Business Operations Flashcards
Just in time
a stock management method in which goods are received from suppliers only as they are needed.
Just in case
a stock control method that involves producing or purchasing stock with excess, or buffer stock.
Procurement
Involves selecting suppliers, establishing the terms of payment and negotiating the contract
Supply chain
the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product.
Logistics
Refers to the movement of goods, services, information and money throughout the production process
Break-even output
The point at which the business’ total sales equals the total costs. There is
neither profit nor loss.
Centralisation
Maintaining control by keeping authority at the senior levels of the organisation
Chain of command
The line through the hierarchy that shows who is responsible for whom from top
to bottom of an organisation
Delayering
The reorganisation of the organisation’s employees so that there are fewer levels
of management.
What is just in time (JIT) stock control methods
Just in time (JIT) is an inventory management system, used to manage the stock that is kept in storage. It involves receiving goods from suppliers as and when they are required, rather than carrying a large inventory at once.
Advantages of just in time stock control
. Removing buffer stock space (which would previously have been used for storage) means more space can be used for sales.
. Smaller but more frequent deliveries mean that the products will be fresher. A business can also have new stock delivered more frequently, eg perishable items such as fresh fruit and vegetables.
. Businesses will no longer have large amounts of capital tied up in stock that could go out of date or out of fashion.
. This capital can then be reinvested or spent elsewhere. Additionally, having less stock that could go out of date will reduce waste, saving money.
Disadvantages of just in time stock control
. It can be hard for businesses to react to unexpected changes in demand, eg a heatwave causing an increase in the demand for ice cream.
. Businesses are unable to use bulk-buy discounts if they only buy in small quantities.
. Customers could receive a poor service if the business misjudges the amount of stock it needs and allows products to go out of stock.
. Delivery delays will be more detrimental with this stock control method
What is Just-in-case (JIC) stock control
Just-in-case (JIC) is a stock control method that involves producing or purchasing stock with excess, or buffer stock in place. This means that there is always stock available for the business if required.
Advantages of Just in case
. Increases the level of customer satisfaction
. Reduce the chance of running out of stock
. Benefit from bulk-buy discounts
. They have stock in case of sudden increase of demand or delivery delays
Disadvantages of just in case
. Buffer stock space requires more storage space at more cost to the business
. Products kept in stock for a long period of time may lose their freshness
. High amounts of cash tied up in stock
. Increases the chances of having to sell off stock at a discount
. May struggke to sell the added stock because of decrease in demand
