The Role of Procurement (AQA GCSE Business): Flashcards
Exam code: 8132
1/330Still learning
Know0
- FrontManaging Stock
Define stock.
Was this flashcard helpful?
Cards in this collection (33)
Define stock.
Stock, also known as inventory, is the goods and materials a business holds for resale or for use in production.
What is the difference between raw materials and components?
Raw materials are natural resources or goods used to make other products. Components are the parts used in the production of goods.
Partially finished products awaiting completion are known as ______________.
Partially finished products awaiting completion are known as work-in-progress.
What problems can arise from holding too much stock?
Storage costs will be higher than necessary, and there is a greater risk of spoilage and shrinkage.
True or False?
Holding too little stock can lead to higher unit costs.
True.
Running out of stock causes production stoppages, leading to higher unit costs from underused capacity.
Define just in case stock management.
Just in case stock management involves a business holding raw materials, components or finished goods as buffer stock in case of shortages.
What are the advantages of just in case stock management?
It ensures a stable supply so a business can respond to increases in demand. It also avoids extreme price fluctuations caused by shortages.
Holding buffer stocks _____ cash that could be invested in other areas of the business.
Holding buffer stocks ties up cash that could be invested in other areas of the business.
Define just in time (JIT) stock management.
JIT stock management is where raw materials and components are ordered as required and delivered exactly when they are needed in production.
What kind of relationship must a JIT business have with its suppliers?
It needs close, long-term relationships with a small number of trusted suppliers, who must be flexible and reliable.
True or False?
JIT stock management allows a business to benefit from bulk buying economies of scale.
False.
Bulk buying economies of scale are not generally possible with JIT, because stock is ordered as required rather than in large quantities.
How does JIT stock management improve cash flow?
Less money is spent on holding stock, so cash can be put to other uses.
Under JIT, frequent ordering of stock leads to high ____________ costs.
Under JIT, frequent ordering of stock leads to high administration costs.
Why is the choice of supplier important to a business?
The supplier chosen affects whether a business can efficiently produce high-quality products at a reasonable cost.
Why does the quality of supplies matter when choosing a supplier?
If raw materials or components are poor quality, the final product may not meet the desired standards.
What should a business expect from a supplier's delivery?
Stock should be delivered on time, at a reasonable cost and in a reliable manner.
Delivery on time is especially important for businesses operating __________ manufacturing.
Delivery on time is especially important for businesses operating just in time manufacturing.
How is availability different from delivery when choosing a supplier?
Availability is about making sure the raw materials a business needs are readily available in a steady supply, not just that they arrive on time.
True or False?
Businesses always choose the supplier that charges the lowest price.
False.
Businesses look for the best possible price, but not at the expense of quality.
Getting a low price for raw materials and components helps a business remain _________ in the market.
Getting a low price for raw materials and components helps a business remain competitive in the market.
True or False?
Businesses often choose to work with reliable suppliers they trust.
True.
Strong relationships with trusted suppliers help ensure that materials meet the required standards, such as safety standards.
Define procurement.
Procurement is the sourcing and buying of raw materials, goods or services.
Which activities are part of procurement?
Procurement includes selecting suitable suppliers, negotiating prices and other terms, and taking receipt of products and paying for them.
Define logistics.
Logistics is the management of acquiring, storing and transporting products to their final destination.
Packing, labelling and arranging delivery are all part of ________, which is an element of logistics.
Packing, labelling and arranging delivery are all part of fulfilment, which is an element of logistics.
True or False?
Effective logistics can help a business expand into new markets.
True.
Effective logistics means storage and transport networks already exist, making it easier to reach new markets.
How can effective procurement and logistics help reduce costs?
Well-managed warehouses create minimal waste, automation leads to fewer returns and refunds, and efficient route planning cuts transportation costs.
Define supply chain.
A supply chain consists of all the processes, individuals and businesses that contribute to the production and delivery of a product to the final customer.
What do businesses balance at each stage of the supply chain?
Businesses balance costs with quality, reliability and speed.
True or False?
Delivering goods by air freight is both the fastest and the cheapest option.
False.
Air freight is very quick but very expensive, so a business may use road haulage to distribute products to retailers instead.
How does an effective supply chain improve customer satisfaction?
The right products are available at the right time and place, so customers are likely to remain loyal and recommend the business.
An effective supply chain improves cash flow, as there is less need to hold large volumes of ___.
An effective supply chain improves cash flow, as there is less need to hold large volumes of stock.
How does an effective supply chain reduce risks?
It allows supply disruptions, quality issues or fluctuations in demand to be managed effectively.
Sign up to unlock flashcards
or