WORKING WITH SUPPLIERS Flashcards
The role of procurement
The management of the buying or purchasing area in a business.
WHY?
It is vital to ensuring nothing goes wrong when choosing and managing where products are bought as it will reflect badly on the business.
HOW?
Procurement has a number of roles in a business;
Identifying goods and services to buy
Choosing suppliers
Ordering goods and services
Receiving deliveries from suppliers
Identifying goods and services to buy
Any shop has to constantly make decisions as to what they should offer for sale. These decisions are influenced by three different factors;
The time of year
Changes in technology
Changes in fashion and lifestyle
Choosing suppliers
Businesses must be very careful when choosing suppliers and often their decision is influenced by two factors. The quality of the goods supplied. The reputation and reliability of suppliers Some businesses may base their choice off ethical and environmental decisions
Ordering goods and services
Procurement is particularly important when dealing with the actual ordering of goods and services needed by the business.
It will deal with looking at:
The amount to be ordered
Considering the budget
Can discount be received if a larger amount is ordered? (economies of scale)
If a contract is signed for a longer period of time can there be a reduced price?
Receiving deliveries from suppliers
Procurement holds huge importance when receiving deliveries. Factors included in this:
Amount of storage space available (links to amount you can order)
Time of day delivery will happen (is there access to the premises?)
Staff arrangements for delivery
Logistics and supply chain
WHAT? The process of organising the transport of goods from the seller to the buyer, and the chain of businesses involved in the production of a product and its delivery to a user.
WHY?
The changes in these can either have a slight or enormous impact on the business.
HOW?
In order to ensure decisions are correct the business must consider:
Time
Reliability of supply
Length of the supply chain
Costs
Customer service
Time
For some businesses time can be vital for the delivery of supplies. The supplier must be able to deliver the goods on time and if not, there will be a serious impact on the business. For example: A mechanic needs a particular part for a job, the part does not arrive on time, impacts the production and therefore sales and profit.
Reliability of supply
A business must have reliable suppliers. This reliability links to time, outlined above. A shop needs products to sell and if the suppliers are not reliable then it has a huge impact on the business. When finding a reliable supplier the business must consider:
Quantity and quality of product
Time
Reputation
Length of the supply chain
Some supply chains may be shorter than others depending on the business. The longer the supply chain the higher risk of problems occurring through each section. The length of the supply chain links with the reliability of supply.
Costs
Clearly the costs of items being bought by a business have a direct impact on the business performance. However, costs must be balanced against other logistic and supply chain considerations. A saving on costs could result in lower quality, less reliability and loss of good reputation.
