Purchasing

• What is effective stock management important for?

  Efficient operations management plan
• Why is purchasing stock at the required quality and quantities crucial?

  It is key for the production process
• What does effective stock management ensure in the production process?

  A smooth flow of goods to consumers
• What are the key aspects of effective stock management?

  • Stock must be available when needed
  • Part-finished goods should progress quickly
  • Finished goods must be ready for timely delivery
• What is the traditional method for ensuring a ready supply of raw materials?

  Maintenance of large buffer stocks
• What is the re-order level?

  The stock level at which a new order is placed
• What does re-order quantity refer to?

  The quantity ordered to return to maximum level
• What is lead time in stock management?

  The time between placing an order and delivery
• What is buffer stock?

  Stock held between minimum level and zero
• What are the benefits of computerized stock control?

  • Improves efficiency and accuracy
  • Instant updates on stock levels
  • Automatic reordering when stock is low
• What is a key feature of Just-in-Time (JIT) manufacturing systems?

  Minimizing costs of holding stocks
• What is required for JIT to operate effectively?

  A very efficient ordering system
• How does JIT affect stock storage?

  Virtually no stock is stored on site
• What are the problems associated with JIT systems?

  • Rising ordering and administration costs
  • Risk of production halts due to late deliveries
  • Potential damage to manufacturer’s reputation
• What systems and relationships are necessary for effective stock management?

  • Strong relationships with suppliers and customers
  • Internal supply chain operates like external supply
  • Integration of systems using EPOS and barcoding
• What are the advantages of effective stock management?

  • Reduction in working capital
  • Improved customer relationships
  • Freeing of storage space
  • Less stock wastage
  • Easier stock rotation
• What are the consequences of not having enough stock?

  Production may cease and schedules reorganized
• What are the consequences of holding too much stock?

  High costs for storage and handling
• What are the health and safety issues related to excess stock?

  • Danger to staff through accidents
  • Potential for stock damage
  • Increased risk of theft
• What are the outcomes of effective stock control?

  • Assess performance of products
  • Monitor and limit shrinkage
  • Maintain stock in good condition
  • Monitor customer preferences
  • Maintain stock security