Competition

The global marketplace is highly competitive, and suppliers may be tempted to work with other manufacturers if they offer better deals or incentives.

Pricing pressure

OEMs often put pressure on suppliers to reduce their prices, which can negatively impact supplier profitability and erode loyalty over time.

Dependence on a single supplier

OEMs may become overly dependent on a single supplier, which can lead to supply chain disruptions if that supplier fails to meet expectations or goes out of business.

Communication breakdowns

Poor communication between the OEM and suppliers can lead to misunderstandings, delays, and other issues that can damage the relationship over time.

Lack of trust

Building trust is an essential aspect of maintaining loyalty in the supply chain. If there is a lack of trust between the OEM and suppliers, it can lead to issues such as withholding information, disputes, and broken promises. This can ultimately result in a loss of loyalty and a breakdown in the relationship.

Price fluctuations

Raw material prices can be volatile, and unexpected price fluctuations can impact the suppliers to switch with the competing company. Through loyal relationships with suppliers, OEMs can negotiate fair prices and work together to manage cost fluctuations.