Holding stock or ordering just in time, picking the cheapest supplier or the most reliable one — procurement decisions look small day to day, but they decide how efficiently a business actually runs.
Procurement is the process of sourcing and purchasing the goods, materials and services a business needs to operate — everything from raw materials for a factory to stock for a shop shelf. In 3.3.1 you met Just In Time as a lean production technique; this chapter builds on that by contrasting it properly with its opposite, Just In Case, and then moves into two closely related skills: choosing the right suppliers, and managing the wider supply chain that connects them all together.
None of these decisions are free choices without consequences — every one involves a genuine trade-off between cost, reliability and quality that AQA specifically wants you to be able to evaluate rather than simply describe.
You already met Just In Time (JIT) in 3.3.1 — ordering stock only as it's needed, minimising the inventory a business holds at any one time. Its opposite, Just In Case (JIC), takes the reverse approach: deliberately holding extra buffer stock in case of unexpected demand or a disruption to supply.
Neither approach is simply "correct" — the right choice depends on how predictable demand is, how reliable a business's suppliers have proven to be, and how expensive or risky it would be to run out of stock at the wrong moment. A business selling a highly seasonal or unpredictable product often leans towards JIC precisely because the cost of holding some spare stock is far lower than the cost of disappointing customers when demand suddenly spikes.
Choosing a supplier is rarely as simple as picking whoever is cheapest — AQA wants you to weigh up three factors together for a given business.
The cost of the goods or materials directly affects a business's own costs and pricing — but the cheapest supplier isn't automatically the best choice once quality and reliability are considered.
Consistent quality reduces defects, returns and reputational damage — a supplier's quality directly shapes the quality of the finished product a customer eventually receives.
A supplier that delivers on time, every time, lets a business plan production with confidence — particularly critical for any business relying on Just In Time ordering.
These three factors often pull against each other. A supplier offering the lowest price may cut corners on quality or struggle to guarantee reliable delivery, while the most reliable, highest-quality supplier is rarely the cheapest. A strong exam answer weighs these factors against the specific priorities of the business in the scenario, rather than assuming price always wins.
Good procurement and logistics — the process of moving goods and materials to where they're needed — directly improve a business's efficiency, cutting out delays and unnecessary handling, which in turn helps achieve lower unit costs.
But just as with choosing a supplier, reduced costs from procurement have to be balanced against the quality of service received. Switching to a cheaper logistics provider that delivers late or damages goods in transit can end up costing a business far more in lost sales and reputational damage than it saves on the delivery invoice. Efficient logistics also feeds directly back into the production methods from 3.3.1: a flow production line running Just In Time depends entirely on materials arriving exactly when needed, so a business investing in flow production usually has to invest just as heavily in reliable logistics to support it — the two decisions can't really be separated in practice.
A supply chain is the entire network of suppliers, manufacturers, and distributors involved in getting a product from raw material to the final customer. Managing this network effectively — rather than treating each supplier relationship separately — brings real value to a business.
Drag each statement into the stock management approach it best supports.
State two factors that affect a business's choice of supplier.
Structure guide: two correctly identified factors — 1 mark each, no explanation required.
State and explain two factors Fenwick Toy Co should consider when choosing between its current supplier and the more expensive alternative.
Structure guide: state a factor grounded in the case study (1 mark), explain it (1 mark) — repeated twice over.
Analyse the risks Fenwick Toy Co faces by continuing to use Just In Time stock management ahead of the busy Christmas period.
Structure guide: a single developed line of reasoning grounded in the case study (eg: Fenwick Toy Co holds very little spare stock under Just In Time → its current supplier has already missed delivery deadlines twice in the past year → a further delay during the critical Christmas trading period could leave shelves empty at the busiest time of year → risking significant lost sales that a buffer of stock under Just In Case might have prevented).
Recommend whether Fenwick Toy Co should switch to the more reliable supplier, increase its buffer stock ahead of Christmas, or both. Justify your answer using the case study.
Structure guide: a "recommend" question needs a justified judgement — weigh the 10% higher price of the reliable supplier and the cost of holding extra buffer stock against the risk of running out of stock during Fenwick Toy Co's busiest trading period, before reaching a clear final recommendation.