What Is The Responsibility of A Firm Towards Suppliers?

Responsibility towards your suppliers emanates from the fact that their survival and growth (partly or wholly) is dependent upon your survival-and growth. Suppliers provide you the raw materials, components and parts necessary for the production of your products. You are dependent upon your suppliers for regular, timely supplies of the specified quality at the agreed price. The suppliers in turn depend on you for providing correct design specification, adequate time for production, fixation of a fair price and prompt and timely payments. This two-way relationship works best when it is based on the realisation of mutual dependence and one party does not try to pressurise the other for its own benefit.

Escorts Limited and Hero Cycles are examples of how firms can play a responsible role in nurturing the growth of suppliers. As these firms have grown from success to success so have their suppliers. A full-fledged bicycle ancillary industry has been established in and around Ludhiana in response to the needs of Hero Cycles and other cycle manufacturers. In some cases firms may even provide the seed capital and other necessary infrastructural support to an individual to start an ancillary industry. There are numerous examples where these small ancillary industries have grown to be as successful and large as the firms to which they were originally supplying.

The manager’s responsibility towards suppliers of funds, i.e. banks and other financial institutions, is that not only he has to make the interest payments, but make the repayment on time as per the agreed repayment schedules. By doing so the fine is not only helping the bank but also helping itself because the health of the bank will determine the health of the firm and vice versa. An added dimension of responsibility towards the banks is that the manager must provide accurate and complete information about the various facets of its business when applying for financial assistance. This will help the bank in assessing the risk and return potential of your project and determine the amount of loan it can sanction.

Advertising agencies supply creative inputs used in promoting your company’s products. since their services are not of a very tangible nature, most firms have the tendency to postpone or delay making their payment. As a responsible manager you must check against this tendency. Advertising agencies after all, run a business, like any other, and are your suppliers, and payment delays from your end puts undue pressure on them and affects the efficiency of their operations.