Explain one procurement decision that could help a start-up manufacturer of electric scooters meet its objective of reliable production. It needs batteries,...
Question 1 Report
Explain one procurement decision that could help a start-up manufacturer of electric scooters meet its objective of reliable production. It needs batteries, tyres and electronic controllers from several businesses. A delayed controller delivery last month stopped the whole manufacturing line for two days, while customers waited for orders and sales were postponed.
(a) Identify one reason why a delay in one component can stop scooter manufacturing. [1]
(b) Explain one benefit of using an approved-supplier list. [2]
(c) Which component should procurement treat as a priority if it is required for every scooter and currently has the longest delivery time? [1]
(d) What is meant by lead time in this context? [1]
(e) Explain one reason why the business may hold a small buffer stock of controllers. [1]
Answer Details
(a) All required components are needed to complete a scooter, so a missing component prevents final assembly [1].
(b) An approved-supplier list identifies suppliers already checked for quality and reliability [1]. Procurement can order more quickly and reduce the risk of unsuitable materials or supply disruption [1].
(c) The electronic controller should be treated as the priority [1], because it is required for every scooter and has the longest delivery time.
(d) Lead time is the time between placing an order and receiving it [1].
(e) The business may hold a small buffer stock of controllers so manufacturing can continue if a delivery is late or demand rises unexpectedly [1]. Buffer stock is extra stock held to protect production against uncertainty.
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