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Procurement (What makes an effective supplier? (Price, Quality,…
Procurement
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JIC
The business holds buffer stock of raw materials/finished goods just in case there is a problem with deliveries or there is an unexpected surge in demand
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Drawbacks
Higher stock holding means a need for more storage space, which increases rent and insurance costs
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Stock go out of date, prices may need to be reduced to sell excess stock
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JIT
Benefits
Less storage space required, reduced rent and insurance costs
Less money is tied up in stock, which improves cash flow
Stock is less likely to perish, become obsolete, or go out of date
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Drawbacks
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No benefits of economies of scale from bulk purchasing; a large number of smaller deliveries are made
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Procurement is the whole process of managing the ordering and receipt of the goods and services in the business
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