Unit 3.3 - the supply chain

Question 1

Define supply chain.

Answer 1

The various processes involved in producing a product and distributing it to buyers.

Question 2

Define procurement.

Answer 2

Selecting suppliers establishing the terms of payment and negotiating the contract.

Question 3

Define logistics.

Answer 3

The movement of goods, services, information and money throughout the production process.

Question 4

Name the types of stock. (3)

Answer 4

Raw materials
Partly finished goods
Finished goods

Question 5

Explain the difference between just in case (JIC) and just in time (JIT).

Answer 5

JIC holds stock in case there is a delay from suppliers or a sudden unexpected increase in demand whereas JIT production holds as little stock as possible, items are ordered just in time to be used.

Question 6

Name the advantages (4) and disadvantages (3) of JIC.

Answer 6

Stock is available so production will not be held up.
Bulk buy stock - purchasing economies of scale (bulk buying)
Stock can be checked on delivery.
Stock can be kept in the correct environment.
Expensive to store.
Stock may get damaged in transportation.
Stock can lose value.

Question 7

Name the advantages (5) and disadvantages (3) of JIT.

Answer 7

Zero warehouse costs.
Stock is in good condition as it comes directly from the supplier.
Materials are up to date.
Little waste.
Less chance of damage.
Production might have to stop.
Deliveries may be delayed.
Cannot buy in bulk.

Question 8

When procuring supplies, what do businesses consider?

Answer 8

Cost
Quality
Supplier’s reliability
Ethical and environmental actions of the supplier
Delivery time
Payment terms and contractual issues