2.4.3 Stock control Flashcards
What are the different types of stock?
Raw materials and components
work in progress
finished goods
define stock control
The processes used by a business to ensure that it has sufficent stock for its purpose.
what are buffer stocks?
inventory that a business holds as a safeguard against uncertainties
What does a stock control help a business do?
-manage their stock
-it tells the business the level of stock they’re holding at different times and how quickly they’re using it up
-also informs business when they need to place new orders for stock
What 4 factors influence levels of stock a business holds ?
-Demand
-Reliability of supplier
-Storage cost or available space
-lead time (time between placing an order and receiving stock)
What might having poor stock control lead to
-stockouts
-excess inventory
-cash flow problems
What are the 3 implications of a business holding too much stock?
-increased storage stock
-could become obsolete or wasted
-cash flow issues as if moneys tied up in unsold stock, its hard for business to invest in other areas
What are the 3implications of a business holding too little stock?
-unable to meet unexpected demand- decreased customer satisfaction
-high ordering costs as they’re not benefitting from economies of scale
-halt production due to not having stock readily available
What is just in case stock control
businesses maintain higher levels of stock to prepare for unexpected demand fluctuations
What are 3 advantages of just in case stock control?
-reduced risk of stockouts which will
-improve customer satisfaction as they can fulfill customer orders promptly
-Buffer stock incase of supply chain disruptions
What are 3 disadvantages of just in case stock control?
-increased holding cost
-risk of obsolescence
-reduced cash flow as
(tying up capital in excess inventory can limit a business’s cash flow, making it challenging to invest in other areas)
What is just in time stock control?
Where raw materials and stock arrive just in time for when they’re needed
What are 3 advantages of just in time stock control?
-reduced inventory cost so less stock held so lower storage cost
-less cash tied up in stock so can be used elsewhere
-flexibility, bus able to respond quickly to changes in demand which increases customers satisfaction
What are 3 disadvantages of just in time stock control?
-supply chain vulnerability, if delays can lead to stockouts
-hard to respond to last minute orders as ready made stock not ready
-quality issues as the focus is on speed and efficiency so there may be a risk of compromising quality
What can wasted stock result in?
failure to control stock properly
Give 3 examples of types of waste businesses may come across
-defective products (faulty)
-overproduction (too much for demand)
-perishable goods going off
Give 3 examples of waste minimization techniques
-ordering stock based on previous data
-stock rotation
-adjust prices to sell stock about to go off
What does lean production aim to do?
It aims to minimize waste and use fewer resources in production as possible
Why is JIT stock control important when adapting to lean production?
Because JIT cuts inventory costs because manufacturers receive materials and parts as needed for production and do not have to pay storage costs.
What are 3 benefits of lean production?
-use fewer materials as focus is on waste reduction
-lower labour cost as it is typically capital intensive
-decreased costs as space required for production is reduced as a result of JIT stock management
What is the drawback of a business adapting to lean production?
high initial investment in equipment and training etc
How do lean producers have a competitive advantage?
because lower unit costs are achieved due to minimal waste so prices may be lower than competitors offer
