Assignment on:

Logistic Management theory

Course: Logistic Management
Course Code: MBA 506
Program: MBA (22 Batch)
The Millennium University

Submitted By :
Submitted By :
Prof. Dr. Abhinaya Chandra
Shaha (Vice Chancellor) Joy Roy
The Millennium University Id; 319MBA1012
Batch: 22

Submission Date: 29 March 2020

1. What Is Supply Chain Management? What Are The
Activities That Are Involved In Supply Chain Management?

Supply chain management is the management of the flow of goods and services and includes all
processes that transform raw materials into final products. It involves the active streamlining of a
business's supply-side activities to maximize customer value and gain a competitive advantage in
the marketplace. SCM represents an effort by suppliers to develop and implement supply chains
that are as efficient and economical as possible. Supply chains cover everything from
production to product development to the information systems needed to direct these
undertakings.

Typically, SCM attempts to centrally control or link the production, shipment, and distribution of
a product. By managing the supply chain, companies are able to cut excess costs and deliver
products to the consumer faster. This is done by keeping tighter control of internal inventories,
internal production, distribution, sales, and the inventories of company vendors.
SCM is based on the idea that nearly every product that comes to market results from the efforts
of various organizations that make up a supply chain. Although supply chains have existed for
ages, most companies have only recently paid attention to them as a value-add to their
operations.
In SCM, the supply chain manager coordinates the logistics of all aspects of the supply chain
which consists of five parts:

 The plan or strategy

 The source (of raw materials or services)
 Manufacturing (focused on productivity and efficiency)
 Delivery and logistics
 The return system (for defective or unwanted products)

The supply chain manager tries to minimize shortages and keep costs down. The job is not only
about logistics and purchasing inventory. According to supply chain managers, “make
recommendations to improve productivity, quality, and efficiency of operations.”

Improvements in productivity and efficiency go straight to the bottom line of a company and
have a real and lasting impact. Good supply chain management keeps companies out of the
headlines and away from expensive recalls and lawsuits.

Supply Chain Activities / Functions:

Supply Chain Management is a cross functional approach to managing the movement of raw
materials into an organization and movement of the finished goods out of the organization
toward the end consumer. Several models have been proposed to understand the activities
required to manage material movement across organizational and functional boundaries. SCOR
is a supply chain management model promoted by the supply chain council. Another model is
the Supply Chain Management floated by the Global Supply Chain Forum (GSCF). Supply
Chain activities can be grouped into strategic, tactical and operational level of activities.

A firm’s Supply Chain Management efforts start with the development and execution of a long-
term supply chain strategy. Among other things, this strategy should:

 Identify what supply chains the firm wants to compete in.

 Help managers understand how the firm will provide value to the supply chain.
 Guide the selection of supply chain partners, including suppliers, subcontractors,
transportation providers, and distributors.

As firms gear up to understand what supply chains they compete in, it is often valuable to map
the physical flows and information flows that make up these supply chains. From these maps,
firms can begin to understand how they add value, and what information is needed to make the
supply chain work in the most effective and efficient way possible. Of course, the firm’s supply
chain strategy does not exist in a vacuum. It must be consistent with both the overall business
strategy and efforts within such areas as purchasing, logistics, manufacturing and marketing. The
Supply Chain activities have to be clearly spelled out for the given business.
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Strategic activities:

1. Strategic network optimization, including the number, location, and size of warehouses,
distribution centers and facilities.
2. Strategic partnership with suppliers, distributors, and customers, creating communication
channels for critical information and operational improvements such as cross docking,
direct shipping, and third-party logistics.
3. Product designs coordination, so that new and existing products can be optimally
integrated into the supply chain, load management.
4. Information Technology infrastructure, to support supply chain operations.
5. Where to make and what to make or buy decisions.
6. Align overall organizational strategy with supply strategy.

Tactical activities:

1. Sourcing contracts and other purchasing decisions.

2. Production decisions, including contracting, locations, scheduling, & planning process
definition.
3. Inventory decisions, including quantity, location, and quality of inventory.
4. Transportation strategy, including frequency, routes, and contracting.
 5. Benchmarking of all operations against competitors and implementation of best practices
throughout the enterprise.
6. Milestone payments.

