2.4.3 - Stock Control

Question 1

What is stock control

Answer 1

• Stock control is the control of the flow of stock in a business, it concerns the ordering and management of:

1.Raw materials
2.Components
3.Work-in-progress
4.Finished goods

• Stock is also known as inventory. It can mean any of these; raw materials, work-in-progress, components or even finished goods. So stock does not have to be complete products it can be part made items.

Question 2

research a stock diagram

Answer 2

• research

Question 3

What is buffer stock

Answer 3

• Buffer stocks are stocks which are held in case there is unforeseen rise in demand or a problem with supply
• A business will keep buffer stocks to make sure that production is not stopped and that customers are kept happy with supply dates being met
• Some goods cannot hold buffer stocks – due to perishability (it goes off like milk) or due to obsolescence (it goes out of date like technology)

Question 4

What are the advantages of buffer stocks

Answer 4

• Holding buffer stocks means that a business can easily respond to changes in consumer demands
• Holding buffer stocks means that if the suppliers cannot deliver on time that production will not be affected

Question 5

What are the disadvantages of buffer stock

Answer 5

• The cost of storage is high, a business will need to pay for premises, staff and security of the stock
• This can tie up the working capital of a business

Question 6

What are the implications of poor stock control

Answer 6

1. Loss of customer goodwill
2. Loss of sales revenue
3. Damage to reputation
4. Disruption to production

Question 7

What is Just-In-Time Delivery (JIT)

Answer 7

• Just-in-time means that a business does not keep stocks of parts in a warehouse
• Instead they order the parts and get them delivered same day from the supplier
• This means very close links with suppliers

Question 8

How does JIT work with suppliers

Answer 8

• To make JIT work the manufacturer needs to have excellent working relationships with their smaller parts suppliers
• JIT does not work when there are delivery or quality issues
• No buffer stocks are held in a JIT system so if delivery does not arrive the product cannot be made

Question 9

What are the advantages of JIT

Answer 9

• As parts are ordered as they are needed there is no wastage
• Parts are not warehoused which is a massive cost saving in terms of premises and staff
• Stock is less likely to go out of date
• The business will improve their cash flow, as their money is not tied up in stock

Question 10

What are the disadvantages of JIT

Answer 10

• The business won’t be able to meet unpredicted surges in demand
• The business won’t be able to quickly replace damaged parts
• If the delivery does not turn up in time this can stop the whole production line, which is costly

Question 11

What is waste

Answer 11

• Any activity or result that the customer doesn’t value and is not willing to pay for. These activities that don’t add value for the customer between the inputs and the outputs must be removed or minimised.

Question 12

What is waste minimisation

Answer 12

• Waste minimisation can help improve efficiency and reduce the unit costs of production
• Waste minimisation can also improve the public image of the business – if they are seen to be more eco friendly
• Waste minimisation can carry heavy legal fines for noncompliance

Question 13

What are the 7 deadly wastes

Answer 13

1. Over production
2. Waiting time
3. Transportation time
4. Excess processing
5. Excess stock
6. Excess motion
7. Product quality

Question 14

What is over production

Answer 14

• Over production means that the business is making more than required and maybe running at over capacity (Just-in-case)
• Over production can stop the smooth flow of materials round the factory and reduces quality of finished goods

Question 15

What is waiting time

Answer 15

• The waste of waiting can take two forms;
• Waiting because the next step in the process is not ready
• Waiting because there are not enough inputs necessary to complete the next process

Question 16

What is transportation time

Answer 16

• There can be significant costs spent on transporting parts, components and stock to each workstation or between sites
• It wastes energy and resources of an employee that could be better used
• It wastes fuel for forklifts and lorries
• Anytime that materials have to be moved from one place to another is an opportunity to reduce wasteful transportation

Question 17

What is excess processing

Answer 17

• Excess processing can mean any extra processes which take the original raw material further and further from its natural state
• This is fine if it meets customer needs, but if the customer doesn’t want these extra processes then this is wasteful
• If the customer just wants to buy a garden shed and we paint it before delivery, and the customer wasn’t really expecting it to be painted, just plain wood, then this is wasteful unnecessary process

Question 18

What is excess stock

Answer 18

• If a product is over produced then it must be stored somewhere until it is needed. This means warehousing, tracking and monitoring.
• It risks the products becoming obsolete, going off or going out of style (depending on hat it is) and it is incurring costs

Question 19

What is excess motion

Answer 19

• Excess motion can mean unnecessary activities within the workspace
• Too much bending, lifting stretching can be tiring and case accidents
• Examples might be printers or photocopies that are not in a convenient location and require staff to have to walk to them

Question 20

What is product quality

Answer 20

• If product quality is inferior then this will cause scrap and rework, these defects all add costs to the manufacturing process
• Mistakes can cause waste

Question 21

What is lean production

Answer 21

• The aim is to reduce resources used in production, to use less of everything;

A. Time
B. Labour
C. Capital
D. Space in the factory
E. Raw materials

Question 22

What are the benefits of lean production

Answer 22

• Improved customer service through delivering exactly what is required when they want it (think cars)
• Improved productivity in terms of output per worker per time period
• Quality improvements through reduction in defects and reworking faulty goods
• Shorter lead times – which can become a competitive advantage for the business – who wants to wait six months for a sofa?
• Reduced waste in terms of the 7 types of waste
• Safer work environment, with a more organised leaner organisation comes higher levels of safety