supply chains

• Role of suppliers in business


  A supplier is a business or individual that provides goods and services to another business.
• Importance of Suppliers to a Business

  • For a business to meet the needs and wants of customers, it needs an effective “supply chain”

  • Suppliers determine many of the costs of a business (e.g. raw materials, distribution)

  • Suppliers are closely linked to product quality

  • Suppliers can be an important source of finance to a business (trade credit)

  • For businesses that use lean production techniques, effective relationships with key suppliers are essential
• ways in which suppliers can help improve business performance

  Lower purchase costs

  Better quality

  Improved customer service

  Increased productivity

  More flexible capacity
• Two ways in which supplier prices can be pushed lower by are

  • Grouping purchases with fewer suppliers (use bargaining power to get lower price)

  • Ensuring suppliers compete against each other for regular orders
• Characteristics of Effective Suppliers

  Price

  Consistently high quality

  Delivers the correct product on time

  Easy to communicate with supplier

  Long-term trading relationship requires supplier to stay in business

  Ability to handle increased volumes of supply
• Supply chain

  The network of all the resources and suppliers involved in the creation and sale of a product