Operational activities:

1. Daily production and distribution planning, including all nodes in the supply chain.
2. Production scheduling for each manufacturing facility in the supply chain (minute by
minute)
3. Demand planning and forecasting, coordinating the demand forecast of all customers and
sharing the forecast with all suppliers.
4. Sourcing planning, including current inventory and forecast demand, in collaboration
with all suppliers.
5. Inbound operations, including transportation from suppliers and receiving inventory.
6. Production operations, including the consumption of materials and flow of finished
goods.
7. Outbound operations, including all fulfillment activities and transportation to customers.
8. Order promising, accounting for all constraints in the supply chain, including all
suppliers, manufacturing facilities. Distribution centers and other customers.
9. Performance tracking of all activities.

Thus Supply Chain activities depend a lot on a firm's business model as also on how it wants to
move. Supply chain management (SCM) is the active management of supply chain activities to
maximize customer value and achieve a sustainable competitive advantage. It represents a
conscious effort by the supply chain firms to develop and run supply chains in the most effective
& efficient ways possible. Supply chain activities cover everything from product development,
sourcing, production, and logistics, as well as the information systems needed to coordinate these
activities.


2. What Are The Key Challenges Purchase Management Are
Facing Today? Explain…
Effective procurement relies on a carefully balanced set of procurement processes; in a typical
procurement department, a team of professionals works closely to ensure everything works
efficiently, from contract management to risk mitigation to supplier relationship management.
But no matter how well-oiled the machine or thorough the procurement professionals, every
business faces potentially costly and frustrating procurement challenges now and again.
Nowadays, procurement teams face an increasing number of complex challenges, as reported by
CASME members around the world during a series of roundtables. Here are the top six issues.

1. Risk management:

Risk is always a key concern for procurement, with the primary focus on suppliers’ financial
status, followed by health and safety and industry practices. It’s no longer good enough to simply
engage with your tier-one suppliers. Emphasis needs to be paid to controlling the approach taken
with tier-two suppliers, ensuring that the necessary obligations are passed down to
subcontractors.

2. Reputation and brand image:

It’s not difficult to recall allegations of child labor in the overseas supply chain of certain retail
brands, or issues around modern slavery both at home and abroad. The knock-on effect can be
disruption to brand and public image and ultimately an impact on profitability. The Modern
Slavery Act goes some way towards addressing this, but issues remain around compliance.

3. CSR:

Can procurement ever be sustainable? Organizations are making tremendous progress in the
approach to direct materials, but indirect procurement is more complex. The level of auditing
required to ensure that practice are sustainable, including those of first and second tier suppliers,
is labor-intensive and time-consuming. Consider asking suppliers to complete detailed
questionnaires and take positive action with the results. Many organizations now issue written
codes of conduct, but the key challenge is acceptance and practical application in the supply
chain.

4. Becoming a customer of choice:

Innovation is often included in an RFP, but does not necessarily specify what is really needed.
Supplier innovation is more likely if you become a customer of choice. A recent CASME survey
highlighted that a simple constraint to achieving this is late payment of invoices. Innovation is a
two-way process; don’t just write it in a contract and expect the best ideas from suppliers. The
most successful approach is to abide by agreed payment terms, and demonstrate a partnership
approach by listening and responding to suppliers’ ideas.
 5. Centers of Excellence:

The trend towards a centralized organization to support the procurement function is on the rise,
with an emphasis on provision of spend data and analysis, plus Refax e-sourcing support. What
is the best approach to organizing the Coe’s structure, work responsibilities and operation to
ensure the business is supported? A virtual Coe may be an appropriate solution; however, a
complete software package, beyond the capabilities of Microsoft Excel, is needed for
centralizing and recording the Coe’s activities.

