AQA AS Business studies chapter 36-Working with suppliers

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Chapter 36: Working with suppliers
What is a supplier a business or individual that provides goods and services to another
business
The supply chain
Origination ­ publishing manufacturing ­ distribution ­retail
Why suppliers are important
For a business to meet the needs and demands of its customers to needs as
effective supply chain
Suppliers determine many of the costs of a business
Suppliers are closely linked to product quality
For a business to use lean production techniques effective relationship with
suppliers is key
Suppliers can be an important source of finance to a business
The importance of supplier price
Suppliers must offer competitive prices
They can be pushed lower by:
Ensuring suppliers compete with others for regular orders
Grouping purchases with fewer suppliers
Strategic vs. commodity suppliers.
Some suppliers are strategically crucial to a business
Strategic = the business cannot succeed without maintaining an effective
supplier relationship.
Other suppliers can be considered commodity suppliers they provide goods and
services that can easily be brought elsewhere and which are not hugely
important to the business
e.g. Strategic Commodity
Car manufacturer Car components Office stationary
Energy Magazines
Methods of choosing a supplier
Word of mouth
Exhibitions
Direct marketing
Trade associations
Contracting with a supplier

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Relationships between supplier and customer are finalised with a supply contract
Contract set out how a business and its supplier will work together
Key features of service agreement
Price
Disputes
Delivery
Suppliers and cash flow
Trade credit= where a business buys goods and services from a supplier and
pays for them later e.g.…read more

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