC M4:U5:5.1-3
What are they?
Many suppliers & the item is readily available
Standard item
Your annual expenditure on the item is high
The item is low risk to your company
Your relatively high expenditure makes your purchases
attractive to suppliers
ITC M4:U5:5.1-1
, Leverage Items
Since the value is high & risks are low,
you will focus on price
Price changes can have a significant
impact on your company
Since the value is high, a degree of
switching costs can be tolerated
ITC M4:U5:5.1-2
, Leverage Items
Supply strategy options depend on:
The volatility of the market
Your knowledge of the supply market
The degree of price variation amongst suppliers
The level of “switching costs”
ITC M4:U5:5.1-3
