4.6 Working with Suppliers Flashcards
All 18 cards in this deck
When comparing suppliers on price, what should a business include besides the price of the goods?
The total cost of getting them, such as delivery charges.
In procurement, what must the benefit of reduced costs be balanced against?
The quality of service: a cheaper supplier may be slower, less reliable or supply lower-quality goods.
What is a supply chain?
All the businesses and stages involved in getting a product from raw materials through to the final customer.
What is procurement?
Buying in the right goods and services from the right suppliers. Its role covers identifying what to buy, choosing suppliers, ordering, and receiving deliveries.
Give three factors a business considers when choosing and working with a supplier.
Any three of: quality; delivery (cost, speed, reliability); availability; cost; trust.
Give one benefit to a business of having a good relationship with its suppliers.
Suppliers may give discounts on raw materials, so variable costs per unit fall and profit per item rises. (Also: faster, more reliable delivery; better trade credit terms.)
What is logistics?
Managing how raw materials and goods are transported and stored: getting supplies into the business and finished products out to its customers.
What is lead time?
The time between a business ordering stock and that stock being delivered.
How can an unreliable supplier affect customer satisfaction?
Deliveries arrive late, so the business runs out of stock and cannot meet orders — customers are disappointed and switch to rivals, reducing revenue.
How can improving logistics reduce a business's costs?
Stock is moved and delivered more efficiently with less waste, so the cost of producing each product falls and the profit margin rises.
Give one impact on a business of having a long supply chain.
Costs are higher and deliveries take longer, because more businesses and stages must be co-ordinated to move materials.
Why is timing important in logistics for a manufacturer?
Raw materials must arrive on time so production is not delayed and finished products reach customers when promised.
Give one factor that affects which goods a business decides to buy.
Any one of: the season, as demand for some goods changes through the year; changing customer tastes; new technology that makes existing products out of date.
Why does a supplier's reputation matter when choosing it?
If the supplier behaves unethically, the reputation of the business that sells its goods can be damaged too.
Why might a business order goods in larger quantities?
Suppliers may give a discount for bigger orders or longer contracts, lowering the price per unit.
Give one thing a business must arrange to receive deliveries from suppliers.
Any one of: space to store the goods; staff to receive and check deliveries; access for delivery vehicles.
Why is a supplier's customer service a factor in choosing it?
If items are missing or faulty, a supplier with good customer service puts it right quickly, so the buying business's production and sales are not disrupted.
Why do businesses selling fresh products need especially reliable suppliers?
Fresh goods need frequent, often daily, deliveries; if one is missed the business has nothing to sell and its reputation suffers.