purchasing

• What is an important part of an efficient operations management plan?

  Effective stock management
• Why is purchasing stock at the required quality and quantities crucial?

  It is a key factor in the production process
• What does ensuring a smooth flow of goods from the production line to the final consumer involve?

  It may involve numerous different suppliers
• What are the key aspects of effective stock management?

  • Maintenance of large buffer stocks
  • Transition from buffer stocks to just-in-time systems
  • Ensuring stock is available for manufacturing as needed
  • Minimizing idle work in progress
  • Timely delivery of finished goods to customers
• What is the traditional method of ensuring a ready supply of raw materials?

  Maintenance of large buffer stocks
• Why was the maintenance of large buffer stocks understandable in the 1970s and 1980s?

  Because businesses faced considerable industrial strife and supply interruptions
• What has changed in the industrial landscape that affects stock management?

  The emphasis is now on the reduction of stock holdings and freeing up working capital
• What is the purpose of just-in-time (JIT) systems?

  To minimize the costs of holding stocks
• How does a JIT system ensure stock is available for manufacturing?

  By delivering materials shortly before they are required
• What are the key requirements for a JIT system to operate effectively?

  Efficient ordering system, reliable suppliers, well-trained workforce, and a cooperative culture
• What happens to products in a JIT system?

  Products are not made unless an order has already been placed
• What are the potential problems of operating a JIT system?

  Ordering and administration costs may rise, and bulk buying advantages may be lost
• How can late deliveries from suppliers affect a JIT system?


  They can bring the whole production line to a halt
• What systems and relationships are necessary for effective stock management?

  • Effective relationships with suppliers and customers
  • Integration of ordering and delivery systems
  • Effective internal relationships within the manufacturing process
  • Treating each team as a customer in the production process
• What are the advantages of effective stock management?

  • Reduction in working capital
  • Improved relationships with customers
  • Freeing of storage space
  • Less stock wastage and discounting
  • Easier stock rotation
• What does the term 'opportunity cost of holding stock' refer to?

  It means that money tied up in stock is not available for use elsewhere in the business
• What is stock rotation?

  Ensuring that older stock is used before newer stock
• Why is stock rotation easier with smaller buffer stocks?

  Because stock is used shortly after delivery
• What discussion themes are presented regarding stock management?

  • Importance of an efficient purchasing function
  • How a business can control its stock
  • Costs associated with holding stock
  • Meaning of lead time and buffer stock
  • Advantages of adapting a JIT stock control system
  • Impact of technology on stock control
  • Debate on having too much stock versus too little