Operations: Suppliers Flashcards
What are some examples of suppliers?
Tate & Lyle sugar- supply the sugar in coca cola drinks, Michelin Tyres- supply the tires for Ford Cars, Coats- supple thread to most clothing manufacturers.
What are the factors influencing choice of supplier?
Price, Quality, Location, Lead time, Reliability, Technology, After-sales service, Size of the business, Credit terms
How does price affect a firms choice of supplier?
The supplier’s prices will be compared to its competitors. The firm is often interested
in purchasing from the cheapest supplier, also, and one that offers discounts for large
volume purchases. This is called bulk buying discounts.
How does quality affect a firm’s choice of supplier?
The firm needs the quality of the supplies to be of a good standard, otherwise the
firm’s products may be returned by the customers, which gives the firm a bad
reputation.
How does location affect a firms choice of supplier?
For some firms, it is essential the supplier is near to the firm. Ford, for instance, has a
supplier park near to the Ford factory where their suppliers of tyres etc were based.
For some firms having the supplier near to the firm means they will avoid high delivery
costs.
How does lead time affect a firms choice of supplier?
This the length of time between the supplier receiving the order for the goods and the
supplier delivering them to the firm. It can be said as a figure, such as, 2 months. If a
firm is ordering from a supplier abroad then the lead time will be longer than a local
supplier.
How does reliability affect a firms choice of supplier?
The firm will assess the supplier on their ability to deliver goods on time, to the
correct factory, with the correct quantity.
If a supplier is late then a production line may have to be stopped which holds back
sales and reduces the firm’s profit.
How does technology affect a firms choice of supplier?
Firms will look at the level of the supplier’s technology. If the supplier does not have
up-to-date technology then a large firm, such as Asda or McDonald’s, may overlook this
supplier for another move advanced and better equipped supplier.
How does after-sales service affect a firm’s choice of supplier?
Suppliers of machines and cars, for example, will be judged on the quality of the
service they offer, after the product has been purchased. A supplier that is
professional and answers the customer’s problems quickly and efficiently will win favour
with the firm and is likely to get the business
How does the size of the business affect the firms choice of supplier?
Large firm such as Tesco and Marks& Spencer’s, will need a large size of business to
meet their demands. Tesco will need to meet the needs of all their supermarkets sites
which is a large amount. The supplier will need to able to produce the large quantities Tesco demands and be able to deliver them around the country.
How do credit terms affect a firm’s choice of supplier?
To purchase raw materials on credit simply means a firm will take delivery of a product, such as, potatoes for a chip shop and pay for them at a later date, (ie on credit). A supplier that offers credit
will be more attractive to a café, for example, as it means a café can take delivery of
bread or cakes, then go on to sell them and make money from these supplies, before
they have to pay the supplier back.
Which factor is this ‘The supplier can cope with the volume of
Asda’s business’?
Size of the business/supplier
Which factor is this ‘The supplier has a good database’?
Technology
Which factor is this ‘The supplier offers good discounts on large orders’?
Price
Which factor is this ‘the supplier offers good discounts on large orders’?
Reliability
