What is Supplier

7/21/2019 What is Supplier

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Who are supplier

Suppliers are individuals or businesses that provide goods or services to vendors in

return for the agreed upon compensation. As such, suppliers do not generally

interact with consumers directly, leaving that task to vendors or shop owners. It is

not unusual for a supplier to provide volume discounts to vendors when they agree

to sign long-term contracts or place orders for large quantities.

There are suppliers found in ust about any type of profession that can be imagined.

!holesale suppliers are very common in the retail industry, where they are likely

to manufacture and deliver large quantities of products to their client. Supply

companies also work in niche markets as well, such as importing and e"porting

packaged foods, ethnic or cultural goods, or any other range of products that have a

small but reliable demand. In general, e"porters of this type will handle all the

details for shipment and delivery to the vendor, and include the associated costs in

the final charges issued to the client.

Role of suppliers:

T#$ is a way of planning, organi%ing and understanding each activity, and of

removing all the wasted effort and energy that is routinely spent in organi%ations,

thus improving the competitiveness, effectiveness and &e"ibility of an organi%ation

for the bene't of all stakeholders. It ensures that leaders adopt a strategic overview

of quality and focus on prevention not detection of problems.

Suppliers are firms and individuals that provide the resources needed by the

company to produce its goods and services. This includes materials and parts,

capital items, supplies and service.



(rgani%ations spend on the purchase of raw materials, components and services.

Therefore, suppliers) quality can substantially affect the overall cost of a product or

service. (ne of the keys to obtaining high-quality products and services is for the

customer to work with suppliers in a partnering atmosphere to achieve the same

quality level as attained within the organi%ation.

*ustomers and suppliers have the same goal of satisfying the end user. The better

the supplier quality, the better the supplier)s long-term position, because the

customer will have better quality.

This is because both the customer and supplier have limited resources+ they must

work together as partners to ma"imi%e their returns on investment.

eming stated that customers must stop awarding business based on the low

bidder because prices have no basis without quality. e advocated single suppliers

for each item to help develop a long-term relationship of loyalty and trust. oint

efforts improve quality, reduces costs, and increase market share for both.

Benefits of good suppliersReduced costs:

There are usually some significant costs involved in setting up deals with new

suppliers, but a supplier relationship management program can eliminate many of

those costs.

/y cooperating in a mutually beneficial relationship with key suppliers, a company

can strive for cost savings over the long term.



0ood working relationships with suppliers will not only deliver cost savings, they

will reduce availability problems, delays and quality issues - and that means a

better service for the consumer.

Increased efficiency:

As a defined and establish supplier relationship develops, communication

improves. Suppliers gain a more complete understanding of the businesses they

serve, and this allows them to meet their needs more effectively. elays in the

supply chain will decrease, and the flow of operations will greatly improve.

And when issues in the ordering process do arise, the healthy working relationship

between supplier and client will make such issues easier to resolve.

Minimizes price volatility:

1othing spooks consumers more than huge fluctuations in market prices. In some

cases, these fluctuations are as a direct result of increased volatility of commodity

prices. owever, by adopting the principles of supplier relationship management,

companies can often take advantage of fi"ed pricing or scaled increases in

e"change for lengthier contract terms, minimum order levels or various other

qualifying criteria.





may include entrusting a supplier with the management of inventory levels and

some elements of customer service.

Continual improvement of operations:

A long-term relationship between supplier and buyer allows for the free-flow of

feedback and ideas. (ver time, this will create a more streamlined, effective supply

chain that could have a positive impact on both costs and customer service. parties.

Steps to build the better relationship ith organization

In almost every industry, supplier relationships can either make or break an

organi%ation2s ability to service customers responsibly and reliably while

maintaining cost effectiveness and managing assets effectively. (rgani%ations can

establish strategic goals to minimi%e inventory investment and lower transaction

costs while still increasing differential3competitive advantage and e"panding

globally. Supplier relationship management 4S5$6 programs that drive effective

collaboration and supply chain synchroni%ation with suppliers are critical success

factors in serving customers and meeting strategic goals.

Supplier Relationship Methodology:

7.partnering with suppliers and integrating supplier relationship methodology into

strategic sourcing initiatives improves supply chain effectiveness and customer

service.



8. 9ffective S5$ aligns with corporate goals through cross-functional strategic

initiatives involving cross-functional teams in supplier relationships.

:. A supplier relationship initiative must be recogni%ed and supported by the entire

organi%ation.

Collaboration and Synchronization of the Supply Chain

;. Strategic relationships require time, trust, mutual understanding, regular and

consistent communications, and mutual commitment to establish a long-term

relationship.

<. /uilding an effective supplier relationship framework involves identifying and

categori%ing spend characteristics and then implementing initiatives across a

rationali%ed supplier base.

=. !orking with suppliers to develop mutual capability and integrated strengths

serves to continuously improve supply chain effectiveness and, ultimately,

customer service.

