What are Suppliers? Definition and Types of Suppliers

Definition and Types of Suppliers


Definition and Types of Suppliers

For a company, the supplier’s position is critical. Check out more information about the following suppliers!

In terms of language, a supplier is a supplier. Suppliers are individuals or companies/businesses that provide products or services to other entities.

In business, suppliers provide high-quality products from manufacturers at reasonable prices to distributors or retailers for resale.

A supplier in business is someone who acts as an intermediary between the manufacturer and the retailer. They also ensure that the following stock is guaranteed in sufficient quantity. Then, is the supplier the same as the distributor?

These two terms are often used interchangeably. When viewed from the role, both have different tasks.

Distributors generally only focus on distributing or selling products to retailers to reach the final consumer.

Meanwhile, suppliers provide products in the form of raw materials. These raw materials will later be processed by producers into finished goods that are ready to be sold.

Types of Suppliers

Types of Suppliers

When viewed from the products produced, suppliers consist of suppliers of goods and suppliers of services. To better understand the difference between the two, please refer to the following description!

1. Supplier of Products in the Form of Goods

As the name suggests, goods suppliers are responsible for supplying raw materials to producers. Later, suppliers will process the raw materials into ready-to-sell products. Examples of suppliers of goods are suppliers of paper for the printing industry or suppliers of sugar cane for the sugar industry, and so on.

Suppliers of goods are further divided into two types, namely suppliers of fabricated and non-fabricated materials.

For fabricated products, the ordered material must be processed first by the supplier before being brought to the place of the orderer. By the customer, they will convert this semi-finished product into a ready-to-use product. An example is a supplier of wool or nylon fiber that supplies material for a fabric factory.

Meanwhile, non-fabricated suppliers are in charge of supplying raw materials that do not go through a first process—for example, wood suppliers who provide raw materials for making furniture.

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2. Product Suppliers in the Form of Services

Service suppliers play a role in providing supplies in raw materials, which they will later process into ready-to-sell products in the form of services. Examples of service product suppliers are cashier software providers or financial applications that make it easier for consumers to manage company finances.

How Suppliers Work

How Suppliers Work

Supplier plays a vital role in every production cycle of a product, both goods, and services. Starting from looking for raw materials to help increase production.

Suppliers can also help find alternative raw material options when market conditions are not good. Cooperation between producers and suppliers must be well established so that the final product produced is also good.

With the advancement of existing technology, the work process carried out by suppliers has become more accessible. Some of the main tasks that are generally the responsibility of suppliers are:

  • Suppliers are suppliers of raw materials. The raw material procurement process can be done alone or obtained through a partnership process with other parties.
  • Provides raw material related data. Before the raw material provided is delivered or sold to the next party, the supplier must prepare information regarding the raw material.
  • Marketing products. Just like finished products, they can also market raw materials online and offline. The information available on the internet will also make it easier for producers of goods and services to find suppliers for their products.
  • Forge partnerships with entrepreneurs. Not only for one-time or two-time sales, suppliers generally carry out long-term cooperation with entrepreneurs. Not only by guaranteeing stock availability, but also the quality of the raw materials they provide.
  • Maintain the services provided. The service referred to in this case is not only related to the quality of the raw materials but also related to the way suppliers establish relationships with companies that partner with them.

What are the Criteria for a Good Supplier?

Criteria for a Good Supplier

A good supplier has various important criteria to meet. This is not only important for the company that is a client but also for the supplier itself.

Choosing the wrong supplier can cause a company to experience delays in shipping goods to a decrease in the quality of the finished product to be sold.

For suppliers, maintaining the quality of products and services is also very important to maintain client satisfaction. When you become a supplier but are unable to meet customer expectations, you will be left behind.

So, what criteria should a good supplier have?

1. Fully Responsible for Products Supplied

Admitting mistakes is not an easy thing to do. Good suppliers can be responsible for the quality of the products they supply.

If it turns out to be a problem, the supplier is the first party to solve it immediately without disturbing the client’s productivity.

2. Good Production Ability

Every company is not only looking for suppliers who can meet their raw material needs in sufficient quantities.

A good supplier should also be able to consistently make or provide products of the same quality according to the standards set by the client.

3. Have a Good Understanding of the Products They Provide

Suppliers are the ones who should understand best about the products they sell and the industry they are associated with. A good understanding of this supplier will make it easier for them to find a way out if there is a problem with client productivity.

This knowledge of natural products will also help them provide valuable input and solutions so that clients can improve their production results.

4. Have the Same Goals as Clients

As the party that supplies raw materials, the supplier is the party most trusted by the client. Therefore, the joint mission between the supplier and the client will be very beneficial for the client. They can work together to find solutions if problems occur and find new ways to improve the products they sell.

Finding suppliers is significant for a business. Not only maintaining the continuity of productivity but also the quality of the final product provided. Provide the best support for your business with experienced suppliers and qualified support applications from iREAP POS.

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