When it comes to business, it is all about give and take. A customer pays money in return for the goods that one expects to purchase. A retailer that sells these goods pays money to a distributor who keeps these goods in stock and supplies to retailers. A distributor in turn receives these goods from a manufacturer who makes these goods in the first place and sells it to wholesalers. This is a chain that is followed in most types of goods we see in the market.
Material Suppliers are on the top of this chain as they are the businesses that make the availability of things possible in the market. Suppliers source goods by either making themselves or having the right businesses to source these goods from. In business perspective, a business must be able to have a good set of material suppliers so that their business is unaffected by market fluctuations and is always on top of their game.
What Does A Supplier Do?
A material supplier helps in supplying a particular type of goods that is further sold by retailers in the market. These suppliers could be selling either to a business (retailer), to wholesalers who further sell to a retailer, to a distributor who sells to different retailers in a large geographic area or to the end customer directly.
A supplier is one of the most important elements for a business to run smoothly as a business always depends upon the various kinds of materials that are required for them to cater to their customers. In this regard, a supplier could be selling either raw materials that are further manufactured into finished goods by the business or a finished good in itself that is used by the business or sold by the business. Either way, the role of a supplier is indispensable.
This is why there are many softwares and ERP’s in the market that are developed to keep track of the suppliers, the materials purchased from them, the credit balance, the shipment of goods from them etc. In a small business it is easy to track these processes but in a large business with plenty of suppliers, it can get very confusing and misleading. Supplier Relationship Management is the key to a well oiled business for both benefits and relationship with suppliers.
Types of Suppliers
There are many categories that Suppliers can be divided into. It could be the mode of operation, to whom they sell their goods to or what stage of processed goods they sell. In a larger perspective, most common types of suppliers are listed below:
Manufacturers are a major type of supplier in many industries including furniture, garments, electronics etc. Manufacturers are the product developers and designers who make the product in question. They have the option to hold stock and sell directly to retailers or to end customers as well. When they sell directly to retailers, they become a supplier on their own
These are the next level of suppliers who purchase said products from manufacturers and sometimes sell to retailers or to a distribution network. Wholesalers hold large volume of stock giving them economy of scale and therefore become one of the most important type of suppliers
Distributors work either physically or online and usually buy from wholesalers or from the manufacturer themselves for cost advantage. One of the best examples for distributors is Amazon and Etsy. They have a direct network with the makers and the retailers.
Importers purchase goods directly from manufacturers globally and stock them. They later sell through various networks in retail format or sell to a distributor who could sell it further to end customers or retailers physically or online.