Working with suppliers
An effective supplier would:
There are many factors that a business must use when choosing an appropriate supplier.
- Provide high quality supplies – this affects the quality of the final product.
- Provide reliable delivery – they deliver on time and when they say they will. This is important because if deliveries are late it will hold up production and reduce efficiency or productivity.
- Flexibility to meet unusual or one-off orders. This allows the firm to be able to meet its customer needs more closely.
- Provide value for money
- Have good communication links with the firm. This will help to increase flexibility.
- Be financially secure – i.e. the supplier does not have any cash flow problems. The firm does not want the supplier to be liquidated because they may have to find another supplier at short notice.
- Have the same IT system / stock ordering system as the firm – Re-ordering supplies will be quicker.
There are many factors that a business must use when choosing an appropriate supplier.
- Prices
- Payment terms – e.g. cash on delivery or an amount of credit. Firms want flexibility and credit to help with cash flow.
- Quality
- Reliability of delivery and flexibility
- Capacity – This the suppliers ability to meet increases in demand in the future.