141 purachsing Flashcards
what is purchasing
- purchasing and supply focuses on sourcing, pricing and buying the right things,at the right price and right i’ve in order to deliver products/services
importance of purchasing
- effective purchasing can help a business add value more efficiently-if you buy it cheaper its easier to add value/lower costs- the difference between this and the selling price increases
- effective purchasing reduces fixed costs- right amount t of stock they need-saves money on storage space by using JIT
- help a business meet demand more efficiently- ensures they always have enough stock to meet demand
what is stock controll
the process of maintaining the appropriate quantity of stock so a business can meet customer demand without delay while keeping the costs of holding stock to a minimum
explain a traditional stock control method
maintainance of large buffer stocks- large holdings of stock ‘just in case’
(+)/(-) of traditional stock control
(+) business is always in a position to meet demand, easier to adapt to changes in demand, slows for greater flexibility with pricing strategies , bulk purchasing discounts
(-) depends on the nature of the product it will be ineffective for perishable products, items increased storage costs reduced capacity due to storage space neededed
explain just in time stock control method
business doesn’t stock raw materials, instead has regular deliveries that bring only what is needed before its existing raw materials run out, so buffer stock not needed
(+)/(-) of JIT
(+) less storage space needed saving rent and insurance costs, less likelihood of stock going put of date, avoids buildup of unsold products that can occur with sudden changes in demand
(-) little room for intakes as minimal stock is kept for re-working faulty products, production reliant on suppliers if stock is not delivered on time whole production schedule delayed. unable to bulk buy-get discounts-high costs
what is buffer stock/lead time
buffer -the amount of stock you always want to have eg.200 donuts
lead time - amount of time between placing the order and receiving the stock
eval importance of effective stock control to employees
(+) effective stock is beneficial to them-stock means they would have something to do
(-) little stock -nothing to do-bored , too much-overwhelmed
eval importance of effective stock control to customers
(+) demands met if stock is managed well- loyal
(-) if they have poor stock control/ out of date products- unsatisfied. not enough stock customers will find alternatives
eval importance of effective stock control to managers
(+) if they have good stock control it gives them a competitive advantage as they can meet demand-more profits-meet target and budgets effectively
(-) if they can’t manage stock there’s no work for employees to do
eval importance of effective stock control to shareholders
(+) business sis always in a position to meet customer needs and expectations- so able to generate revenue/profits- dividends
(-) if unable to manage stock-unable to maximise. sales-affecting short term profit and dividends
