Supplier Definition and Meaning

Supplier Definition and Meaning

In addition to marketing, service and customer satisfaction are central building blocks of your company. Since the reliability of external service providers plays a major role in this context, it is important to choose your suppliers carefully. Here you can find out which criteria distinguish solid suppliers and how you can become aware of them.

What is a supplier?

By definition from digopaul, a supplier represents an organization or person through which customers receive products. In principle, the supplier can act as an outside party or as part of the customer himself. If you translate supplier into English, you will quickly find an explanation for the fact that the so-called supplier is often used as a synonym for supplier.

What are the criteria for a good supplier?

In order to satisfy your customers and meet their expectations, the reliability of your suppliers is essential. However, since good suppliers do not measure themselves solely by price, numerous other aspects are decisive.

In order to avoid bad experiences as much as possible, you should set specific criteria within your supplier selection. This table gives you an overview of the most popular criteria for supplier selection :

Property Supplier response
Goodwill behavior Does the supplier show insight or indulgence in the case of complaints?
Delivery readiness Are the desired goods in stock on demand and do they arrive on time at the desired date?
Reachability Is there a personal contact?
Flexibility Are short-term deliveries also possible?
Product quality Do the delivered goods correspond to the desired quality?
Offer transparency Are there any hidden costs?
Pricing Are there price guarantees for a clearly defined period? How often are the prices increased?
Payment term How long do you have to pay your bills? Does the supplier grant discounts or cash discounts for fast payment?

Tip : The supplier search engine on the website Supplier.de makes your search for suppliers much easier. Immediately after your registration you will find numerous supplier addresses in the wholesale suppliers area. The platform meets the needs of buyers and suppliers alike.

What do you have to consider when comparing suppliers?

Thanks to state-of-the-art technologies, there are numerous options for acquiring suppliers . However, it is not always easy to find the right supplier for your company. Your supplier selection process is successful if you manage to create a harmonious interaction between customer and supplier. To achieve this, you should integrate a detailed supplier comparison into your supplier selection process.

As soon as you have put together a few providers as part of an initial supplier selection, nothing stands in the way of your supplier comparison. First of all, it is important to know the importance of individual providers for your company. What happens if exactly one supplier fails? Are you still able to meet your obligations on time or do you get into trouble yourself as a result? Group your suppliers into the categories “indispensable”, “important” and “less important” in order to clearly show their importance for your company.

Checklist for your supplier evaluation

Subsequently, the suppliers of the first two categories are to be subjected to a more detailed assessment. This supplier assessment checklist tells you how to do this :

  1. Define eight to ten criteria that you want to specifically compare with each other, e.g. price, quality, delivery conditions, adherence to deadlines
  2. Weight the importance of your criteria as a percentage. In total, all criteria should add up to 100%.
  3. Collect all known data, with new suppliers you can replace missing data with neutral average values
  4. Assign points from 0 – 10 to individual criteria, with 10 standing for very good performance. The graduation should be in 0.5 or 1.0 points.
  5. Multiply the number of points in the categories by the percentage weighting of the category. Then add the sum of the points achieved for the category.

If the result is close to 80, future collaboration is definitely advisable. All suppliers with a value between 60 and 80 are characterized by consistently solid performance. In this case, too, nothing stands in the way of further cooperation. For values ​​below the number 60, you should refrain from further collaboration.

Tip: Since very little information is often known from new suppliers, a temporary business relationship is worthwhile in this case . If you have initial experience, you can consider a long-term collaboration.

What do you mean by the Six-R Rule?

In order to keep your company competitive in the long term, an ongoing supplier analysis is essential. Over time, it is important that you develop your own supplier selection criteria depending on your offer. The so-called 6-R rule provides you with the most important central aspects and thus serves as a guide.

Specifically, the 6-R rule is divided into the following components:

  1. Delivery of the right product
  2. Delivery of the right amount
  3. Delivery of the right quality
  4. Delivery is at the right time
  5. Delivery is at the right cost
  6. Delivery takes place in the right place

In addition to the contents of the 6-R rule, you should also include complaint processing , services and the certification of your suppliers in your evaluation scheme.

When do you need a replacement supplier?

For products in your core business, the failure of your supplier would have drastic consequences for the reputation and success of your company. Since the risk of unpredictable incidents can never be ruled out with certainty, you should develop a strategy against sudden delivery failures in advance . Because in an emergency, the search for a supplier under the desired conditions is usually extremely difficult.

If you have urgent products in your range that are difficult to obtain, two replacement suppliers are recommended. A reliable replacement supplier is sufficient for products that contribute to a large part of your business success .

So that you are not forgotten by your replacement suppliers, you should order from them at regular intervals from time to time, even if the conditions here prove to be less attractive.

How important is supplier management for you?

Comprehensively structured supplier management enables you to systematically control your business relationships with suppliers. The more you dedicate yourself to the core competencies of your company, the more processes you have to hand over to suppliers. As a result, supplier management is becoming increasingly important for you as an entrepreneur. Supplier management primarily pursues the following goals:

Strategic goals Operational goals
Medium-long term optimization of your company’s supplier base Increase in supplier performance and lower your procurement costs
Continuous assurance of supplier quality Transparent comparison of suppliers in order to find the “best” supplier
Forward-looking organization of replacement suppliers Weighing up the supplier relationships
Elaboration of measures to maintain competitiveness Reduction of the supplier base in order to achieve better conditions
Targeted control of your procurement volume Realistic assessment of the optimization potential of suppliers

Which areas does supplier management include?

In order for your supplier management to function smoothly, these three areas are particularly crucial:

  1. Supplier evaluation : careful selection of your suppliers, taking into account possible deficits, such as product quality, delivery time, level of performance, costs and technology
  2. Performance level of your suppliers: Continuous review of flexibility, reliability, availability
  3. Classification in the value chain : How important is the respective supplier for your company? What products or services do you purchase?

Conclusion

Suppliers are suppliers of goods and are a great relief for you as an entrepreneur. In order for everything to run smoothly, the reliability and punctuality of your suppliers are essential. Therefore, it is important to select your business partners with absolute care. A thorough supplier evaluation gives you a concrete overview of different providers. Ultimately, it is important to find the supplier who satisfactorily meets your personal criteria.

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