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Stock, suppliers and logistics

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Stock

  • Stock includes raw materials, work in progress and finished goods. Accurate records and physical checks help identify losses and avoid relying on quantities that are not actually available or usable.
  • Reorder level is the trigger for replenishment; lead time is order to usable receipt; buffer stock absorbs uncertainty. Fictional usage 20 per day × two-day lead time + 20 buffer = 60-unit reorder level. Ordering 60 units brings the 20 units left at delivery back to 80 under the simple model.

A fictional stock-control cycle

A fictional stock-control cycleO20406080100123456Time (days)Stock (units)ReorderlevelBuffer

Approaches

  • JIT aims for low average stock with supplies close to use. JIC retains extra stock to reduce shortage exposure. A hybrid can fit different items: a perishable ingredient and a long-life critical component need not use the same buffer.
  • Compare storage, waste and funds tied up against ordering frequency, lost bulk discounts and disruption. JIC is not entirely safe, and JIT is not automatically best for a particular industry. Reliability, alternatives, shelf life and the cost of failure inform the choice.

Low stock and spare stock

Low stock and spare stockApproachBenefit and exposureJITLess stock held; supply disruption mayhalt workJICReserve against uncertainty; holdingcosts remainEitherapproachNeeds usable records and suitablesuppliersMixed policyDifferent items can need differentbuffers

Costs of holding stock

  • Holding stock can involve space, security, insurance, deterioration, spoilage and obsolescence. Funds tied up cannot be used elsewhere; this is an opportunity cost, not necessarily a separate immediate cash payment.
  • Stock rotation and checks can reduce avoidable loss. Extra purchases made for a discount are worthwhile only if savings justify holding costs and likely demand; unsold or obsolete items may destroy the apparent saving.

Suppliers

  • Procurement covers sourcing, selection and purchase. Assess price, conformance quality, delivery reliability, speed, payment terms, capacity and responsible practices. Longer agreed credit can help cash timing but does not reduce the bill automatically.
  • Fictional 100-unit order: A costs £2 each + £20 delivery + £30 expected defect cost = £250. B costs £2.20 each + £10 delivery + £5 expected defect cost = £235. B has the higher unit price but lower estimated total on these assumptions; uncertainty and other requirements still matter.

Compare a fictional 100-unit order

Compare a fictional 100-unit orderCost measureSupplier ASupplier BUnit purchase price£2.00£2.20100-unit purchase cost£200£220Delivery charge£20£10Expected defect cost£30£5Estimated total£250£235

Supply chains

  • Supply chains link organisations and activities from inputs through production and customer supply, with information and returns as well as goods. Relationships can support coordination but do not guarantee discounts, priority or reliability.
  • Ethical sourcing considers labour, human-rights, environmental and trading practices. Fair trade broadly seeks better terms; Fairtrade certification has specific standards, independent checks, premiums and applicable price rules. Verify the scope rather than equating local origin or a label with proof of every ethical or environmental claim.

Check sourcing claims

Check sourcing claimsClaim or issueEvidence to investigateWorkingconditionsSupplier records and credibleindependent checksEnvironmentaleffectsRelevant impacts and methods ofassessmentFairtradecertificationApplicable standards andcertification scopeLocal originDoes not alone prove ethical conduct

Logistics

  • Logistics coordinates transport, warehousing, fulfilment and returns. Compare total cost, reliability, capacity, handling, door-to-door time and environmental effects; transport modes can be combined and no mode is always fastest or cheapest for every route.
  • An online retailer should make realistic promises matched to target needs, including tracking or return arrangements where useful. Urgent delivery, slower economy services and collection can serve different customers. A low transport charge may be offset by storage, damage, missed sales or delay.

Match delivery to the offer

Match delivery to the offerCustomer oroperational needDecisionUrgent suitableconsignmentCompare feasible door-to-doortimesNon-urgent large loadCompare total cost and capacityPerishable or fragileitemCheck handling, storage anddamage risksOnline customerOffer a clear, realistic servicepromise

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练习题

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  1. 1.What is stock?

    Easy
    • Agoods and materials held by a business
    • Bmoney in the bank
    • Cwages
    • Dprofit
  2. 2.What is a supplier?

    Easy
    • Aa customer
    • Ban employee
    • Ca shareholder
    • Da firm that provides goods or services to another firm
  3. 3.What is raw material?

    Easy
    • Aa wage
    • Ba loan
    • Cbasic input used to make products
    • Da finished product
  4. 4.What is work in progress?

    Easy
    • Awaste
    • Bpartly finished goods
    • Cfinished goods
    • Draw materials only
  5. 5.What are finished goods?

    Easy
    • Acompleted products ready for sale
    • Braw materials
    • Cwaste
    • Dtools
  6. 6.What is a re-order level?

    Easy
    • Athe maximum stock
    • Bthe minimum wage
    • Ca price
    • Dthe stock level that triggers a new order
  7. 7.What is lead time?

    Easy
    • Atime to pay wages
    • Btime to open
    • Ctime from ordering to delivery
    • Dtime to sell stock
  8. 8.What is JIT?

    Easy
    • Aordering yearly
    • Bholding minimal stock and receiving deliveries as needed
    • Cholding large stock
    • Dholding no suppliers

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