How does a business choose and manage the suppliers it depends on?
The role of procurement and the supply chain, the factors a business considers when choosing a supplier (price, quality, reliability, delivery), the importance of managing stock, and the impact of good and poor supplier relationships.
A focused answer to AQA GCSE Business 3.3.5, covering procurement and the supply chain, the factors used to choose a supplier, managing stock, and the impact of supplier relationships.
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What this dot point is asking
AQA wants you to explain what procurement and the supply chain are, describe the factors a business uses to choose a supplier, explain why managing stock matters, and explain the impact of good and poor supplier relationships.
Procurement and the supply chain
Choosing a supplier
There is often a trade-off, for example the cheapest supplier may not be the most reliable. The right balance depends on what the business sells: a luxury brand will prioritise quality over price, while a budget retailer will push hard on price. Many firms also weigh ethics now, choosing suppliers who treat workers fairly and source sustainably, because customers and pressure groups increasingly judge a business by its whole supply chain. AQA expects you to apply the factors to the context rather than always choosing the cheapest option.
Managing stock
Holding too little stock risks running out (a stockout), which means lost sales and disappointed customers; holding too much ties up cash that could be used elsewhere and risks waste through damage or going out of date, so businesses aim for the right balance. Some firms use just-in-time (JIT) stock control, ordering materials to arrive only as they are needed, which frees up cash and reduces waste but depends completely on reliable suppliers. A late delivery under JIT halts production immediately, which is why supplier reliability and stock policy are closely linked.
The impact of supplier relationships
Good supplier relationships bring reliable deliveries, consistent quality, sometimes discounts and flexibility. Poor relationships cause late or faulty deliveries, which disrupt production, harm quality and lose customers.
Try this
Q1. State two factors a business considers when choosing a supplier. [2 marks]
- Cue. For example, price and reliability (also quality and delivery).
Q2. Explain one effect of a poor relationship with a supplier. [2 marks]
- Cue. Late or faulty deliveries disrupt production and lose customers.
Exam-style practice questions
Practice questions written in the style of AQA exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
AQA 20193 marksExplain one reason why reliability is an important factor when a manufacturer chooses a supplier. (Paper 1, Section B)Show worked answer →
A 3-mark explain question: one factor developed through a chain.
Reliability matters because a manufacturer depends on materials arriving on time to keep production running. If a supplier is unreliable and delivers late, the production line stops, orders are missed and customers may be lost. So a reliable supplier keeps production flowing and protects the firm's reputation, which can matter more than a slightly lower price.
Markers reward the link from reliability to uninterrupted production to keeping customers. A bare statement that reliability is important, with no consequence, caps at one mark.
AQA 20219 marksA clothing retailer can choose between a cheaper overseas supplier with slow delivery and a more expensive local supplier with fast, reliable delivery. Justify which supplier the retailer should choose. (Paper 1, Section C)Show worked answer →
A 9-mark justify question: choose, apply, weigh the alternative.
Case for the local supplier: fast, reliable delivery lets the retailer respond quickly to fashion trends and avoid running out of popular lines, protecting sales and reputation, even though it costs more per unit.
Case for the overseas supplier: the lower price widens the profit margin or allows lower selling prices, but slow delivery risks stockouts and tying up cash in large orders held as buffer stock. A supported judgement might choose the local supplier because in fast-moving fashion the cost of missing a trend outweighs the price saving, or choose overseas for staple basics where speed matters less. The decision should turn on the type of product. Markers reward a clear choice justified against the rejected option and applied to the retailer.
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Sources & how we know this
- AQA GCSE Business (8132) specification — AQA (2017)