Supplier

We explain what a supplier is in the business world and what types exist. In addition, we tell you how supplier management is carried out.

A supplier delivers a wide variety of goods from a truck.
A supplier produces and markets what the company will need for its operation.

What is a supplier?

In the business and professional world, a supplier is a natural or legal person that meets the specific needs (tangible or intangible) of another organization. In other words, the provider It is the one who supplies the company with the supplies and services it requires to start or continue its productive work..

The term “supplier” comes from the Latin verb providere (“provide”) which is made up of Latin voices pro- (“forward” or “in favor”) and videre (“see”, “observe”). That is, the supplier anticipates (“looks ahead”) the needs of the organization and therefore produces and markets what it will need for its operation. In other words, he is prepared to satisfy the needs that arise.

Companies pay their suppliers regularly, either in cash or in periods of 30, 60 or 90 days, depending on the type of work regime that exists between both organizations. Suppliers should not be confused with outsourcing or outsourcingthat is, companies hired to operate from outside and temporarily in an organization, without being part of its fixed payroll or staff.

See also: Business management

Types of suppliers

There are three types of suppliers, depending on what they provide to a company’s economic circuit:

  • Goods suppliers. They are those that generate some type of product to satisfy a real need of the company. For example, a company that manufactures microchips that are purchased by another company to produce televisions, or a company that obtains iron, processes it, and sells it as raw material to a construction rod factory.
  • Service providers. They are those that seek to satisfy the intangible needs of the company, that is, provide those elements that it requires and that are not products in themselves. For example, a repair company hired by another to maintain their equipment, or an electricity company that provides them with continuous energy.
  • Resource providers. They are those that offer the company the necessary economic resources to undertake or continue its productive functions. For example, a bank that offers the company a financial loan or long-term credit.
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Difference between suppliers and creditors

Although both suppliers and creditors are necessary to guarantee the activity of an organization, they are two different people who usually have separate accounting dynamics.

Suppliers are those who provide necessary supplies or services. for business activity, so without them productive activity would stop. On the other hand, creditors provide non-essential goods and servicesthat is, to accompany productive activity, which does not mean that they are less important.

Thus, examples of creditors are: the rental of a premises or a building, the supply of advertising material, market research services or banking service providers. Like suppliers, creditors have the right to demand payment for their services or goods provided.

Supplier management

The process of finding and establishing a professional relationship with a supplier for each unmet need is known as supplier management, so as to have the goods, resources and services necessary for production. This process typically involves the following steps:

  • Supplier selectionbased on the offer and the financial possibilities of the company.
  • Risk evaluationconsidering the nature of the supplier and the good or service provided, in order to anticipate future complications.
  • Contract negotiationto determine the conditions under which the exchange will occur.
  • performance management and feedbackto obtain information regarding the performance of the supplier’s goods and services, and thus influence the next selection step.

Importance of suppliers

The bill from a gas and electricity supplier shows the consumption made.
Suppliers are essential for the continuity and efficiency of a company.

Suppliers are essential for the continuity and efficiency of a company. Especially because No organization is capable of producing on its own all of the inputs it requires. (the raw material, the machines and components to transform it, the energy to activate them, etc.), but you must have a third party to provide them in a timely manner.

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Furthermore, this dynamic of company specialization is what allows the emergence of exchange networks that generate shared wealth: suppliers obtain a benefit that is paid by contracting companies, and the latter normally transfer these production costs to the final good that the customer acquires. consumer.

Supplier Examples

The following are some examples of providers:

  • Basic service companies such as electricity, internet or telephone.
  • A raw material distributor (copper, iron, wood, meat, fruits, etc.) or semi-processed materials (leather, fabrics, nails, screws, etc.).
  • A repair service company and machine maintenance.
  • An input importing company that are not produced in the country or region.
  • A set of editors of content hired on a piece-rate basis.

Continue with: Organizational structure

References

  • “Supplier, ra” in the Language Dictionary of the Royal Spanish Academy.
  • “Radication of the word supplier” in the Online Spanish Etymological Dictionary.
  • “What is a supplier?” (video) in Galaxy Conta.
  • “What is supplier management?” in SAP Ariba.