Manufacturers rely on raw material suppliers to collect and disseminate natural resources for efficient production. Suppliers may need exclusive use agreements and refining skills to sell directly to manufacturers, and must adjust offerings to ensure sustainability in the free market economy.
Manufacturers convert raw materials and natural resources into useful goods for many different consumers. To run this process efficiently, manufacturers typically rely on a raw material supplier. This supplier gathers natural resources or other raw materials and ships them to manufacturers and other producers. This vendor’s individual activities basically include collecting and disseminating resources to paying customers. This process is an integral part of the free market economy and an important part of the invisible hand as defined by economists.
A raw material supplier generally must have access to natural resources to collect and disseminate raw materials. For example, a lumber company needs trees, which can grow in various locations, depending on the variety of trees needed by the supplier. Access to the trees may require the purchase or lease of land by governments or other companies. The same goes for other natural materials such as stones, minerals, fish or livestock. Creating agreements that create exclusive use can help a supplier engage in better commercial contracts when compared to competitors.
Some refinement of natural resources or other raw materials may be required. Raw material suppliers must have these enhancement skills to sell their products directly to manufacturers. At other times, the supplier may send the materials to an intermediary operation, which does the refining and then sells the products directly to the manufacturers. This process may not be very common as vendors often have enhancement capabilities to meet manufacturers’ demands. In some cases, suppliers may even be able to engage in enhancement activities at the point of natural resource collection.
All companies must have sales departments to move their goods from the point of collection or production to end users. A raw material supplier is no different. This organization usually has people who handle sales and customer service to induce or increase sales. In most cases, the supplier doesn’t care how many customers it has or who it sells materials to. As more customers buy materials will increase supplier coffers and allow refinement of the material collection process.
The services and products offered by a raw material supplier may need to change over time. The free market is rarely stable, creating this constructive capitalism. Raw material suppliers need to adjust their offerings to ensure sustainability. Listening to manufacturers’ needs can help the supplier achieve this goal.
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