A buyer refers to an individual who always purchases goods from a supplier for their own use. The buyer might want to resale the same product or they might want to use the product for their own benefit. Some may also want to process it further and sell a more refined product. A supplier, contrary to the other term, denotes one who avails the required goods to the buyer, at the right price, place and time. He or she can either produce goods originally or be an intermediary. For a supplier’s business to succeed, he or she must locate which products have significant market. Such products must be produced under favorable conditions. If the supplier supplies exceptional quality goods, he or she can increase the number of sales they can make in a given time (Schultz, 2005).
There are many examples of buyers who are also sellers. These include wholesalers and retailers. Buyers and sellers compete because of many identifiable reasons. First, this occurs when one of the parties tries to interfere and blocks the other party from achieving its goals. The other issue that may cause conflict between the two parties can be looked at as varying attitudes and judgment that may exist between them (Schultz, 2010).
A supply chain is a network of businesses connected internally. These businesses are solely involved in providing a certain service or product that is necessary for the customers’ use, at the end of the chain. A successful supply chain needs a system with one objective. This can be looked at as producing a product or service that id wholly based on customers’ specifications, tastes and preferences. Consequently, costs must be at the lowest side, and the main focus should also add value to the product or service. Throughput technique should be fully applied. Efficiency should also be on the rise. All bottle necks should be deleted with immediate effect. Performance measurement should always focus on enhancing efficiency and equitable reward systems to all individuals in the supply chain. They always add the needed value to all the existing products or services. The supply chain should also be flexible enough to meet the customers’ requirements. Supply chain management involves planning and managing all activities entailed in sourcing procurement, managing logistics and conversion. It also encompasses delicate components of collaboration and coordination, with all partners in the channel. These partners could be suppliers, third party service providers, intermediaries and lastly customers. The essence of managing the supply chain is to integrate supply and demand, within or across companies. In most cases, the supply chain involves collecting and recycling goods after the customer has put them into maximum use (Schultz, 2005).
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The following issues must be addressed by the supply chain management:
- Distribution network configuration. This deals with suppliers’ network missions, customers, facilities used in production, and cross docks.
- Distribution strategy is another problem that must be dealt with, and it entails inquiries in operating control. The operating control delivering scheme can be centralized, decentralized or shared. For example if a shipment is direct or if it is a closed loop. The transportation mode is also dealt with under this. Examples of different means that could be used for transportation include; a motor carrier, a container on a flatcar and airfreight.
- Trade offs in logistical activities should also be addressed. Low logistics costs should be achieved by coordinating all the activities involved. An example being; making many consecutive orders can be costly as compared to just making one enormous order. On the other hand, making one large order that has no ready market will increase holding costs. So either way, proper planning should take place to avoid ordering several times and incurring a rise in holding costs.
- Processes should be integrated through the supply chain to allow for easy passage of information down the chain.
- It should also be taken in to account the quantity of inventory. Clear records should also specify where different types of inventory raw materials in question, works that are in progress and also finished goods are located.
- Cash flows should also be dealt with crucially. Payment terms and methods of fund exchange across all entities of the supply chain should be devised. The flow of these key factors is bi-directional.
Costs and quality considerations are among the few factors recognized that may lead to a conflict of interests between buyers and sellers. Sometimes the buyers specifications and quality expectation of a product can be too costly for the supplier thus contradicting with his or her interest in lowering costs. Either way since the supplier wants to maximize in profit making he or she is forced to comply with the customers’ specifications. Since the supplier’s trade costs inclined, he or she systematically increases the price of the commodity in order to break even and make a substantial mark up, as a result.
These increases contradict with buyers’ interest of acquiring the product at the lowest possible price. This leaves the buyer with two choices; to purchase the commodity at the set price or look for a cheaper supplier whose products do not meet the buyer’s quality requirement. If the buyer foregoes an exceptional quality product and instead buys the cheaper one, the quality of the product will be conflicting with the buyer’s interest of a superb quality product. The foregone supplier will automatically incurs losses in the process thus foregoing his interest to make products (McLean, 2005).