Procurement And Logistics aqa

课 Progress

0% Complete

Exam code:8132

Procurement, logistics, efficiency and costs

Procurement refers to the sourcing and buying of raw materials, goods or services. It includes:
- Identifying and selecting suitable suppliers
- Negotiating prices and other important terms and conditions (e.g. lead times, payment terms)
  - Some businesses employ specialist buyers to manage these discussions
- Taking receipt of products and paying for them
Logistics involves the management of acquiring, storing and transporting products to their final destination, including:
- Warehousing
- Fulfillment, including packing, labelling, and arranging delivery
- After-sales service, including tracking orders and managing returns
Effective procurement and logistics make a significant contribution to business efficiency and the reduction of its costs

Benefits of effective procurement and logistics

Improving efficiency	Reducing costs
Businesses that have all the high-quality resources they need can match output to customer demand They are in a good position to react to market changes as they have strong relationships with flexible suppliers Effective logistics can help businesses expand into new markets, as storage and transport networks already exist	Minimal waste is generated by well-managed warehouse facilities Automation of fulfillment processes reduces the likelihood of human error, leading to fewer returns and refunds Efficient route planning, using the most appropriate transport (air, sea, road) can reduce transportation costs

The value of effective supply chain management

A supply chain consists of all the processes, individuals and businesses that contribute to the production and delivery of a product to the final customer

A typical supply chain

Process flowchart showing stages from raw material to customer: farm, supplier, factory, distribution, retail, ending at a house labelled customer. — **The supply chain is all of the people, activities and businesses involved in the manufacture and distribution of products**

The supply chain includes:
- Producers and processors of raw materials and components
- Shipping and distribution businesses
- Warehousing services
- Wholesalers and retail businesses
Businesses balance costs with quality, reliability and speed at each stage of the supply chain
- E.g. Delivering finished goods by air freight is very quick, but it is very expensive so a business may use road haulage to distribute its products to retailers

The importance of effective supply chains

It helps minimise production costs
- Sourcing raw materials and components, storing stock and distributing goods to customers are organised in the most efficient way
It improves customer satisfaction
- The right products are available at the right time and place
- As their needs and wants are met promptly, they are likely to recommend the business to others and remain loyal
It helps businesses to respond quickly to market changes
- They can introduce new products quickly and provide, giving them a competitive advantage
It reduces risks
- Supply disruptions, quality issues, or fluctuations in demand can be managed effectively
It improves cash flow
- There is less need to hold large volumes of stock, freeing up cash for other uses

Examiner Tips and Tricks

A common misconception is that logistics is simply another word for distribution.

Logistics involves all of the planning, implementing, and controlling of the efficient flow of products from raw materials to the end customer. Distribution is one component of logistics that deals with the final stages of delivering goods to customers or retailers.

Business GCSE AQA