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The importance of quality of product
Factors affecting supplier selection
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The selection of vendors and suppliers is very important to the company’s sale of ever product. The products that are brought in by the vendors is an important aspect of how the overall quality of the business is. If the supplier or vendor is known for poor quality, they will be passed over because higher quality products are more important long term. Quality is the top priority when determining the criteria for selecting the suppliers and vendors for this business. Other important elements in determining suppliers and venders are the pricing analysis, creditable service, conflict of interest to our business, and ensuring free market competition with the suppliers and venders.
Quality
Businesses separate themselves for the competition with great quality goods and services. The quality of the products will also boost the overall appeal of the business itself. Having higher quality products is not only great for advertising, but it shows that the supplier or vendor really cares about their product they produce. “Your suppliers should want to know how they are performing (arcplan, 2014). Outsourcing has become a major aspect of nearly every business, but where these products come from is important in determining if this business should select those suppliers. In an article about firms that outsource products, it states, “As manufacturing firms outsource more parts and services to focus on their own core competencies, they increasingly expect their suppliers to deliver innovative and quality products on time and at competitive cost” (Sharma, 2013). The higher quality of the product a supplier puts out, the higher likelihood of higher pricing amounts.
Pricing analysis
Pricing is the other major factor in attracting the consumer to the business. We can have better pricing with in depth price analysis between each supplier and vendor. Finding the best price to quality ratio is necessary for receiving the highest profit return rate. We want the upper hand on our competition, and having more capital will allow us to spread the expenses to fulfill every need greatly. An article exampling the objectives of analyzing pricing with suppliers states, “The objective of analyzing prices and costs is to determine whether the price is equitable and/or competitive in that is it reasonable in terms of the market, the industry, and the end use of the goods or services purchased” (Selecting a Vendor 2011). Cheaper pricing with good quality is the edge we will have on the competition.
Free market
A couple of Squares has a limited capacity for which to produce their products and smaller companies tend to have larger fixed costs than bigger companies. Therefore, A Couple of Squares must maximize profits in order to ensure that they will stay in business. A profit-oriented pricing objective is also useful because of A Couple of Squares’ increased sales goals. A Couple of Squares increased their sales goals due to recent financial troubles. Maximizing profits is the easiest way to meet these sales goals due to the fact that A Couple of Squares has limited production capacity. The last key consideration favors a profit-oriented pricing objective because A Couple of Squares offers a specialty product. A specialty product often has limited competition, therefore can be priced on customer value. Pricing at customer value will maximize profits as well as customer satisfaction. A Couple of Squares’ lack of production capacity, increased sales goals, and specialty product favor a profit-oriented pricing
Their price must be one that is attainable and reasonable for the offerings. The Kotler & Keller text suggests that facilities analyze competitors and their offerings, estimate their own costs, and determine demand, in order to set the appropriate price.
Suppliers must also have technical expertise and product innovation, be proactive in reducing costs, maintain the highest quality standards, and be willing to build long-term relationships (Volvo Group, 2014). This trust is an integral part of the supply chain since Prevost relies on consistent on-time deliveries of quality parts from its suppliers so that it is able to complete its chassis and shell builds.... ... middle of paper ... ... a.
As we learned from Chapter 12, price must be carefully determined and match with firm’s product, distribution, and communication strategies. (Hutt & Speh, 2012, p. 300) Therefore, there should be a strong market perspective in pricing. In order to build an effective pricing policy, marketers should focus on the value a customer places on a product or service. One of the most effective ways to do so is differentiating through value creation.
Suppliers must maintain good relations with the companies in the industry. This is low because there are multiyear service contracts and the delivery industry uses items such as vehicles, employee benefits, general goods and airline contracts associated with overhead of running business, but all contracts are rewarded through an RFP process. There are enough players in the market and had high fixed cost and thus have substantial buying power.
This will help them to increase their negotiating power with suppliers while providing the company security in times of unplanned events such as poor quality. An increase negotiating power will give the company more options when selecting suppliers and the price at which they are willing to pay for these suppliers to manufacturer their product. Furthermore the will gain security because if there is an issue with one supplier who cannot produce the product or the quality of product they will have other suppliers to rely on. However, with having multiple suppliers the company should work on improving their quality test procedures that will be standard to all suppliers. In addition, it will help to detect sheer material before it is ready to be
⑥ Buyers. Buyers’ benefit from quality products, which is related to corporate profitability, repayment capacity and operational capabilities.
Maintaining good quality helps the organization to avoid focus on rework and loss. Quality attracts customers and acts as detour to other suppliers. Most organizations fall for huge supplier list and spend their time in negotiating for costs over quality. It is a good practice to maintain minimum of approved most trusted suppliers than to promote huge suppliers list.
In light of recent growth of domestic and foreign countries outsourcing and off shoring over seas, companies been taken advantage of the cheap labor cost for outsourcing and off shoring manufacturing. Competitive business investing in domestic and foreign manufacturing have affects every part of the business industries from design, software development, finances and logistic management, i.e., customer and sales. Nevertheless, outsourcing been praised by businesses for outcomes of cost-effectiveness, efficient, productive and strategic, but damned as malicious, because of companies’ greediness, detrimental, and brutal in the public eyes.
Lim, W., & Tan, S. (2010). Outsourcing suppliers as downstream competitors: Biting the hand that feeds. European Journal of Operational Research, 203(2), 360-369. doi:10.1016/j.ejor.2009.08.006.
Threat of substitutes in market as best quality is not always a priority for some customers as they are price sensitive.
In such situations, the buying industry often faces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization.
Outsourcing has been around for many years. In this paper, I will discuss some of the history of outsourcing, the good things about outsourcing, and the bad things about outsourcing. Outsourcing is important because many companies rely on it in order to get many different products and services to their facility on time and in good shape. Outsourcing is a huge part of the business industry today. Any business can be affected by outsourcing.
As such the management need to focus on ways of making the customers have high rate of satisfaction. The bargaining of the suppliers of raw materials is also low and the management must come up with ways of controlling the materials so as to be independent and avoid the prices of the output depending on the cost of raw materials (Bertsch, 2015). Other competitive forces that have impact in the market are threat of substitutes and competition rivalry which requires management to conduct appropriate analysis before making strategic
Step 6, evaluation and selection of a supplier: the evaluation stage of the process could involve the p...