operations - the role of procurement

Question 1

What are the 2 methods of stock control?

Answer 1

JIT and JIC

Question 2

What does JIT stand for?

Answer 2

Just in time.

Question 3

What does JIC stand for?

Answer 3

Just in case.

Question 4

Give two factors which will influence whether a business chooses to use JIT or JIC stock control.

Answer 4

• The nature of the market
• The product
• The businesses’ objectives

Question 5

What is JIT stock control?

Answer 5

When a business keeps stock to a minimum by ordering products only when they need them.

Question 6

Give 2 advantages of JIT stock control.

Answer 6

• Reduces warehousing costs
• Reduces waste
• Less money tied up in stock

Question 7

Give 2 disadvantages of JIT stock control.

Answer 7

• Dependent upon a good relationship with suppliers
• Business loses out on purchasing economies of scale
• More frequent deliveries
• Cannot meet unexpected increase in demand

Question 8

What is JIC stock control?

Answer 8

A method of operating a production and distribution system with buffer stocks of item.

Question 9

Give 2 advantages of JIC.

Answer 9

• Can meet unexpected increase in demand
• Benefit from purchasing economies of scale
• Stops customers going to competitors

Question 10

Give 2 disadvantages of JIC.

Answer 10

• Stock can be wasted if not all sold

* Costly to store items

Question 11

What is buffer stock?

Answer 11

Extra stock of items (used in JIC).

Question 12

What are the 3 factors which affect a business’ choice of supplier?

Answer 12

• Price
• Quality
• Reliability

Question 13

Why would a business let price influence their choice of supplier?

Answer 13

Can charge a lower price or enjoy higher profit margins.

Question 14

What is a potential drawback of a supplier which charges low prices?

Answer 14

Low prices could mean sub-standard quality.

Question 15

Why would a business let quality influence their choice of supplier?

Answer 15

The quality will usually have a direct effect upon the quality of the finished product.

Question 16

What is a potential drawback of a supplier which has low quality?

Answer 16

It will decrease operational efficiency if goods have to be remade.

Question 17

Why would a business let reliability influence their choice of supplier?

Answer 17

A business must consider if it is able to make enough of a good to meet demand.

Question 18

What is a potential drawback of a supplier which is not reliable?

Answer 18

If business cannot meet customer demand, they will lose their custom to competitors.

Question 19

What is procurement?

Answer 19

The finding, purchasing or acquisition of goods and services from suppliers.

Question 20

What is logistics?

Answer 20

The movemtn of good and services from one part of the supply chain to another.

Question 21

In what 2 ways does having effective procurement and logistics affect a business.

Answer 21

• Increases efficiency

* Lower unit costs

Question 22

How does having effective procurement and logistics systems in place increase efficiency?

Answer 22

The business will have the supplies it needs at the right time, so there will be no breaks in production.

Question 23

How does having effective procurement and logistics systems in place reduce unit costs?

Answer 23

It gets supplies at the best price so the firm can make more profit on each item.

Question 24

What is a supply chain?

Answer 24

The network between a company and all its suppliers in the production and distribution of a good or service.

Question 25

What are the 4 typical members of a supply chain?

Answer 25

Suppliers, manufacturers, distributors and retailers.

Question 26

Give 2 benefits of managing an effective supply chain.

Answer 26

• Good relationship with suppliers
• Finding the best price and value
• Reducing waste and unnecessary costs