Purchasing Flashcards
What are suppliers
People who are responsible for providing resources to businesses
What is the supply chain
All of the resource providers throughout every stage of operations
What is inventory
The number of goods held in stock including raw materials, work in progress and finished goods
What criteria is used to choose suppliers
Price, payment terms, quality, capacity, reliability, flexibility
What are the 4 types of payment terms
In advance, upon delivery, pre agreed credit terms, payment plan
What are the negatives of poor quality suppliers
One poor component will effect the whole product, may also effect operational efficiency
Why is capacity and reliability important from a supplier
To ensure demand is met, build trust and effect on operational efficiency
What is stock control
The process of managing the holding of inventories to ensure supply can match demand
What does the amount of stock held depend upon
Attitude to risk, importance of speed of response, speed of change within the market and nature of the product
How does efficient stock control reduce waste
Less obsolete or damaged stock and lower costs of holding stock
How does efficient stock control provide a competitive advantage
Cost savings can be passed onto customers via lower prices, better able to meet the needs of customers
What is lead time
The time it takes between placing an order and receiving delivery, the greater the lead time the higher the minimum stock level
What is the re-order level
The level of stock which triggers an order, this may be done automatically by a computerised system, determined by both lead time and the minimum stock level
What is buffer stock
Stock held by a business to cope with unforeseen circumstances like a rise in demand, businesses using just in time do not hold buffer stock
What are the advantages to holding buffer stock
Can meet customer demand, quickly respond to increases in demand, continue with production even if there is an issue with deliveries
