Introduction
In order to understand how the selection of a reliable supplier impacts competitive advantage positively, we need to know what a reliable supplier is and what it takes to become a reliable supplier. The qualities of a good supplier, and where the buyer is supposed to draw the line, are some of the things that should be considered in the process of supplier selection.
This paper will look at competitive advantage, define and understand what it is, and then finally explain how the choice of a right supplier is an important issue in competitive advantage. After all this is done, we would come up with examples to illustrate how the choice of a supplier affects competitive advantage.
How to choose an efficient supplier
The choice of a supplier is crucial for the success of a business. A supplier is a very important person in the chain of distribution since they determine what and how much goes to the market. As much as price is very important while deciding which supplier to do business with, there are other factors to consider when it comes suppler efficiency and reliability. There are several important considerations when deciding who to choose as your supplier.
Environmental awareness is one of the most important contemporary issues and in the process of choosing any supplier; this is supposed to be put in to consideration. It has become a basic requirement for any present day manufacturers to be aware of the environment and, therefore, do all that is environmentally friendly. Knowing the suppliers commitment to sustainability is one of the very important factors to consider while choosing a supplier apart from price. The supplier should preferably, in any way, have an environmental platform, where matters to related with environmental safety are addressed i.e. how the manufacturer intends to deal with the modern day environmental issues and to what level he should delve into dealing with this issues.
Renewable sources of energy and renewable raw materials are environmentally friendly, generally speaking. This, therefore, means in the process of choosing a supplier, one is supposed to ensure that the products of that particular supplier are made from renewable sources. The supplier should offer recycling programs for the waste that result from the production process thus minimizing the chances of polluting the environment in any possible way .
The supplier should be in a position to offer a sustainability report which is a clear indication that they (the suppliers) are committed to the environment. This report attempts to demonstrate the supplier’s responsibility to the community around and most importantly, the environment. A good supplier attempts to put the success of their customers’ businesses in to consideration by supplying them with environmentally friendly products that will ensure the continued safekeeping of the surrounding ecosystem. This way, such a supplier defines the future of the customers’ business, by ensuring the supply of quality and environmentally friendly products; they keep their customers in business .
Reliability is another factor to consider during the choice of a supplier apart from the price of their products. Consistency and reliability when addressing events that are unforeseeable in business are qualities that any business person should look for in a supplier if they intend to get a good one. The suppler should deliver products on time; ensure that their products have a consistent performance an able and totally reliable support team. A reliable supplier’s goal should always be to meet their customers’ expectations.
A reliable supplier should, therefore, have the interest of the customer in mind and ensure stable relationship by maintaining consistency in terms of product quality. The supplier’s abilities and capabilities should go in line with the foundry’s needs and expectations. That way, there would be a continuous chain of distribution, a benefit to both parties.
Another quality the buyer has to look for in a supplier is innovation. Each foundry has unique processes and a partnership should be the type of relationship that exists between the buyer and the supplier. A supplier who has had an innovation history is the right choice for a buyer to make. For a partnership that will last considerably long, the supplier should have the ability to adapt and adjust to market shifts and fluctuations and, therefore, a guaranteed future growth for the buyer. Technology should be latest for the supplier to the profile of an innovative supplier .
A good supplier should add value to their customers’ businesses. They (suppliers) should do something to help the customer’s business. Value could include things like early deliveries and ensuring that their customers have constant and regular supplies round the clock. This will enable their customers in turn to win their customers loyalty by having adequate stock at all times. Improved freight services by the supplier enables the buyer to receive the products on time, which in turn improves the rate of stock turn over since the rate at which goods are brought in and sold out is fast.
The value for money is of course the most important thing when choosing a supplier. This brings us to the point where we see that the lowest price is not at all times the best value for money .It is about the buyer deciding what they really want; is it reliability, efficiency, quality and consistency? If the answer to this is yes, then the real question becomes how much are they ready to pay for these services? The buyer is, therefore, supposed to strike a balance between quality, cost, reliability and service. The best supplier will regularly communicate with the customer and give insights about these services and they relate to price
Competitive advantage
Competitive advantage advocates for quality and price. A supplier who wants to fetch good prices must ensure that the goods/ products they deal in are of high and exemplary quality. In order to sell at high prices and still remain in business in the presence of competitors, the supplier has to ensure that the quality of their products is off the scales. Competitive advantage has it that cheap labor is everywhere and easy to get and that a good economy does not necessarily rely on natural resources. Competitive advantage is against the idea of counties exporting raw materials or primary goods since these goods fetch low prices. Instead, competitive advantage advices that such countries should sell goods that garner high prices especially processed goods .
Competitive advantage occurs when an organization attains the characteristics which enable them to rank above all their competitors and outperform them in service delivery and other relevant roles of a business. These attribute (characteristics) that enable an organization to outperform others on the competitive market may among others include: highly trained or skilled personnel, access to natural resources and affordable power.
Very advanced technology with automated systems and machines for example robotics can create competitive advantage. Technological superiority for an organization will ease the whole process of communication, production, service delivery and management. This creates competitive advantage for an organization over the competitors with effectives and efficiency so much in effect .
An organization is said to implement competitive advantage if it engages in strategies that are currently not being implemented by the competitor or potential competitor simultaneously. If these strategies are successful, this organization will rise way above the competitor thus creating competitive advantage. Organizations do their best to attain the levels of competitive advantages by manipulating the resources that they can control. These resources, on some occasions, have the ability to create competitive advantage for such organizations .
Some examples of strategies that could create an organization’s competitive advantage is the organization offering their products at the lowest possible prices. This ensures that all customers opt for the lower cost products knowing that all these products are of the same quality with the competitors. This keeps competitors out of business for sometime as long as their products are going at a higher price .
Why reliable suppliers are important in creating competitive advantage
A reliable supplier ensures that their customers’ businesses are functioning properly and the products they deal with are of exemplary quality. Reliable suppliers, therefore, ensure customer loyalty by providing quality products. Good suppliers would supply their buyers with latest technology and effective means and methods of product handling, including branding. These services put an organization at a better position compared to its competitors by ensuring that there is effective communication, excellent service delivery and general advancement in technology. The suppliers, therefore, play a crucial role in the performance of a business in every aspect of it .
Reliable suppliers offer reliability and consistency in terms of supplies. They also, from time to time, advise their customers on contemporary business issues and therefore putting them (customers) in the know. The organization, therefore, will be in the best position to make decisions on what unique products or services to come up with in order to gain comparative advantage over their competitors. Successful implementation of these unique services as aided by their respective suppliers enables such organizations to attain competitive advantage .
As we observed earlier, lowering costs below any competitor by business organizations is one way of attaining competitive advantage. This can be made possible by suppliers entering in to agreement with their customers. The suppliers having had a long partnership with their clients presumably have a stable relationship and, therefore, reaching some form of business consensus cannot be a problem. The organization therefore can attain competitive advantage by lowering their prices below their competitor while still offering same quality products.
Examples of how reliable suppliers have created competitive advantage
Examples of how these suppliers have directly influenced competitive advantage include: in the excerpt www.businessstudies.co.uk, during the oil spill in the Gulf of Mexico, BP wanted to put in check the supply of emergency goods. The supply of such products during the time of catastrophe is normally not budgeted for; therefore, there is need for reliable supplier to do the supplier on such short notice. This creates competitive advantage.
Companies such as Apple have come up with latest technology, therefore, obsoleting the existing technology gadgets by the introduction of ipad and iphones. It is not possible for established companies to use this strategy since their products have already gained market acceptance. Apple therefore gained competitive advantage over the rest of the technology organizations.
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