Entrepreneurs work tirelessly in trying to make products and services that meet different consumer needs. They ensure that their commodities are of high quality and are sold at the mostly affordable prices. The value chain involves adding some value to items obtained from various suppliers of a company and reselling them to others in the chain such as distributors and consumers. For an enterprise to operate profitably, it has to put in place measures aimed at minimizing its expenditures in providing services that are not paramount or core to the business. For instance, a hotel is involved mainly in cooking meals and providing beverages to consumers. There are support services such as provision of various ingredients which comprise such meals. Since the core business of the hotel is to prepare meals, outsourcing the provision of such services is the best option mainly because the supplier has all the resources required to fully execute such duties. Resorts enter into agreements with vendors for long term food supply.
Significant amount of time is used in trying to find suitable suppliers. Some of these cannot meet the demand for the resort. Others may have unreasonable prices too. Having a specific seller ensures that such issues are solved and employees assigned to search for the products are reassigned to other tasks.
All bidders for the provision of such raw materials are scrutinized before acceptance. Their ability to meet demand, reputation of company for such tasks, efficiency-whether there are any delays and reliability of the original source are considered. This ensures steady provision of all needed items.
Hiring specialists to perform the job assures management of these resorts that deliveries are of top quality and meet any set standards. These experts also charge cheaper prices than keeping a team of professionals to perform the job on payroll. Profitability of these organizations therefore increases.
A contract sets out what is required and expected from all the parties in the contract. The management therefore understands the terms of the agreement and is therefore comfortable with all supplies. A breach of contract may lead to a law suit to address the issues in dispute.
The issue of price instability associated with sale of foodstuffs ensures that the hotel purchases them at discounted prices. Many of such prices are lower than the prevailing market prices of such items. Therefore long term food supply to such resorts increases profitability.
Significant amount of time is used in trying to find suitable suppliers. Some of these cannot meet the demand for the resort. Others may have unreasonable prices too. Having a specific seller ensures that such issues are solved and employees assigned to search for the products are reassigned to other tasks.
All bidders for the provision of such raw materials are scrutinized before acceptance. Their ability to meet demand, reputation of company for such tasks, efficiency-whether there are any delays and reliability of the original source are considered. This ensures steady provision of all needed items.
Hiring specialists to perform the job assures management of these resorts that deliveries are of top quality and meet any set standards. These experts also charge cheaper prices than keeping a team of professionals to perform the job on payroll. Profitability of these organizations therefore increases.
A contract sets out what is required and expected from all the parties in the contract. The management therefore understands the terms of the agreement and is therefore comfortable with all supplies. A breach of contract may lead to a law suit to address the issues in dispute.
The issue of price instability associated with sale of foodstuffs ensures that the hotel purchases them at discounted prices. Many of such prices are lower than the prevailing market prices of such items. Therefore long term food supply to such resorts increases profitability.
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