A supplier also referred to as a vendor is a party or entity that is mandated with the responsibility of supplying goods or services at a negotiated fee. Such companies constitute part of the supply chain. It can also be a distinguished firm depending on the magnitude of the product or service being provided. Some of the suppliers might engage in drop shipping by delivering goods directly to the ultimate consumer or buyer. A supplier can either be a distributor or a manufacturer. Today's businesses operate in a different environment that forces companies to consider the global market as they develop a competitive strategic analysis. Firms cannot assume the external factors like economic trends, technology or competitive situations in the extended market. A supplier might be required to deliver a product to a different continent or market within the same region. Such companies have changed their modes of operations and the manner they conduct their logistics activities. Several factors affect a global supplier ranging from the global market forces, risks, development chain, supply chain, and strategies; (Darko, 2013; Drake, 2012; Dye, R., & Stephenson, 2010).
Global Market Forces that affects a Supplier
The global market has experienced numerous changes that have altered the landscape for the suppliers. Different players now operate in an expanded environment where the rules of the games are different from the local market. The market is dynamic as the surrounding conditions are ever changing. There has been a steady growth in the demand for goods in the global market that has forced companies to develop to develop global networks to supply products that serve the new markets. To maintain their operations in such a volatile environment, suppliers should conduct Competitive Intelligence (CI) to assist them to identify unique opportunity, therefore, taking advantages over the competitors or avoid external threats. Two main types forces are critical, the market forces and the technological forces that necessitate the velocity of change required but other minor effects are equally important as well as illustrated below (Darko, 2013; Drake, 2012; Dye, R., & Stephenson, 2010).
Delegate your assignment to our experts and they will do the rest.
The market forces are the external forces that necessitate the supply and demand of a given product hence controlling the market price. These forces can arise from different sources including; unmet consumer desires, competition, mergers, and acquisitions. Technological forces emanate from the inclusion of the use of technology instead of manual processing. With the integration of technology, it increases the efficiency of the suppliers as communication is enhanced and they are aware of the real-time demand in their next destination, therefore, supplying the required quantity at the right time. Upgrading technology as a supplier increases the efficiency and reliability and also helps to keep track of the shipping and effectively monitor logistics (Darko, 2013; Drake, 2012; Dye, R., & Stephenson, 2010).
Regulatory/legal forces include rules and regulations that may affect the manner in which a supplier will be operating in different territories. Suppliers must be aware of the applicable rules and regulations to avoid unwanted exposure to legal suits. Some countries have unique laws that restrict some products. Therefore, being aware of such regulations will be essential to the supplier (Darko, 2013; Drake, 2012; Dye, R., & Stephenson, 2010).
Suppliers are faced with cultural forces as they engage in their business. Each country has its unique culture and subculture that affect the way companies conduct their business. Suppliers must understand the importance of learning in the global marketplace and how it can affect their business operations. Suppliers should try to acculturate if they are to maintain healthy business activities in the global arena (Darko, 2013; Drake, 2012; Dye, R., & Stephenson, 2010).
Suppliers must observe ethical/moral considerations in their conduct of business. They should not engage in activities like dumping or environmental pollution. Similarly, they are called upon to observe free and fair business practices and also consider the cultural aspects of the global market. Moral values determine how the suppliers handle their customers in trying to meet their needs in a manner that will make them feel satisfied. Upholding high ethical standards in how suppliers operate is vital in their attempt to remain relevant in a competitive environment (Sinha & Sinha, 2008; Lambert, 2006).
Risks that affect how a supplier operates
The role played by Supplier in the field of business can be underestimated. They are a link between the producer and the consumer. However, some risks emanate from being a supplier. Suppliers are exposed to operational risks in which they can be affected by disasters both natural and humanmade resulting in loss or damaging of products. Information/ Data security risks is another threat as suppliers are required to secure the information of their clients in order not to expose them to competitors. Suppliers store confidential information which can be targeted by hackers. Reputational risks also affect suppliers as they are required to maintain their image if they are to be trusted by their customers. There are also Geographical risks that affect suppliers as they are called upon to employ different approaches to delivery. Therefore, it becomes expensive for a supplier to operate in various terrains. Lastly, suppliers are exposed to financial risks as they are required to cater for insurance of the products under their possession. Likewise, if the supplier is also a manufacturer, they are wholly exposed to entire cost for the products (Greenfield & Camm, 2005).
The development chain of a Supplier
Supply Chain Management (SCM)- refers to the integration of key trade partners (Manufactures, Distributors, and Suppliers) that play different roles in assembling, production, transportation, marketing and selling processes involved in the transformation of raw materials to the end-product for consumption. For this chain to be completed, the role played by Suppliers is very significant. With the innovation of Supply Development (SD), new strategies and packaging solutions to meet the consumer’s expectations have been realized hence the importance of suppliers in completing the supply chain management (Darko, 2013; Drake, 2012).
Strategies that can be adopted by a Supplier
Supplier management firm is a costly and complicated business to invest and operate, and therefore there is a need of developing strategies that can help bring down the cost incurred as well as increase the efficiency of product handling and delivery on time. Following are some strategies that can be selected by the supplier. They should adequately research on different types of products based on size, tangibility and their nature to use the appropriate handling required; custom-made packaging can be used in an attempt to remain relevant in the game. Similarly, the supplier must have relevant information about their destination. They can implement new technologies that can help in tracking and managing logistical issues to ensure timely delivery. They should communicate with the Manufacturer and device contingency measures that will help in dealing with any adverse outcome (Darko, 2013; Renner, 2016).
References
Darko, E. T. (2013). Global supply chain management: supplier development process . Grin Verlag Ohg.
Drake, M. (2012). Global supply chain management . New York, N.Y: Business Expert Press.
Dye, R., & Stephenson, E. (2010). Five forces reshaping the global economy: McKinsey Global Survey results. Retrieved November 11, 2017, from https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/five-forces-reshaping-the-global-economy-mckinsey-global-survey-results
Greenfield, V. A., & Camm, F. A. (2005). Risk management and performance in the Balkans support contract . Santa Monica, CA: Rand.
Lambert, D.M., (2006). Supply Chain Management, process, Partnerships, Performance. Supply Chain Management Institute. Florida
Renner, A., (2016, July 06). 5 Strategies to Reduce Costs in Procurement and Supplier Management. Retrieved November 11, 2017, from https://procurementandsupply.com/2016/07/5-strategies-reduce-costs-procurement-supplier-management/
Sinha, P. K., & Sinha, S. (2008). International business management: a global perspective . New Delhi: Excel Books.
