Management of operations : Purchasing Material from suppliers Flashcards
Price
The price of the supply can have a direct effect on how much it costs the company to produce the product. The higher the price of the supply will lead to higher cost of production. If companies can find a cheaper supplier they will go to it be because it will increase there profits
Quality
The quality of the raw materials will have a direct effect on the quality of the business finished products. It is important to source supplies of a high standard of it may effect the finished product and therefore customer satisfaction.
Delivery (lead) time
The lead time is the time taken between the order being placed and the order being received. Some companies want stock to be delivered fast because the product may be perishable or the company may be using just in time stock control methods
Quantity
The supplier can provide the right amount of raw materials when required. Correct quantities are required to satisfy customer demand.
Storage
it is important to stock manage to avoid any mistake or losing money. Where the raw materials are going to be held is very important is a storage space is very expensive.
