AQA · GCSE · Business

    Course version: 8132 · Version from Sept 2017

    The effects of procurement and logistics on a business, including:

    Full specification wording

    The role of procurement: The effects of procurement and logistics on a business, including:

    Procurement is buying the inputs a business needs, while logistics is moving and storing materials and finished goods.

    Checked against the AQA 8132 specification (opens in a new tab) on .

    • Point 12 of 21
    • 4 key terms

    Study notes

    From the checked teaching notes for this specification point.

    The idea

    Procurement is buying the inputs a business needs, while logistics is moving and storing materials and finished goods. Their effects reach cost, quality, speed and customer satisfaction. Effective procurement secures the right quality at a competitive price, controls stock and builds dependable supplier relationships; poor procurement causes overstocking, waste or stockouts. Efficient logistics moves stock quickly and safely, reducing lead times and storage costs; poor logistics causes delays, damage and higher transport costs. For example, a furniture maker buying timber and arranging delivery to its workshop must balance bulk discounts against storage costs. Together they influence unit cost, cash flow, competitiveness and reputation, so businesses monitor lead times, stock turnover and delivery performance.

    What earns the marks

    • Explains that procurement affects unit cost through the prices negotiated, bulk-buying discounts and the cost of holding stock.
    • Explains that procurement affects quality and customer satisfaction because inputs determine the standard of the final product.
    • Explains that logistics affects lead times and delivery reliability, influencing whether customers receive goods on time.
    • Explains that logistics affects costs through transport, warehousing, handling and the risk of damage or waste.
    • Analyses how procurement and logistics together influence cash flow, competitiveness and a business's reputation.

    Common mistakes and how to put them right

    • Treating procurement and logistics as the same activity.

      Put it right: Separate the buying decision from the movement and storage decision.

    • Ignoring the cost of holding stock.

      Put it right: Compare total cost, not just the unit price.

    • Assuming faster logistics is always better.

      Put it right: Match the logistics method to the value, fragility and urgency of the goods.

    Exam tips

    • Use a specific product or business so the effect on cost, quality or delivery can be made concrete.
    • Develop each point with a chain of reasoning, for example lower lead time leads to faster order fulfilment, which raises customer satisfaction.
    • For evaluation, weigh the benefits of efficient procurement and logistics against their costs and risks before reaching a judgement.

    Try the lesson

    The start of the The role of procurement: The effects of procurement and logistics on a business, including: lesson, made from checked teaching notes for this specification point.

    Have a go first

    Which term describes the movement and storage of goods from suppliers to a business and then on to customers?

    Listen

    Procurement is buying the inputs a business needs, while logistics is moving and storing materials and finished goods. Their effects reach cost, quality, speed and customer satisfaction. Effective procurement secures the right quality at a competitive price, controls stock and builds dependable supplier relationships; poor procurement causes overstocking, waste or stockouts. Efficient logistics moves stock quickly and safely, reducing lead times and storage costs; poor logistics causes delays, damage and higher transport costs. For example, a furniture maker buying timber and arranging delivery to its workshop must balance bulk discounts against storage costs. Together they influence unit cost, cash flow, competitiveness and reputation, so businesses monitor lead times, stock turnover and delivery performance. A strong answer earns marks for these points. Explains that procurement affects unit cost through the prices negotiated, bulk-buying discounts and the cost of holding stock. Explains that procurement affects quality and customer satisfaction because inputs determine the standard of the final product. Explains that logistics affects lead times and delivery reliability, influencing whether customers receive goods on time. Explains that logistics affects costs through transport, warehousing, handling and the risk of damage or waste. A common slip: Treating procurement and logistics as the same activity: procurement is buying inputs, while logistics is moving and storing them. Instead, separate the buying decision from the movement and storage decision. Exam tip: Use a specific product or business so the effect on cost, quality or delivery can be made concrete.

    See it

    A top-down flowchart. At the top, two separate starting nodes: 'Procurement: buying inputs' and 'Logistics: moving and storing'. From procurement, three arrows lead to 'Right quality at competitive price', 'Controls stock' and 'Supplier relationships'. From logistics, two arrows lead to 'Reduces lead times' and 'Reduces storage costs'. All five of these nodes then lead into a single node, 'Unit cost, quality and customer satisfaction', which leads to a final node, 'Cash flow, competitiveness and reputation'.
    It shows how procurement and logistics each affect cost, quality and delivery, and together influence cash flow, competitiveness and reputation.

    Key words

    Say what each word means before you turn the card.

    Procurement

    Try answering aloud or in your head before turning the card.

    Logistics

    Try answering aloud or in your head before turning the card.

    Lead time

    Try answering aloud or in your head before turning the card.

    Stock turnover

    Try answering aloud or in your head before turning the card.

    See every definition
    Procurement
    Buying the inputs a business needs, securing the right quality at a competitive price and building dependable supplier relationships.
    Logistics
    Moving and storing materials and finished goods, moving stock quickly and safely to reduce lead times and storage costs.
    Lead time
    The time taken before customers receive goods, which efficient logistics reduces and poor logistics extends.
    Stock turnover
    A measure businesses monitor alongside lead times and delivery performance to judge how procurement and logistics affect performance.

    Label the diagram

    Some boxes have lost their names. Pick the right name for each number.

    The diagram again, with 3 boxes numbered instead of named. A top-down flowchart. At the top, two separate starting nodes: 'Procurement: buying inputs' and 'Logistics: moving and storing'. From procurement, three arrows lead to 'Right quality at competitive price', 'Controls stock' and 'Supplier relationships'. From logistics, two arrows lead to 'Reduces lead times' and 'Reduces storage costs'. All five of these nodes then lead into a single node, 'Unit cost, quality and customer satisfaction', which leads to a final node, 'Cash flow, competitiveness and reputation'.
    • 1Box 1

    • 2Box 2

    • 3Box 3

    0 of 3 labelled

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