What is meant by supplier? In general, the meaning of supplier is a party (individual / company) that sells or supplies resources in the form of raw materials to other parties (individuals / companies) to be processed into certain goods or services.
Another opinion said that the definition of supplier is an individual or company that sells raw materials needed by other companies to be processed into ready-to-sell products. For example palm oil suppliers that supply large quantities of palm oil to certain companies to be processed into cooking oil.
Many people mistakenly equate suppliers with distributors, even though the two are different. Distributors only sell or distribute finished products to retailers for resale to end consumers, while suppliers sell raw materials to other companies or factories that need raw materials to produce finished goods.
The characteristics of the supplier are as follows:
- Functioning as a supplier of raw materials or raw goods to other companies.
- Products sold are still raw (vegetables, fruits, soil, gold, metals, etc.) as well as semi-finished goods (paper, plastic, etc.).
Also read: Understanding Distributors
Supplier Functions and Duties
Suppliers have very important functions and duties in the supply chain of products to consumers, both goods and services. The functions and duties of the supplier are as follows:
- As a party that ensures the availability of raw materials or raw materials for parties (individuals or companies) who need them.
- Ensuring that the supplied raw materials are still in good condition when received by the buyer.
- Manage the process of storing raw materials before they are sent to the company that needs them.
- Arrange the delivery of raw materials in a timely manner to those who need them.
Also read: The meaning of Dropship
Types of Suppliers
In general, suppliers can be distinguished based on the products to be produced, namely goods and services. Referring to the meaning of suppliers, the brief explanation of the types of suppliers is as follows:
1. Supplier of Goods
This is the type of supplier that supplies raw materials to make products in the form of goods. In this case, the supplier only supplies raw materials for processing by other parties into a finished product.
As an example; for example a company for example a company engaged in the manufacturing of notebooks. So this company needs raw materials for paper, plastic, and other materials in order to produce notebooks.
The company then cooperates with suppliers who can supply the required raw materials (paper, plastic, and other materials). Cooperation can be done with several parties who provide different raw materials.
2. Supplier of Product Services
This is a type of supplier that supplies raw materials to produce products in the form of services. In this case the supplier only supplies raw materials which are then processed by other parties into service products that can be sold to consumers.
As an example; a financial services company needs special software or applications to help their clients monitor and manage their company’s finances. The service product supplier then provides the software or application with the specifications required by the financial services company.
Also read: The Meaning of Retail
How the Supplier Works
In the digital age like today, there are a variety of ways that are carried out by suppliers in their operations. But in brief, there are a number of things that the supplier does in carrying out his business, namely:
- Procurement of raw materials, in the process of procuring raw materials can be done alone by the supplier or in collaboration with other parties.
- Making information on raw materials, before being sold to other parties, the supplier must prepare information about the raw materials being sold.
- Conduct marketing, marketing processes can be through offline and online. Online for example by creating websites and advertisements to sell certain raw materials.
- In collaboration with business people, at this stage the supplier must commit to be able to supply quality raw materials to business people on a regular basis.
- Maintaining quality, in this case the quality of service and quality of raw materials greatly affect the success of suppliers in running their business.
Also read: Understanding Marketing
Thus a brief explanation of the meaning of suppliers, their functions and duties, types, and how suppliers work in general. Hopefully this article is useful and broadens your horizons.