6. Stakeholder engagement:

At almost every one of CASME’s meetings held each year, the discussion includes
procurement’s need for achieving greater connections with stakeholders. Recent benchmarking
studies show that more CASME members are now profiling and prioritizing stakeholders and
their requirements, in order to plan the right type of communication – for example, whether a
particular stakeholder needs an occasional meeting over coffee, or a formal monthly one. CRM
tools can be used to track the relationship building activities and supplier on boarding.
Credibility can be gained by using the right terminology, and by demonstrating knowledge of the
category, suppliers and market trends. By aligning procurement activity to the stakeholder’s
business objectives and selling the benefits of collaboration, the overall result can be more
valuable than cost savings alone.

Defeating even the toughest procurement challenges is a lot easier when your team has the tools
and technology required to succeed. By integrating automation and artificial intelligence into
your workflows and freeing your staff to focus on the big picture, you can ensure your
procurement department is building value, and a strong bottom line, for your company.


3. Explain Value chain concept? What are checklists you should
consider before go for value analysis?

Value Chain Definition:

A value chain is a business model that describes the full range of activities needed to create a
product or service. For companies that produce goods, a value chain comprises the steps that
involve bringing a product from conception to distribution, and everything in between-such as
procuring raw materials, manufacturing functions, and marketing activities.

A company conducts a value-chain analysis by evaluating the detailed procedures involved in

each step of its business. The purpose of a value-chain analysis is to increase production
efficiency so that a company can deliver maximum value for the least possible cost.

Key Takeaways:

 A value chain is a step-by-step business model for transforming a product or service from
idea to reality.

 Value chains help increase a business's efficiency so the business can deliver the most
value for the least possible cost.

 The end goal of a value chain is to create a competitive advantage for a company by
increasing productivity while keeping costs reasonable.

 The value-chain theory analyzes a firm's five primary activities and four support
activities.

Understanding Value Chains:

Because of ever-increasing competition for unbeatable prices, exceptional products, and

customer loyalty, companies must continually examine the value they create in order to retain
their competitive advantage. A value chain can help a company to discern areas of its business
that are inefficient, and then implement strategies that will optimize its procedures for maximum
efficiency and profitability.

In addition to ensuring that production mechanics are seamless and efficient, it's critical that
businesses keep customers feeling confident and secure enough to remain loyal. Value-chain
analyses can help with this, too.

Components of a Value Chain:

In his concept of a value chain, Porter splits a business's activities into two categories, "primary"
and "support," whose sample activities we list below. Specific activities in each category will
vary according to the industry.

Primary Activities:

Primary activities consist of five components, and all are essential for adding value and creating
competitive advantage:

a) Inbound logistics include functions like receiving, warehousing, and managing

inventory.

b) Operations include procedures for converting raw materials into a finished product.

c) Outbound logistics include activities to distribute a final product to a consumer.

d) Marketing and sales include strategies to enhance visibility and target appropriate

customers—such as advertising, promotion, and pricing.

e) Service includes programs to maintain products and enhance the consumer experience-

like customer service, maintenance, repair, refund, and exchange.

Support Activities:

The role of support activities is to help make the primary activities more efficient. When you
increase the efficiency of any of the four support activities, it benefits at least one of the five
primary activities. These support activities are generally denoted as overhead costs on a
company's income statement:

a. Procurement concerns how a company obtains raw materials.

b. Technological development is used at a firm's research and development (R&D) stage-

like designing and developing manufacturing techniques and automating processes.

c. Human resources (HR) management involves hiring and retaining employees who will
fulfill the firm's business strategy and help design, market, and sell the product.

d. Infrastructure includes company systems and the composition of its management team-

such as planning, accounting, finance, and quality control.

The idea of the value chain is based on the process view of organizations, the idea of seeing a
manufacturing (or service) organization as a system, made up of subsystems each with inputs,
transformation processes and outputs. Inputs, transformation processes, and outputs involve the
acquisition and consumption of resources – money, labor, materials, equipment, buildings, land,
administration and management. How value chain activities are carried out determines costs and
affects profits.
A pre-analysis plan checklist:
A pre-analysis plan is a step-by-step plan setting out how a researcher will analyze data which is
written in advance of them seeing this data (and ideally before collecting it in cases where the
researcher is collecting the data). They are recently starting to become popular in the context of
randomized experiments, with Casey et al. And Finkelstein et al.’s recent papers in the QJE both
using them. There is also some discussion in political science – see this recent paper by Macarten
Humphrey’s and co-authors.

