4.6 Working with suppliers

• PROCUREMENT:

  • RAW materials
  • COMPONENTS
  • PRODUCTS
  • SERVICES
  • Other RESOURCES

  These items are bought from a SUPPLIER to PRODUCE their own PRODUCTS / SERVICES
• DIRECT PROCUREMENT:

  • Act of acquiring RAW materials / GOODS for PRODUCTION e.g. buying THREAD for clothing
• INDIRECT PROCUREMENT:

  • Act of purchasing SUPPLIES to keep the DAY-TO-DAY business alive
  • EXAMPLE: Supermarkets need PAPER to print receipts
• CHOOSING THE RIGHT SUPPLIER (QUALITY & RELIABILITY):

  • Quality- must be GOOD and CONSISTENT to reflect well on its CUSTOMERS
  • Reliable- DELAY in supplies could have a negative iMPACT on delivering the final PRODUCT to CUSTOMERS
• CHOOSING THE RIGHT SUPPLIER (SPEED & FLEXIBILITY):

  • Ensures that a BUSINESS can KEEP up with an increase in DEMAND
• CHOOSING THE RIGHT SUPPLIER (STRONG SERVICE):

  • Suppliers need to DELIVER on time / give plenty of NOTICE if they cannot
• CHOOSING THE RIGHT SUPPLIER (VALUE FOR MONEY):

  • Suppliers should strike a BALANCE between COST, reliability, QUALITY and service
• CHOOSING THE RIGHT SUPPLIER (FINANCIAL SECURITY):

  • A business will want the SUPPLIER to be financially SECURE to ensure that they can provide the BUSINESS with RESOURCES
• CHOOSING THE RIGHT SUPPLIER (COMMUNICATION):

  • Business will want regular COMMUNICATION & UPDATES from the suppliers