The role of procurement

• What does JIT stand for in stock control?

  Just-in-time
• What does JIC stand for in stock control methods?

  Just-in-case
• What is the main principle of Just-in-time (JIT) stock control?

  It involves not storing raw materials and having regular deliveries of only what is needed.
• Why is buffer stock not needed in JIT stock control?

  Because deliveries are made just before existing raw materials run out.
• How does JIT stock control affect the ordering process for businesses?

  Businesses order smaller but more frequent quantities of stock.
• What is the primary purpose of Just-in-case (JIC) stock control?

  To ensure there is always stock available for the business if required
• What is essential for JIT stock control to be effective?

  A good relationship with suppliers is essential.
• What is the benefit of having suppliers local to the business in JIT stock control?

  It reduces both delivery costs and lead time.
• What do most businesses rely on suppliers for?

  Raw materials or components
• What is a potential disadvantage of JIT stock control?

  A business may run out of stock due to late deliveries.
• How does JIC stock control help during a sudden increase in demand?

  It provides excess stock to meet the unexpected demand
• What must businesses consider regarding JIT stock control?

  They must weigh the advantages against the disadvantages.
• Why is finding suppliers that meet a business's needs essential?

  To remain competitive and successful
• What is an example of how a business might implement JIC stock control?

  A cereal business keeping an additional 15 boxes more than predicted sales
• What are the advantages of JIT stock control?

  • More space for sales due to removal of buffer stock
  • Fresher products from smaller, more frequent deliveries
  • Less capital tied up in stock, allowing reinvestment
  • Reduced waste and savings from less stock going out of date
• What does procurement mean in a business context?

  Getting the right supplies from the right supplier, at the right price and at the right time
• Why is procurement considered a vital component of business success?

  Customers expect products to be available when they need them, and in the right quantity
• What does removing buffer stock space allow businesses to do?

  It allows more space to be used for sales.
• What does logistics mean in a business context?

  Making sure the correct products are procured and that they will arrive when needed
• What are the three main elements of logistics?

  Transportation, storage, and distribution
• What are the three key factors a business needs to consider when selecting a supplier?

  • Cost
  • Quality
  • Reliability
• What is transportation in the context of logistics?

  The process of getting goods or services from one part of the supply chain to the next
• What modes of transport might businesses use to move goods?

  Boats, planes, lorries, vans, or pipes
• How does JIT stock control benefit the freshness of products?

  It allows for smaller but more frequent deliveries, keeping products fresher.
• What does storage (warehousing) involve?

  Storing products before they are sent out to retail shops or directly to customers
• What is the purpose of distribution in logistics?

  To ensure products make their way to the end customer in the most efficient way possible
• What are the advantages of Just-in-case (JIC) stock control?

  • Increases the level of customer satisfaction
  • Reduces the chance of running out of stock
  • Benefits from bulk-buy discounts
• How do procurement and logistics impact a business?

  They have impacts on a business’ costs and efficiency
• Why is cost a vital consideration for businesses when selecting suppliers?

  It helps keep variable costs low and maintain higher profit margins
• What happens to capital in a JIT system?

  Less capital is tied up in stock, allowing it to be reinvested or spent elsewhere.
• How can business costs influence overall financial performance?

  Most businesses aim to keep costs as low as possible while providing suitable quality products
• What can reduce unit costs in a business?

  Quick production or using inferior quality materials
• What can delays in procurement or logistics cost a business?

  They can cost money and limit cash flow if products are damaged, lost, or unavailable
• Why is efficiency important to the success of a business?

  It relates to how quickly and effectively an item is produced or delivered to a customer
• How does purchasing more products from suppliers affect a business's negotiation power?

  It increases their power to negotiate discounts
• How can being efficient reduce production costs?

  Less time or resources are required
• How does JIT stock control help reduce waste?

  By having less stock that could go out of date.
• What should businesses be cautious about when focusing on costs and efficiency?

  They must also focus on the quality of the product or service being delivered
• What could happen if a business focuses too much on costs and efficiency?


  It could have a negative overall impact on the business
• What are the disadvantages of JIT stock control?

  • Difficulty reacting to unexpected changes in demand
  • Inability to use bulk-buy discounts
  • Risk of poor customer service due to stock misjudgment