Supplier relation costs refer to which of the following?

Supplier relation costs refer to which of the following?

• A. Costs of creating and maintaining a relationship with a supplier
• B. Costs of freight and insurance
• C. Costs of audits
• D. Costs of product warranty claims

Answer: (A)

Supplier relation costs are the costs a company incurs to establish, nurture, and manage its relationship with suppliers. This covers activities like onboarding new suppliers, regular communication, negotiating and administering contracts, monitoring supplier performance, and running collaboration or supplier development programs. These costs reflect the governance and partnership side of sourcing, aiming to improve reliability, quality, and long-term value from suppliers. Freight and insurance are logistics costs tied to moving goods and protecting them in transit. Audits relate to verifying compliance or quality, not the ongoing relationship management itself. Warranty claims are post-sale service costs tied to product reliability after delivery.

Supplier relation costs are the costs a company incurs to establish, nurture, and manage its relationship with suppliers. This covers activities like onboarding new suppliers, regular communication, negotiating and administering contracts, monitoring supplier performance, and running collaboration or supplier development programs. These costs reflect the governance and partnership side of sourcing, aiming to improve reliability, quality, and long-term value from suppliers.

Freight and insurance are logistics costs tied to moving goods and protecting them in transit. Audits relate to verifying compliance or quality, not the ongoing relationship management itself. Warranty claims are post-sale service costs tied to product reliability after delivery.