Purchasing

Question 1

What are the key aspects of stock management

Answer 1

1 business must ensure that stock is available for use within the manufacturing process as and when it is needed
2 part finished goods do not sit around the factory floor unused and losing value- they are brought to the next stage as soon as possible
3 finished goods are available for timely delivery to customers and not made befor customers are found

Question 2

What are buffer stocks
Why are they no longer necessary

Answer 2

Large amounts of raw materials held in stock just in case they are needed
Industry has changed now we reduce stock to free up capital

Question 3

What are the advantages of todays methods of holding stock details on a data base

Answer 3

Improves efficiency and accuracy- data base is regularly updated - good example is stock control system in supermarket linked to tills - when products are scanned data base is automatically updated

Question 4

What is a just in time manufacturing system JIT

Answer 4

Designed to minimize cost of holding stocks of raw materials by planning a schedule so resources can flow through production process smoothly
Materials are delivered just before they are required and go straight on production line - no stock is stored
Products are not made unless an order placed and goods shipped out to customers straight away

Question 5

What are the key requirements for JIT to be successful

Answer 5

1 an efficient ordering system
2 supplies that reliably deliver raw materials when needed
3 well trained workforce
4. Cooperative culture

Question 6

What are the problems with JIT system

Answer 6

1 Ordering and admin costs rise so advantages of bulk buying are lost
2 if suppliers don’t deliver on time can bring whole production line down - damaging reputation

Question 7

What systems and relationships must be in place for effective stock management

Answer 7

1 effective relationships with suppliers and customers - suppliers must switch to new efficient ordering system
2 effective internal relationships - internal supply must operate same as external ie each team in production must consider the next team it’s customer

Question 8

What are the advantages of stock management

Answer 8

1 reduction in working capital - free money for investment
2 improve relationships with customers - helps guarantee ongoing orders
3 free up storage space
4 less wattage and discounting- smaller buffer stocks and supplies for finished stock
5 easier stock rotation - so old stock used before new stock