There are several goals in specifying an analysis plans, but one important reason is to avoid
many of the issues associated with data mining and specification searching by setting out in
advance exactly the specifications that will be run and with which variables. This is particularly
important for interventions which have a whole range of possible different outcomes, like the
CDD programs looked at by Casey et al. They look at 334 different outcomes, and illustrate that
they could have picked 7 outcomes that made their program look like it strengthened institutions,
or alternatively have picked 6 alternate outcomes that make the program look like it weakened
institutions. This is less of an issue in evaluating many other policies in which there are one or
two most important key outcome (e.g. profits and sales for a firm intervention, attendance and
test scores for a school intervention, or incidence of some disease for some health interventions).
But even in those cases there are often many different possible choices of how to measure the
key outcome, so some ex-ante discipline on how this outcome is defined can be useful.

I’m new to writing these, but have now done them for four different projects. They take quite a
bit of work to put together, but I have found two other really useful results from doing them.
First, they help in thinking through questionnaire design. By mapping every equation of interest
that we want to estimate to the specific questions in the questionnaire that measure the variables
in these equations, we can make sure that we don’t inadvertently omit variables that we need to
know, as well as thinking more carefully about how to measure outcomes in ways which are
most amenable to use in analysis. Second, once the data is collected, data analysis is much
quicker and easier, since the pre-analysis plan provides a roadmap to follow through, and you
pretty much have half the paper already written.

So what should you include in a pre-analysis plan. Here is my checklist for writing one for an
evaluation using a randomized experiment – many of the same items would apply for using other
types of data:

I.   Description of the sample to be used in the study:

This should include discussion of how the sample was obtained, what the expected sample size
is, how randomization was done (see my paper with Miriam Bruhn for a checklist on what
should be reported on this), and what variables will be included in tests of randomization balance
and in tests of survey attrition.

II.  Key data sources:

 Discussion of what the key sources of data will be for the study, including which surveys are
planned, and what types of administrative data are planned.

III. Hypotheses to be tested throughout the causal chain:

This should specify the key outcomes of interest, the steps along the causal chain to be measured,
and the subgroup or heterogeneity analysis that is to be done and the hypotheses that accompany
each of these tests. These should be as specific as possible, and link each outcome specifically to
how it will be measured. For example, rather than just saying the outcome will be employment,
you should say that the “outcome will be employment.

IV.  Specify how variables will be constructed:

This includes, for example, where log or levels of particular variables will be used, how missing
variables will be handled, what procedures will be used to deal with outliers, etc. No imputation
for missing data from item non-response at follow-up will be performed. We will check whether
item non-response is correlated with treatment status following the same procedures as for
survey attrition, and if it is, construct bounds for our treatment estimates that are robust to this.

V. Specify the treatment effect equation to be estimated:

For example, is a difference-in-differences, alcove, or post specification to be used? What

controls will be included in the regression? How will standard errors be calculated? The exact
equation to be estimated should be written out.

VI. The plan for how to deal with multiple outcomes and multiple hypothesis testing:

As noted in my post last week, there are a number of methods for dealing with multiple
hypothesis testing. These typically involve either aggregating different measures into a single
index – in which case one needs to specify precisely which variables will get included in this
aggregate; or what variables will be considered as part of the same family when looking at
outcomes within a family of domains.

VII. Procedures to be used for addressing survey attrition:

What checks will be done for attrition, and what adjustments will be made if these checks show
that there is selective attrition.

