Supplier is an entity or organization which main task is to transport dedicated goods to the correct receivers. Supplier is legally bonded by an agreement with the good's receiver. Every producer, distributor or service-provider may be a supplier: it works as an employee of the company or an entity that is directly linked with it (in such case it acts as an external supplier).
Companies very often burden more than one supplier with the obligation to provide goods to the enterprise. While the company buys the entirety of a certain good from one supplier there is a risk, in case of a breakdown, leave the market, a walkout. The company is then heavily dependent on this one supplier. However, due to the high commission, it may negotiate better prices. Having many suppliers puts the company helps the company to feel more safe.
Types of suppliers
- suppliers of raw materials and various goods
- suppliers of share capital (banks, credit agencies)
- suppliers of human resources (employment agencies, work departments)
- suppliers of information (various types of media such as periodicals, magazines, television, the internet, companies examining the market etc.)
Chains of distribution
A suppliers plays a very important role in so-called chain of distribution that consists of many different chains that constitute links between organizations. These entities cooperate with each other in the process supply: in the goods, cash and information flow in order to gain additional market gains and profits. Clients’ complex needs and requirements along with the expansion of competition heavily affect the development and changes in managing this logistic system. This is why the partnership between suppliers and goods receivers is so significant.
Process of making the decision about the purchase
Suppliers are also carefully analysed in the process of purchasing. After the thorough identification of needs consumers begin to search for potential suppliers. During this period of time the most essential are marketing actions, mainly effective suppliers’ advertisement. Next, consumers make assessments according to the right criteria and choose the best offer. After the purchase is done there is a time to evaluate and grade the supplier, this is a crucial point that may decide about the future cooperation or eventual resignation.
- Cannon, J. P., & Homburg, C. (2001). Buyer-supplier relationships and customer firm costs. Journal of Marketing, 65(1), 29-43.
- Choi, T. Y., & Hartley, J. L. (1996). An exploration of supplier selection practices across the supply chain. Journal of operations management, 14(4), 333-343.
Author: Piotr Baran