Qualities of Entrepreneurs and Factors to Consider When Selecting Suppliers

Qualities of Entrepreneurs

1. Initiative

2. Drive and Determination

To turn ideas into practice.

3. An Ability to Plan Carefully

To minimize the risk of failure.

4. An Ability to Learn from Mistakes

And to see mistakes as "part of learning to succeed".

5. The Ability to Think Ahead

To identify opportunities for the future.

Factors to Consider When Selecting Suppliers

Quality

1. The quality of suppliers needs to be consistent.
2. Customers can be selective about quality.
3. Customers will associate poor quality with the business they buy from, not their suppliers.

Availability

1. If a supplier is often out of stock of items, it could affect the firm's production process.
2. So they need to make sure their supplier can provide stock in sufficient quantities.

Reliability and Trust

1. If a supplier lets a firm down, the firm will be unable to supply its own customers.
2. So firms need reliable suppliers that they can trust.
3. Suppliers need to deliver high-quality products on time, or give plenty of warning if they can't.

Delivery

Firms need to consider how much it will cost to get supplies delivered and how quickly they want supplies to arrive.

Price

Firms have to decide how much they want to pay for supplies and whether cost is the top priority.

Inventory Cost

Ordering Cost:

These costs include the wages of the procurement department and related payroll taxes and benefits.

Holding Costs:

These costs are related to the space required to hold inventory, inventory obsolescence.

Administrative Costs:

Pays the wages of a cost accounting staff, compiling the costs of inventory, the cost of goods sold.

ABC System:

Is an important approach for classifying inventory items based on the items' consumption values.

• A items are goods, which are going to use every time.
• B items are interclass items, they are in the middle of importance.
• C items have the lowest consumption value.

Just in Time System

Aims to reduce waste of materials and products by having as little stock as possible.

Advantages:

• Storage costs are reduced.
• The business is more flexible so it can cope with changes in demand and easily adapt its products to suit changing customer requirements.

Disadvantages:

• No stocks means customers can't be supplied production strikes.
• Suppliers have to be reliable because there isn't much stock of raw materials to keep production.