VIII. The study deal with outcomes with limited variation: 

An issue which can arise is that the intent is to look at impacts on an outcome which ex post it
turns out that everyone in the control group does and where the intended treatment is meant to
increase this outcome. There is no power to be gained from looking at this type of outcome, and
including it in a family of outcomes can reduce the power to detect an overall impact. So, for
example one can write “In order to limit noise caused by variables with minimal variation,
questions for which 95 percent of observations have the same value within the relevant sample
will be omitted from the analysis and will not be included in any indicators or hypothesis tests. In
the event that omission decisions result in the exclusion of all constituent variables for an
indicator, the indicator will be not being calculated.” Likewise, one might pre-determine that
outcomes which have item non-response rates above a certain threshold will be omitted.

IX.   If you are going to be testing a model, include the model: 

In many cases papers include a model to explain their findings. But often these models are
written ex post as a way of trying to interpret the results that are found, but presented in a way
that makes it seem like the point of the paper is to test this model. Setting out a model in advance
makes clear the model the authors have in mind before seeing the data – as well as making sure
they collect information on all the key parameters in this model.

X. Remember to archive it:

Since part of the purpose of doing this is to pre-commit to examining particular measures and
outcomes, it is important to make sure this can be verified by others. A couple of examples are
the JPAL Hypothesis Registry (which is where I have filed mine so far) and
the EGAP (Experiments in Governance and Politics) registry. Note that this does not need to
mean that the pre-analysis plans are publicly viewable before the study is released – instead they
are time-stamped and released upon the request of the researcher. This is important if you are
worried about the possibilities of contamination of the experiment if its details are available
online. The AEA and 3ie are currently developing registries of RCTs and developing country
evaluations respectively, which will allow, but as far as I know so far not mandate, the option of
filing such a detailed plan.

If you are interested in writing one, some examples can be found in the 4 currently publicly
viewable examples at the JPAL registry, this example for a program in Afghanistan filed in the
EGAP registry, and here is one of mine – for a project that tests vocational training in Turkey.

I should note that there are a number of concerns researchers have about tying their hands too
much – Casey et al discuss these trade-offs in some detail, and I think most people agree that the
use of these plans is not to rule out the possibility of surprise discoveries (see Bill Easterly’s
satirical post showing Columbus had no impact since he did not find what he was initially
looking for). Their use is still rare in economics, so I am sure we will learn a lot more about how
to do them and use them over the coming years.


4. What Is Outsourcing? What Are The Reasons Companies Go

For Outsourcing?

Outsourcing Definition:

Outsourcing is the business practice of hiring a party outside a company to perform services and
create goods that traditionally were performed in-house by the company's own employees and
staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure. As
such, it can affect a wide range of jobs, ranging from customer support to manufacturing to the
back office.

Outsourcing was first recognized as a business strategy in 1989 and became an integral part
of business economics throughout the 1990s. The practice of outsourcing is subject to
considerable controversy in many countries. Those opposed argue that it has caused the loss of
domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for
businesses and companies to allocate resources where they are most effective, and that
outsourcing helps maintain the nature of free-market economies on a global scale.

Key Takeaways:

 Companies use outsourcing to cut labor costs, including salaries for its personnel,
overhead, equipment, and technology.

 Outsourcing is also used by companies to dial down and focus on the core aspects of the
business, spinning off the less critical operations to outside organizations.

 On the downside, communication between the company and outside providers can be
hard, and security threats can amp up when multiple parties can access sensitive data.

Understanding Outsourcing:

Outsourcing can help businesses reduce labor costs significantly. When a company uses
outsourcing, it enlists the help of outside organizations not affiliated with the company to
complete certain tasks. The outside organizations typically set up different compensation
structures with their employees than the outsourcing company, enabling them to complete the
work for less money. This ultimately enables the company that chose to outsource to lower its
labor costs. Businesses can also avoid expenses associated with overhead, equipment, and
technology.

In addition to cost savings, companies can employ an outsourcing strategy to better focus on the
core aspects of the business. Outsourcing non-core activities can improve efficiency and
productivity because another entity performs these smaller tasks better than the firm itself. This
strategy may also lead to faster turnaround times, increased competitiveness within an industry
and the cutting of overall operational costs.

Why Companies Outsource:

Outsourcing can be defined as “the strategic use of outside resources to perform activities
traditionally handled by internal staff and resources."

