Working with suppliers
Supplier management directly affects cost, quality and customer satisfaction. Edexcel 1BS0 covers stock management (including bar gate graphs and JIT vs JIC), procurement, logistics, and the factors a business considers when choosing suppliers.
Stock management
Bar gate stock graph
A simple chart showing stock level over time. Key features:
- Maximum stock level — the upper line; storage capacity.
- Reorder level — the level at which a new order is placed (factoring in lead time).
- Minimum/buffer stock — the safety floor; running below this risks stockout.
- Lead time — gap between placing an order and receiving it.
Stock falls steadily as units are sold/used; spikes upward each time a delivery arrives, ideally just as stock hits reorder level.
Just-in-time (JIT)
Stock arrives exactly when needed for production. Pioneered by Toyota.
- Pros: low storage cost, less obsolete stock, fast cash conversion.
- Cons: highly vulnerable to supplier disruption (Covid, Suez Canal blockage); requires reliable suppliers and accurate demand forecasts.
Just-in-case (JIC)
Hold buffer stock to insure against supply disruption or unexpected demand.
- Pros: resilient, copes with shocks.
- Cons: storage costs, working capital tied up, risk of obsolete stock.
Procurement
Procurement is the process of finding and buying goods/services from suppliers — including supplier vetting, contract negotiation, and ordering. Effective procurement reduces unit cost, ensures quality and minimises risk of disruption.
Logistics
Logistics is the management of the flow of goods from supplier → business → customer.
Components: transport, warehousing, distribution, returns. Modern logistics relies on real-time tracking, route-planning algorithms, and integration with stock systems.
Factors affecting choice of supplier
A business considers:
- Price — unit cost; bulk discount; payment terms.
- Quality — consistency; rejection/return rates.
- Reliability — on-time delivery percentage.
- Trust — long-term relationship; reputation; financial stability.
- Location — proximity to reduce lead time and transport cost (or for ethical "buy local" reasons).
- Ethics — child labour, environmental record, certifications (Fairtrade, B-Corp).
A business often has multiple suppliers for the same input — one primary, one backup — to avoid dependency.
Edexcel exam tip
Questions on JIT vs JIC are common. The key is to identify the risk profile of the business: high disruption risk (overseas suppliers, perishable inputs) → JIC; predictable demand and reliable local suppliers → JIT. Strong AO3 answers acknowledge that hybrid approaches (lean buffer stock) are often optimal.
AI-generated · claude-opus-4-7 · v3-edexcel-business-leaves