Suppliers Flashcards
1
Q
Examples of suppliers?
A
- landlord of the office leased to business
- the other business that provides design and printing services
- supplier of raw materials
- hotels, train operating companies and other services that help employees while working
2
Q
What factors influence choosing suppliers?
A
- price
- payment terms
- quality
- capacity
- reliability
- flexibility
3
Q
Why is supplier price important?
A
- cost structure of a business is split into variable and fixed
- keeping supplier price down helps to reduce variable costs
4
Q
How can supplier prices be lowered?
A
- businesses can use bargaining power to get lower prices
- economies of scale, bulk buying
-lowest price isn’t best option though as price will reflect quality
5
Q
Why is quality of supplies important?
A
- suppliers can help improve quality issues
- higher quality materials will produce a better end product
- then benefit from advantages of higher quality
6
Q
Why are suppliers’ payment terms important?
A
- suppliers may give more favourable terms in order to win your business
- helps to manage cash flow cycle
7
Q
Why is capacity important to a business when choosing suppliers?
A
- business needs to make sure supplier can provide enough to maintain capacity
- large businesses want bulk so they benefit through lower unit costs
- business may minimise risk by having multiple suppliers per raw material
8
Q
Why is suppliers’ reliability important?
A
- can be judged on the percentage of deliveries on time or if items meet contract of supply
- supply contact sets out how a business and its supplier will work together
9
Q
What does a supply contract contain?
A
- what is to be provided, precise description of product quality standards
- when, delivery timetable
- how much, pricing and payment terms
- source of supply, any restrictions on materials to be used
- disputes, procedures for disputes and how they’ll be resolved
- termination, when contract ends and how
10
Q
Why is flexibility of suppliers important?
A
-business will like if suppliers can adapt to: •changes in demand •failure of rival suppliers •transport/distribution trouble •negative publicity of defects w product
- this is why a business has multiple suppliers
- then they have a contingency plan if things go wrong
11
Q
How can suppliers improve business performance?
A
3 indicators are
- capacity utilisation
- unit costs
- quality
12
Q
How can suppliers improve capacity utilisation?
A
- business wants quick reactions to sudden change in demand
- need suppliers who can quickly provide the necessary raw materials
13
Q
How can suppliers lower unit costs?
A
- business wants lowest prices offered to them
- keeps costs of production down
- they’ll look for discounts for bulk buying and credit to pay in as long a time as possible
14
Q
How can suppliers improve quality?
A
- business will want the supplier to provide good quality raw materials that have been quality assured
- this will reflect on final product
