Working with suppliers - EdexcelImpact of logistics and supply decisions
Businesses must manage their materials effectively. They have a choice between keeping additional stock or using just-in-time stock control. They are affected by the relationship with their suppliers.
The impact of logistics and supply decisions on businesses
Procurement means getting the right supplies from the right supplier. Logistics means making sure the correct products are procured and that they will arrive when needed. Both procurement and logistics have impacts on a business’ costs, reputation and customer satisfaction.
Costs
Costs can be kept lower if production is quick. Delays can cost a business money and can limit cash flowThe movement of money in and out of the business. if products are damaged, lost or unavailable.
Reputation
The quality of the raw materials or services provided by suppliers can have an impact on a business’ reputation. For example, if products are regularly delivered late, this can negatively affect the business’ reputation because it will affect the business’ ability to deliver to its customers on time. If businesses provide high-quality and reliable products, they will have a higher chance of gaining a good reputation.
Customer satisfaction
Businesses aim to have high customer satisfaction by meeting all of their customers’ needs in a simple, quick and effective manner. This is achieved by getting the correct products delivered to the correct places at the correct times. By keeping customer satisfaction high, businesses are more likely to get repeat customers, which will improve sales figures and profits.
