Role of procurement Flashcards
What is procurement?
Procurement is the whole process of dealing with suppliers and involves selecting suppliers, establishing the terms of payment and negotiating the contract.
All businesses hold stocks of some form. What do you think are the different types of stock a business may hold?
- Day-to-day supplies - (e.g paper and pens)
- Raw materials
- Components
- Semi-finished products
- Finished products
Why does stock have an opportunity cost?
It could have been used elsewhere, in the bank accruing interest, spent on motivating workers etc.
What is just-in-case mean (JIC)?
JIC holds stocks in case there is a delay from supplies or a sudden unexpected increase in demand - also referred to as a buffer.
What things will businesses buy from suppliers?
- General items used to keep the business going such as energy, utilities
- Materials used in the production process
- Major purchases used to create the production process such as equipment
What is meant by supply chain?
This is all businesses, people and activities that take part in the production process from the start until it gets to the customer.
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
What factors do businesses consider when choosing suppliers?
- Costs
- Quality
- Range of products they offer
- Speed of delivery
- Reliability -Reputation
- Flexibility - to meet different quantities etc
- Payment terms
- Contract terms
What is meant by logistics?
Logistics refers to 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.
What trade offs are in the supply chain?
Deciding which supplier to use will have trade offs, higher quality means higher cost, or it may cost more to get suppliers quicker etc.
