Working with suppliers How might a supplier help to improve the operational performance of a business that it supplies through the factor you have picked?

Low prices Business can reduce the final selling price of its own product & gain competitive advantage Business can keep its final selling price the same, but enjoy the benefit of higher added value

Payment terms Benefit because of the cash-flow cycle If purchases materials in cash, it may take some time before it can receive cash by transforming materials into finished product that can be sold Potential cash-flow problems can be overcome if supplier offers a delay in payment for materials

High quality raw materials Help business to deliver a quality product to its customers. This in turn enables business to: Increase volume of sales Increase selling price & probably profit margin Create a USP Enhance reputation & customer loyalty Reduce manufacturing costs through elimination of waste

Capacity Supplier must meet quantity of supply that business requires Business with high capacity can always meet needs of customer Helps customer maintain production levels so that it can meet demand of its own customers

Reliability If buyer is a manufacturer, unreliable supplier can lead to whole production line grinding to a halt If buyer is a retailer, lack of produce can affect reputation Customers blame the retailer, not the supplier!

Flexibility Organisation may need radically to change orders from suppliers, e.g. Sudden changes in demand for a product Liquidation of a rival supplier, leaving buyers short of product or component Negative publicity concerning ingredients/components Transport difficulties preventing delivery of supplies from other sources

Porter’s Competitive Advantage A business can gain competitive advantage in one of two ways: Cost advantage Differentiation How do suppliers help?

HP Sauce Page 319 in text books