!echnology and "rocesses as #nablers



>. Strategic supplier relationship initiatives require standardi%ed processes, an

organi%ational structure that supports the processes, and accountability for key

obectives.

?. oint identification and implementation of tools3technology with supply chain

partners lays the foundation for a collaborative environment.

$easurement, 5esults, and *ontinuous Improvement

@. 9ffective metrics are those developed and set in collaboration with suppliers and

stakeholders.

7. 9nforcing S5$ internally through measurement and rewards ensures program

success and drives results.

Ways that suppliers can impact on organization

$uality:

Supplier components can positively or negatively affect the quality of your

product. igher quality increases customer satisfaction and decreases returns,

which adds cash to your bottom line.

!imeliness: Their timely deliveries are crucial to how customers view your reliability. A quick

turnaround can become the key to minimi%ing your inventory, which in turn

translates to less risk of inventory obsolescence and lower cash needs.

Competitiveness:



They can give you the one-up on your competition based on their pricing, quality,

reliability, technological breakthroughs and knowledge of industry trends.

Innovation:

Suppliers can make maor contributions to your new product development.

5emember, they live their product more than you do+ they2re working to be on the

cutting edge of innovation for their product. The good ones will understand your

company, its industry and needs, and can help you tweak your new idea.

%inance:

If you2ve proven to be a considerate, loyal and paying customer, you may be ableto tap into your suppliers for additional financing once you hit growth mode--or if

you run into a cash crunch. That financing may take the form of postponed debt,

e"tended terms on new purchases, a loan, or an investment in your company.

Relationship of suppliers in departmental store

Returns:

$ake sure that you get an agreement on returns. $ost retailers return any products

that they cannot sell or that have been returned by the customers. This is difficult to

protect yourself from, but if you are using a wholesaler then they may be able to

handle the returns for a small margin increase. This also means that they do

everything in their power to reduce the number of returns. Argos has been known

to send back :B of some product lines.

Wholesaler margins:

Some wholesalers will work on less than 7B margin but when you are asking the

wholesaler to act as a distributor and actively sell the product then you could be

asked to fund between 7B and 7<B on top of the retailers who like to make

margins of : to ;B. owever, you obviously can2t discuss that with the retailer.



&etail:

$ake sure that you get final sign off on all the marketing material 4catalogue

pages, web content, staff training6 and point of sale 4C(S6 about your product from

the retailer. Dou can insist on this if you give the impression that you will not

support any misrepresentation of your product to consumers. !hen you check the

material make sure that it has your three top Enique Selling Cropositions 4ESCs6

and that they haven2t ust included some nonsense tech specs 4which they tend to

do6. As someone once said, Fretail is detailF.

Store staff:

See what you can do to help store staff to understand and sell the product. Dou may

be able to arrange some training or include literature in a training pack. Dou may

also be able to run a competition for staff supplying free kit for pri%es. Some

retailers also allow spifs 4sales incentives to individual store staff members6 but

this tends to be e"pensive and bureaucratic because the retailers make their own

money out of it, so running your own incentive may be preferable. Staff purchase

programs can also work in getting the staff to use and love your product. /ut some

retailers will ask for a price so that they can make their full margin, even for a <B

discount to their staff.

Advertising. If a retailer wants you to pay for advertising, that may be a good idea

but check the rates - retailers get the best advertising rates in the country and they

may up their rates to make margin. If you think that2s happening, place the

advertising yourself.

"ricing:



9ncourage the retailer not to reduce the price unless they have an e"clusive

product. It is, of course, illegal for you to enforce this but if they want to lower the

price then let them take it from their own margin. !hen they are asking for a lower

cost price this is often an indication that they want to lower the street price even if

they say they need e"tra margin.

References:

http://www.supplychainbrain.com/content/research-analysis/apqc/single-article-

page/article/ten-steps-to-designing-an-efective-supplier-relationship-management-

program/

http://www.entrepreneur.com/article/20650

http://www.wisegee!.com/what-are-suppliers.htm

http://in"o.winman.com/blog/bid/66#5$/%he-&ene'ts-o"-(upplier-)elationship-

*anagement

http://www.mar!etingdonut.co.u!/mar!eting/mar!eting-strategy/si+-tips-"or-

suppliers-dealing-with-retailers

http://www.supplychainbrain.com/content/research-analysis/apqc/single-article-page/article/ten-steps-to-designing-an-effective-supplier-relationship-management-program/




http://www.wisegeek.com/what-are-suppliers.htm

http://info.winman.com/blog/bid/366854/The-Benefits-of-Supplier-Relationship-Management


http://www.marketingdonut.co.uk/marketing/marketing-strategy/six-tips-for-suppliers-dealing-with-retailers



http://www.wisegeek.com/what-are-suppliers.htm








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What is Supplier