Question

Define the term supplier. Explain the nature of suppliers' interests and power and the scope of the global supply chain. What are the social, ethical, and environmental issues that arise in global supply chains and how they can impact a company's reputation and bottom line? Explain the benefits of engaging collaboratively with suppliers to build capacity and a shared value and the conditions under which such initiatives can succeed?

Answer 1

Solution:

A supplier is defined as an entity that supplies a certain kind of goods or services in a trade deal where the exchange of value happens. The supplier trades the goods or services in return for their monetary value. Suppliers are a common term that is used to define an entity that supplies almost anything that we need in return for a monetary value.

The suppliers form a major and crucial part of any supply chain. The suppliers supply raw materials, component goods, or even services to the companies or businesses that require their services. Suppliers are the early member of the value chain of any business and hence the quality of the services or goods supplied by the supplier determines the quality of the goods or services produced by the manufacturer or business. Hence, the choice of appropriate suppliers is extremely crucial for any business. There are a variety of suppliers that one can choose from. In certain cases, the supplier exerts a certain bargaining power over the businesses when the supplier is reputed and has a strong value attached to itself. In other cases, many suppliers wish to form strong and long term relationships with strong brands across the world to ensure they can leverage the brand value of these brands to enhance their own business. Hence, the power that the suppliers show is determinant of the industry in which they work and operate.

The ethical standards, environmental standards that suppliers follow is crucial for businesses to rectify. Ultimately the suppliers are a part of the business's value chain and whatever value is generated by the suppliers is carried out further in the value chain of the business. This is why a good supplier can bring about the better value to the business and a supplier who fails to maintain reputation of ethical standards, environmental standard or societal standards is ultimately going to spoil the reputation of the company which does business with them. This is why the kind and nature of the suppliers can have a large impact on the bottom line of any business and this is why businesses must pay careful attention to their choice of suppliers and ensure their suppliers are aligned with the business methodologies that are being followed by the business to ensure positive repercussions on the business.

It is always desirable for the businesses to build strong relationships with the suppliers and work in unison with these suppliers with appropriate sharing of resources, information to snure that the supplier and the business work together to make the value chain more effiencent and produce better value for the consumers. With suppliers and businesses sharing strong relationships the situation very similar to that of verticle integration for the businesses up the value chain which has huge benefits for the business because it can common more control over their value chain and thus be in a driving seat. This is why it is desirable to choose appropriate suppliers and collaborate with them to ensure an enriching value chain for the business creating a win-win situation for suppliers as well as businesses.