2.3.2 Working with suppliers

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What is the name for the process of finding suppliers and agreeing terms for the supply of goods or services?: Procurement
Which term describes the amount of time between placing an order for stock and receiving the delivery?: Lead time
What is the name for the extra stock a business holds to cope with emergencies or unexpected rises in demand?: Buffer stock
What is meant by just-in-time stock control?: Materials are delivered just as they are needed for production
What is meant by 'logistics'?: The management of the movement and storage of goods from suppliers and on to customers
What is meant by 'stock control'?: Managing the level of stock so that a business has enough to meet demand without holding too much
Why does a business hold buffer stock?: To cover demand or deliveries that are unexpected
What is a main advantage of using just-in-time stock control?: Less money is tied up in stock held in storage
A business using just-in-time stock control has a delivery delayed by two weeks. What is the most likely result?: Production stops because the materials have run out
Why might a business choose not to buy from the cheapest supplier it can find?: Cheap supplies may be lower quality or less reliable
Why is trust an important part of the relationship between a business and its supplier?: The supplier will keep to agreed prices and delivery dates
A business's supplier keeps delivering late, so customers cannot buy what they want. Which is the most likely impact on the business?: Its reputation is damaged and customers may go elsewhere
What is meant by the re-order level on a bar gate stock graph?: The stock level at which a new order needs to be placed
A bar gate stock graph shows that a business's stock has fallen to its re-order level. What should the business do?: Place a new order with its supplier
A business switches to a cheaper supplier whose goods are often faulty. Which is the most likely effect on customer satisfaction?: Customers receive poor quality products and become less satisfied
Why is the availability of supplies especially important to a business using just-in-time stock control?: There is very little stock held to keep production going if supplies run out
A business asks its supplier to deliver an urgent order more quickly than usual. What is the most likely effect?: The business pays more for the delivery
Which is a problem for a business that holds too much stock?: Storage costs rise and cash is tied up in unsold stock

2.3.2 Working with suppliers

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