Role of Procurement

• just in case: (JIC)

  organising procurement to ensure that the production process never runs out of stock, reducing the number of sales lost due to insufficient raw materials
• JIC advantages:

  -increased level of customer satisfaction

  -reduces the chance of running out of stock

  -benefit from economies of scale
• JIC disadvantages:

  -storage space costs

  -may lose product quality

  -high capital in stock

  -increased chance of having to sell stock at a discount
• factors affecting supplier choice: costs

  -lower variable costs = higher profit margins

  -more products bought, more a business is able to negotiate discounts
• factors affecting supplier choice: quality

  -high quality vs lower quality

  -good quality products at different selling points
• factors affecting supplier choice: reliability

  -deliveries, availability and capacity for stock

  -sudden increases in demand
• procurement:

  the process of buying goods and services including dealing with,

  -demand

  -selection of suppliers

  -analysing and negotiating prices

  -making the purchase

  -managing payments
• logistics:

  managing the movement of supplies and products to ensure the timely delivery of supplies to the production process and finished products to customers
• transportation:

  the process of getting goods or services from one part of the supply chain to the next
• storage:

  involves storing products before they are sent out to retail shops, or direct to the customer if they are sold online
• distribution:

  ensures products make their way to the end customer in the most efficient way possible
• businesses costs and efficiency:

  -low costs ~ suitable quality products

  -delays can limit cash flow

  -unit costs can be reduced with quick production (being efficient)/inferior quality goods
• supply chain:

  the network of organisations, people, activities, information and resources that take the product/service from supplier to customer
• an effective supply chain:

  -works with suppliers to ensure key processes are running efficiently + cost effectively

  -gets goods and services for best price/value

  -cuts waste and unnecessary costs for streamlined production

  -has more satisfied customers, so lower complaints and returns

  -helps the business achieve overall aims/objectives