Outsourcing is a strategy by which an organization contracts out major functions to specialized

and efficient service providers who ultimately become valued business partners. In some cases,
outsourcing involves the transfer of employees from the company to the outsourcing company.

Outsourcing at a Glance:

There have been many calls to bring jobs back to the United States. It was a big component of
Donald Trump's election campaign, as well as his presidency. But according to some statistics,
outsourcing is still front and center for many corporations.

Why Do Companies Outsource:

There are many reasons why a company may choose to outsource certain business functions.
Some of the most common reasons include:

 Reducing and controlling operating costs (the largest driver)

 Improving company focus

 Gaining access to world-class capabilities

 Freeing internal resources for other purposes

 Streamlining or increasing efficiency for time-consuming functions 

 Maximizing use of external resources

 Sharing risks with a partner company

But these reasons aren't enough to implement a successful outsourcing program. Companies
must ensure they consider every component and can meet the requirements for successful
outsourcing. 

Top Ten Reasons to Outsource:

1) Lower operational and labor costs are among the primary reasons why companies choose
to outsource. When properly executed it has a defining impact on a company's revenue
recognition and can deliver significant savings.

2) Companies also choose to outsource or offshore so that they may continue focusing on
their core business processes while delegating mundane time consuming processes to
external agencies.

3) Outsourcing and off shoring also enable companies to tap in to and leverage a global
knowledge base, having access to world class capabilities.

4) Freeing up internal resources that could be put in to effective use for other purposes is
also one of the primary benefits realized when companies outsource or off shore.

5) Many times stranded with internal resource crunches, many world class enterprises
outsource to gain access to resources not available internally.

6) Outsourcing, many a time is undertaken to save costs and provide a buffer capital fund to
companies that could be leveraged in a manner that best profits the company.

7) By delegating responsibilities to external agencies companies can wash their hands off
functions that are difficult to manage and control while still realizing their benefits.

8) Outsourcing and especially off shoring helps companies mitigate risk and is also among
the primary reasons embarked upon.

9) Outsourcing also enables companies to realize the benefits of re-engineering, revise, and
upgrade the project as per the client's requirements.

10) Some companies also outsource to help them expand and gain access to new market
areas, by taking the point of production or service delivery closer to their end users.

The combination of uncertainty and lack of attention to critical details has created a present day
scenario where outsourcing contracts will be renegotiated or canceled within three years.
Ongoing management of the relationship is important. Senior management must stay involved
during the implementation of the contract.

Not only should there be a clearly defined escalation procedure, but senior management should
meet at appropriate intervals to discuss the outsourcing relationship. Meetings also should be
held at the operational level to address the working of the outsourcing contract in practice, to
identify and resolve any problems that have been encountered, and to agree on changes to ensure
continued satisfaction.



5. What Are the Criteria’s You Should Consider before

Selecting a Supplies?

Supplier selection process:

Choosing the right supplier involves much more than scanning a series of price lists. Your choice
will depend on a wide range of factors such as value for money, quality, reliability and service.
How you weigh up the importance of these different factors will be based on your business'
priorities and strategy.

A strategic approach to choosing suppliers can also help you to understand how your own
potential customers weigh up their purchasing decisions.

 Thinking strategically when selecting suppliers.

 What you should look for in a supplier.

  Identifying potential suppliers.

 Drawing up a shortlist of suppliers.

 Choosing a supplier.

 Getting the right supplier for your business.

Thinking strategically when selecting suppliers:

The most effective suppliers are those who offer products or services that match - or exceed - the
needs of your business. So when you are looking for suppliers, it's best to be sure of your
business needs and what you want to achieve by buying, rather than simply paying for what
suppliers want to sell you. For example, if you want to cut down the time it takes you to serve
your customers, suppliers that offer you faster delivery will rate higher than those that compete
on price alone.

It's well worth examining how many suppliers you really need. Buying from a carefully targeted
group could have a number of benefits:

 It will be easier to control your suppliers.

 Your business will become more important to them.

 You may be able to make deals that give you an extra competitive advantage.

