Factors Affecting Retailers Selection of Suppliers

Topics: Retailing, Supermarket, Profit margin Pages: 5 (1813 words) Published: March 9, 2013
A. Explain the factors which might affect a grocery retailer’s selection of suppliers. 300 words. The supply chain needs to deliver the grocery retailer the competitive advantage to create value for the customer at an acceptable cost (1). It has been noted the reduction of time not only reduces costs but also gives a competitive edge to the business, therefore the time it takes for stock to arrive is important. ‘The supplier needs to be lean (efficient) and agile (innovative).’ (1) To do this there are three points which must be completed if they are going to be responsive to market changes.(1) Time to Market is the speed an opportunity is bought to the market. A grocery retailer wants to ensure stock arrives on time. They consider the distance the products travel, the shelf life and the possibility of buying in bulk to reduce the costs if the stock is coming from a great distance. The grocery retailer wants discounts for bulk buying and will target direct brands. Time to serve is the speed a customers order can be met. A grocery retailer will consider if the supplier is going to supply the products direct or do they have to be collected from a depot. Supermarkets like Tesco’s have the stock delivered to a Tesco warehouse which Tesco then distribute to its stores. This saves time and money. Time to react is the speed suppliers can adjust to impulsive demands and responses. The retailer needs to know that the supplier can meet the demand of the store. Larger grocery retailers, such as Tesco, need to know all their stores are supplied by the same supplier to ensure the same standard and quality products across all stores. Other factors, which may affect a grocery retailer’s selection of suppliers, are own brand products. They are important to grocery retailers and it is considered if the supplier will put the company brand on the products. Also the larger grocery retailer dictates prices to increase their profit margins. They look for certain products locally so that the immediate community is cared for. (1) http://learn.open.ac.uk/mod/oucontent/view.php?id=570624§ion=3.1.1 Large grocers such as Tesco want to keep their stock lines across stores similar as it improves stock control, ordering, marketing, merchandising and profit margins. A supplier must have the infrastructure in place to be able to deliver in volume on a regular basis depending on product shelf life and turnover. Products which are considered regional may also appear on shelves to show local community support.    B. Discuss the recent changes in the supply chain in terms of technology development, which have effected the movement of goods from manufacturer to supplier. 400 words Until recently retailers sold products issued to them by manufacturers, now retailers control the product supply due to knowing customer demands. The supply change worked separately until they were intergrated together through the use of information technology. IT allowed retail stores to communicate easily with distribution centres, who in turn communicate with suppliers. Information Technology is used in stock replenishment systems, controlling the movement and storage of products. Pg50 McKinnon. Today, ‘sales based ordering’ is used to improve the accuracy of product ordering. When a product is scanned through a till and sold the system then corrects the inventory, informing replenishment and re-ordering systems. This is a quicker reaction for meeting demand. It has the benefits of automatic stock replenishment, sales can be shared to predict trends and forecast planning. Distribution centres have adapted to improve the movement of goods. They receive stock in bulk and break it down for individual retail stores or temporarily store it. They then look on store systems to see what quantity of stock is needed and prepare it to be delivered. The periodic review is a stock control system which reviews stock levels regularly and when it falls...
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