Procurement Flashcards
What is procurment
Procurement is the whole process of dealing with suppliers and involves selecting suppliers, establishing the terms of payment and negotiating the contract.
Different types of stock a bussiness may hold
Day-to-day supplies - paper and pens Raw materials Components Semi-finished products Finished products
Why does stock have an opportunity cost?
Can be used elsewhere, accurs interest in the bank, spent motivating workers, etc.
just in case (JIC)
holds stocks in case there is a delay from supplies or a sudden unexpected increase in demand - also referred to as a buffer.
Benefits of JIC
Always have stock available
Buy in bulk (purchasing economies of scale)
Fewer deliveries
What is a supply chain?
all the businesses, people and activities that take part in the production processes from the start until it gets to the customer.
What is meant by logistics?
The movement of goods, services, information and money throughout the production process.
It involves managing and ensuring everything is in the right place when it should be (coordination).
How can suppliers affect businesses?
Do suppliers deliver on time - reliable
Can suppliers produce and deliver quickly
Quality of the suppliers products
Is the supplier efficient - reduce costs
