Supply Chain Management (AQA A Level Business): Flashcards
Exam code: 7132
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Define producing internally.
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Define producing internally.
Producing internally means a business makes its own products or components using its own resources and staff.
What are the advantages of producing internally?
It gives full control over quality, timing and production methods, and protects confidential processes or designs. It can also be cheaper in the long run at high volumes.
True or False?
Producing internally makes it harder to increase or reduce capacity than buying from external suppliers.
True.
Producing internally limits flexibility. Capacity cannot be increased or reduced as easily as when buying from external suppliers.
Define buying in.
Buying in means a business purchases finished products or components from an external supplier instead of making them in-house.
What are the disadvantages of buying in?
It reduces control over quality, production methods and delivery times, and creates dependency on a supplier. It may also be more expensive per unit in the long term.
Define supplier relationships.
Supplier relationships are the ongoing connections a business builds with the businesses it buys materials, components or services from.
How can a business build strong supplier relationships?
A business can agree long-term contracts, keep in regular communication and work collaboratively with suppliers to solve problems such as quality or delivery issues.
Strong supplier relationships can encourage suppliers to ________ a business's orders during periods of high demand or shortages.
Strong supplier relationships can encourage suppliers to prioritise a business's orders during periods of high demand or shortages.
Define logistics.
Logistics means managing the movement of goods, both from suppliers and to customers, including transport, warehousing and distribution.
Why is effective logistics important to a business?
It ensures materials are available when needed for production and finished goods reach customers on time, improving satisfaction. It can also cut transport and storage costs and help the business respond quickly to changes in demand.
Define supply chain issue.
A supply chain issue is any disruption affecting the flow of goods and materials from suppliers through to customers, such as delays, shortages, quality problems or rising costs.
What are common causes of supply chain issues?
Common causes are supplier failure, transport disruption and global events such as pandemics, wars or natural disasters. Poor planning or communication within the chain can also cause them.
True or False?
The only impact of supply chain issues on a business is higher costs.
False.
They can also cause production delays and lost sales, damage customer satisfaction and reputation, and reduce a business's ability to compete.
Define supply chain transparency.
Supply chain transparency means a business being open about where its materials and products come from, and the conditions under which they are made.
How does supply chain transparency reduce reputational risk?
It becomes harder for problems such as poor working conditions or environmental damage to go unnoticed.
True or False?
A business's own claims about its suppliers carry as much weight with customers as external certification.
False.
External certification provides independent, credible assurance that standards are being met, which carries more weight than a business's own claims.
Supply chain transparency can ___________ a business from less transparent competitors, supporting premium pricing or customer loyalty.
Supply chain transparency can differentiate a business from less transparent competitors, supporting premium pricing or customer loyalty.
What are the benefits and risks of using a single supplier?
A single supplier allows closer relationships and potentially lower costs. However, it leaves the business vulnerable if that supplier fails.
What influences the number of suppliers a business uses?
It depends on the level of risk the business will accept, how easily it could switch to an alternative supplier, and whether the product is highly specialised.
What influences which suppliers a business chooses?
Key influences are price and payment terms, quality, reliability and capacity, ethical, environmental and legal standards, and location.
Lower prices and more favourable ____ terms from a supplier reduce costs and help cash flow.
Lower prices and more favourable credit terms from a supplier reduce costs and help cash flow.
Define distribution of profit along the supply chain.
The distribution of profit along the supply chain is how the total profit made from a product is divided between the businesses involved in producing, distributing and selling it.
How does bargaining power affect the share of profit a business receives?
Larger businesses, such as major retailers, can often negotiate lower prices from smaller suppliers, keeping more of the profit.
True or False?
A business that owns a well-known brand can often earn more profit than a business producing an unbranded component.
True.
Owning a well-known brand often gives a business a bigger share of the profit from a product than producers of unbranded components receive.
Producers who are easily ______ typically have less power to negotiate a higher price.
Producers who are easily replaced typically have less power to negotiate a higher price.
How do ethical trading schemes such as Fairtrade protect producers?
They set a guaranteed minimum price that protects producers regardless of market conditions.
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