When it comes to navigating shortages during the pandemic, deep pockets and strong supplier relationships give big businesses an advantage.
“Larger companies, simply based on their larger size and the associated resources and buffers, have generally had an easier time to navigate the pandemic than smaller firms,” said Tobias Schoenherr, a professor of purchasing and supply chain management at Michigan State University.
Buying power gives bigger businesses the upper-hand when it comes to negotiating with suppliers, allowing them to lock in long-term contracts at more cost-effective prices. Levi’s negotiated most of its product costs through the first-half of 2022 “at very low single-digit inflation,”
According to Bergh, and the retailer has avoided some of the biggest impacts from rising cost of cotton as a result.Suppliers tend to give large companies “preferential treatment,” said Schoenherr, because of the “clout associated with their larger spend volumes.”