Business Management HL: Production Planning

supply chain

refers to all stages of production through which a product passes, from the extraction of raw materials to the delivery of final products to customers. it may involve a number of different businesses.

Procurement

refers to the process required in order to acquire the necessary resources to conduct operations. procurement can be local or global.

benefits of local supply chains (procurement)

greater control/less risk

lower transport costs

local, social, global, ecological benefits

limitations of local supply chains (procurement)

higher production costs

less choice

benefits of global supply chains (procurement)

greater choice

lower costs of production

limitations of global supply chains (procurement)

greater risk

lack of transparency and control

just-in-time production

the principle of placing smaller, regular orders for resources, which are delivered just in time for them to be used. it reduces storage costs and waste.

just-in-time production benefits

improved cash flow and reduced costs

improved operations

increased capacity

just-in-time production limitations

reduced economies of scale

high risk

reduced resilience

just-in-case production

involves holding relatively large levels of buffer stocks so that a business can continue to operate when faced with an unpredictable event. it results in higher storage costs, but more resilience to disruptions.

just-in-case production benefits

resilience

economies of scale

less risk

just-in-case production limitations

less working capital

higher storage costs

waste