Supply chain management

Since changing to a cheaper milk supplier six months ago, a cheesemaker has received an increasing number of complaints about the taste of the cheese. The business is now losing customers.

Which action would help the cheesemaker deal with this problem?

A Contacting the current milk supplier to negotiate further price discounts

B Explaining on social media that the business needs to use cheaper milk

C Putting up signs that say the recipe for the cheese has not changed

D Switching to another supplier that can provide the correct quality of milk

Which task is likely to be part of the role of procurement at a hotel?

A Analysing room occupancy figures

B Cleaning the bedrooms

C Greeting guests on arrival

D Ordering toiletries and towels

Text 1

_{Adapted from www.drmartensplc.com/sustainability/ and www.drmartensplc.com/sustainability/product/. Item removed due to third party copyright restrictions.}Dr Martens plc

In 2023 DM’s accounts showed the data below.

Fig. 1 Selected financial data for Dr Martens plc 2023

State two production processes.

State two reasons why a business may aim to be environmentally friendly.

Calculate DM’s net profit margin for 2023 to two decimal places.

Show your workings.

........ %

Analyse one reason for DM of using the financial data in Fig. 1 to make decisions about how to meet its sustainability objectives.

Explain one way climate change may affect a business.

Analyse one disadvantage for DM of changing the supply chain for leather to meet its sustainability objectives.

Analyse one advantage for DM of changing its packaging to meet its sustainability objectives.

Recommend which of the two sustainability objectives (the supply of leather or the change in packaging) DM should prioritise.

The role of procurement for a car manufacturer might involve:

A advertising a new range of electric vehicles

B negotiating deals with car showrooms

C receiving deliveries of tyres and windscreens

D testing the brakes of every new car

Text 3

Primark Ltd

Primark Ltd is a fashion retailer that sells clothing and homeware at prices lower than most other retailers. The company is aware of the importance of consumer law and of having low-cost suppliers.

Primark Ltd started to sell its products online in 2022. After changes in buying habits and pressure from customers, in 2022 Primark Ltd launched an online click and collect service for shoppers.

Primark Ltd is very aware of the need to have ethical suppliers. The following ethical factors are among those important to Primark Ltd:

• giving clothes a longer life by using material from sustainable sources

• encouraging its supply chain to pay a living wage and look after the health and well-being of their workers.

Identify one factor which can affect the quality of a business’ products.

Analyse one impact of consumer law on Primark Ltd.

Analyse one benefit for Primark Ltd of having low-cost suppliers.

Analyse one advantage and one disadvantage to Primark Ltd of offering an online click and collect service for shoppers.

Recommend whether Primark Ltd should continue to offer an online click and collect service for shoppers.

(e*) Evaluate whether Primark Ltd’s use of ethical suppliers comes into conflict with its shareholders’ objectives.

Riley runs his own cleaning business. He wishes to keep supply costs as low as possible. The table below shows the price of cleaning fluid at four possible suppliers.

The lowest cost that Riley can obtain 1200 litres of cleaning fluid from one supplier is:

A £480

B £600

C £700

D £800

Text 1 Zara

Zara is a global fashion brand based in Spain. Zara is best known for the speed and frequency it can get its new clothing ranges into its online shop and 2270 stores. Approximately 50% of Zara’s clothes are manufactured in Spain; the rest come from other European countries, or from Asia and Africa. Like most firms in 2020, Zara experienced a fall in sales. Zara’s global sales revenues in 2019 were €19 954 million, but in 2020 these fell to €14 129 million. However, during this period Zara’s online sales increased by approximately 75%, as consumer buying habits changed in favour of e-commerce.

Zara can get new clothing designed, manufactured and delivered to its stores within 15 days. It does this by buying fabric in large quantities from suppliers in Europe, which helps keep its variable costs low. This means that it is delivered quickly to its factory in Spain, where it can then be made up into the new designs.

Zara’s highly responsive supply chain is central to its business success. This means it can change its clothing designs on average every two weeks, while competitors change their designs every two or three months.

Explain one production process a business may use when making its products.

Explain one method that a business could use to ensure the quality of its products.

Analyse one reason why keeping variable costs low may reward Zara’s owners.

Calculate the percentage decrease in Zara’s sales revenue between 2019 and 2020.

Show your workings

Answer........

Explain one possible advantage to a business of selling its products via e-commerce.

Identify two roles of the procurement function in a business.

Evaluate the importance to Zara of having reliable suppliers in the supply chain for its clothing.

Identify one economic factor which may affect a company’s profit.

Analyse the importance of quality in the production of the houses that BD plc produces.

Analyse one advantage to BD plc of obtaining 90% of its raw materials from the UK.

Analyse one advantage and one disadvantage to BD plc of producing components in batches at its factory.

Recommend whether BD plc should continue to produce components in batches at its factory.

* Evaluate how useful break-even analysis is to BD plc’s pricing and promotional decisions.

Hugh works in procurement at a factory that makes jeans.

Which of the following would not be part of Hugh’s job role?

A Choosing a supplier of zips and buttons

B Ordering printer paper and ink cartridges

C Receiving delivery of threads and fabrics

D Sewing the size label on to the waistband

Text 3 Pukka Pies Ltd

Pukka Pies Ltd is a family-owned business with approximately 360 employees. It makes a range of high-quality savoury pies, including steak, chicken and mushroom, and chicken balti, in batches at its factory in Leicester, England. Pukka Pies are sold in more than 4000 food stores nationwide as well as in sports stadiums, fish and chip shops and cafés across the country.

Three of Pukka Pies Ltd’s key values are recruiting people who are ambitious, delighting customers with quality pies, and building trust with suppliers through food safety. Each of these values helps the business meet the requirements of consumer law.

The success of Pukka Pies Ltd is affected by many factors, including its logistical and supply chain decisions. Pukka Pies Ltd procures the ingredients for its pies from businesses across the UK and overseas; consequently its supply chain is long. Nevertheless, all of these ingredients need to arrive in good condition and, therefore, its logistics are time-critical. Unemployment levels also have a significant impact on Pukka Pies Ltd.

Pukka Pies Ltd considers its environmental impact across all aspects of business activity. It has already replaced some of the non-recyclable plastics used in its packaging with alternatives that can be recycled. In addition, none of the company’s waste goes to landfill.

Identify one way consumer law protects consumers.

Analyse the benefits to Pukka Pies Ltd of using a batch production process.

Analyse one way falling unemployment might influence recruitment at Pukka Pies Ltd.

Analyse the impact of each of the following on Pukka Pies Ltd:

the length of its supply chain........

the time-critical nature of its logistics........

Recommend whether the length of its supply chain or the time critical nature of its logistics has the greater impact on Pukka Pies Ltd’s success.

* Evaluate how Pukka Pies Ltd’s environmental considerations might influence its marketing

mix.