6. The Supply Chain – Complex Example Origination Publishing Manufacture Distribution Retail Primary Activities Support Activities Procurement: Editorial management; sourcing writers Human Resources: Recruiting, rewarding, developing, firing Technology: Publishing design software & associated hardware; maintenance of content archive; online Infrastructure: Organisational design, finance, general management Originating of content Commission and acquisition of content Co-ordination of design production and promotion Control of content rights Printing and reproduction Warehousing, stock control and delivery to the points of sale (“POS”) Purchasing Stock Management POS, display and marketing Publishing a Newspaper
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8. What Makes an Effective Supplier? Factor Characteristics of an Effective Supplier Price Often considered the most important Value for money is crucial Lowest price not necessarily the best value – depends on quality Quality Consistently high quality The right product at the right time Reliability Delivers the correct product on time Goods and services work as described Communication Easy to communicate with supplier – e.g. place orders, develop trading relationship Financially secure Long-term trading relationship requires supplier to stay in business! Also more likely to offer better payment terms Capacity Ability to handle increased volumes of supply, perhaps at short notice
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11. Example – Strategic v Commodity Example Business Strategic Suppliers Commodity Suppliers Car manufacturer Car components Energy Office stationery Magazines (advertising) National chain of fast food sandwiches Local fresh produce Product distribution Shop cleaning Refuse collection UK-wide car hire company Vehicle suppliers IT systems Office water coolers Head office photocopiers
12. Choosing a Supplier – Sources of Info Source Why Word of mouth Often the best – a recommendation from another business (not necessarily in the same market). Note: a recommendation can be positive or negative! Trade associations Most industries have a trade body that provides directories of businesses operating in the market. Sometimes they have an “approved supplier” list Exhibitions Traditionally popular way of meeting several potential suppliers at the same time in the same place Trade press + trade websites Websites, newspapers and magazines dedicated to a particular market or industry Directories E.g. Yellow Pages. A good source of suggestions for “commodity suppliers” but not particularly reliable for “strategic suppliers” Direct marketing + advertising Introductions from the promotional marketing activities of suppliers. Often aimed at generating an introduction from a sales representative
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14. Suppliers & Better Business Performance Lower purchase costs Better prices from a supplier lower the costs of a business Better quality Crucial for a business to satisfy customers Improved customer service E.g. fewer late deliveries Increased productivity E.g. fewer production delays, less wastage (lean production) More flexible capacity E.g. ability of a business to work with suppliers to meet sudden increase in demand
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