Equally, while exclusivity may spur some suppliers to offer you a better service, others may
simply become complacent and drop their standards.

What you should look for in a supplier:

Reliability: Remember - if they let you down, you may let your customer down.

Quality: The quality of your supplies needs to be consistent - your customers associate
poor quality with you, not your suppliers.

Value for money: The lowest price is not always the best value for money. If you want
reliability and quality from your suppliers, you'll have to decide how much you're willing
to pay for your supplies and the balance you want to strike between cost, reliability,
quality and service.

Strong service and clear communication: You need your suppliers to deliver on time,
or to be honest and give you plenty of warning if they can't. The best suppliers will want
 to talk with you regularly to find out what needs you have and how they can serve you
better.

Financial security: It's always worth making sure your supplier has sufficiently strong
cash flow to deliver what you want, when you need it. A credit check will help reassure
you that they won't go out of business when you need them most.

A partnership approach: A strong relationship will benefit both sides. You want your
suppliers to acknowledge how important your business is to them, so they make every
effort to provide the best service possible. And you're more likely to create this response
by showing your supplier how important they are to your business.

Identifying potential suppliers:

You can find suppliers through a variety of channels. It's best to build up a shortlist of possible
suppliers through a combination of sources to give you a broader base to choose from.

Recommendations: Ask friends and business acquaintances. You're more likely to get
an honest assessment of a business' strengths and weaknesses from someone who has
used its services.

Directories: If you're looking for a supplier in your local area, it's worth trying
directories such as Yellow Pages and Thomson.

Trade associations: If your needs are specific to a particular trade or industry, there will
probably be a trade association that can match you with suitable suppliers.

Business advisors: Local business-support organizations, such as chambers of

commerce, can often point you in the direction of potential suppliers. You can also
contact our Strategic Information Centre.

Exhibitions: Exhibitions offer a great opportunity to talk with a number of potential

suppliers in the same place at the same time. Before you go to an exhibition, it's a good
idea to check that the exhibitors are relevant and suitable for your business.

Trade press: Trade magazines feature advertisements from potential suppliers. You can
contact our Strategic Information Centre for a list of specialist trade magazines.

Getting the right supplier for your business:

Know your needs: Make sure you know what you need. Don't be tempted by sales
pitches that don't match your requirements. Understand the difference to your business
between a strategic supplier, who provides goods or services that are essential to your
business - such as high-value raw materials - and non-strategic suppliers who provide
low-value supplies such as office stationery. You will need to spend much more time
selecting and managing the former group than the latter.
 Spend time on research: Choosing the right suppliers is essential for your business.
Don't try to save time by buying from the first supplier you find that may be suitable.

Ask around: People or other businesses with first-hand experience of suppliers can give
you useful advice.

Credit check potential suppliers: It's always worth making sure your supplier has
sufficiently strong cash flow to deliver what you want, when you need it. A credit check
will also help reassure you that they won't go out of business when you need them most.

Price isn't everything: Other factors are equally important when choosing a supplier -
reliability and speed, for example. If you buy cheaply but persistently let down your
customers as a result, they'll start to look elsewhere.

Agree on service levels before you start: It's a good idea to agree on service levels
before you start trading so you know what to expect from your supplier and they know
what to expect from you. See our guide on how to manage your suppliers.

Don't buy from too many suppliers: It will be easier for you to manage - and probably
more cost-effective - if you limit the number of sources you buy from. This is particularly
the case with low value-added suppliers.

but don't have just a single supplier: It's always worth having an alternative supply
source ready to help in difficult times. This is particularly important with regard to
suppliers strategic to your business' success.

The final factors are worth investigating in more detail. It’s critical to have executive level buy-
in from both sides otherwise it can cause the relationship to stall. Supplier innovation should also
be considered, particularly in line with any cost-cutting or process streamlining efforts by the
supplier, as this may in turn lead to value creation for the purchasing organization.

Finally, it was recommended that buyers should be aware of the breakdown in business

percentage on both sides. You neither want to represent a high percentage of the supplier’s
business, nor do you want to rely on the supplier too heavily.

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