Procurement is the process of finding and buying the goods and services a business needs from outside suppliers.

What factors does a business consider when choosing a supplier?

A business compares suppliers on price, quality and reliability. Payment terms, delivery speed and flexibility over order size also matter.

Why might a business choose a more expensive supplier?

The dearer supplier may offer better quality or more reliable delivery. Fewer faults and delays can save more than the difference in price.

Why do a supplier's payment terms matter when choosing between suppliers?

A supplier that allows 30 or 60 days to pay helps the buyer's cash flow. The buyer may be able to sell the goods before paying for them.

OCR GCSE Business J204

Business Activity

Topic overview Enterprise and entrepreneurship Business planning and the business plan Sole traders, partnerships and limited companies Business aims and objectives Internal and external stakeholders Organic and external growth How business functions depend on each other

Marketing

Topic overview The purpose of marketing Primary and secondary market research Market segmentation Product design and the product life cycle Pricing methods Point of sale promotion and advertising Place and the marketing mix

People

Topic overview The role of human resources Organisational structures and ways of working Communication in business Recruitment and selection Employee motivation and retention Training and staff development Employment law

Operations

Topic overview Production processes Quality of goods and services The sales process and customer service Consumer law Business location Procurement and choosing suppliers Logistics and supply chains

Finance

Topic overview The role of the finance function Sources of finance Revenue, costs, profit and loss Break-even Cash, liquidity and profit Cash flow forecasts

Influences on Business

Topic overview Ethical and environmental considerations The economic climate Globalisation and multinational companies International branding and competition

Operations

Procurement and choosing suppliers

3 things to know
Component 02

Overview

The stages of procurement, choosing suppliers on price, quality, reliability and payment terms, using several suppliers, bulk buying, checking deliveries, and technology in procurement.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

Define procurement.

Process

What are the main stages of procurement?

Key term

Why must a business identify exactly what goods and services it needs to buy?

Questions from this subtopic

Each one with the model answer underneath.

1
Define procurement.
Model answer
Procurement is the process of finding and buying the goods and services a business needs from outside suppliers.
2
What are the main stages of procurement?
Model answer
A business first identifies what it needs to buy and chooses a supplier. The business then orders the goods or services and receives the delivery.
3
Why must a business identify exactly what goods and services it needs to buy?
Model answer
Clear requirements mean the business buys the right quality and quantity. Buying too much ties up cash in stock, while buying too little can halt production.
4
What factors does a business consider when choosing a supplier?
Model answer
A business compares suppliers on price, quality and reliability. Payment terms, delivery speed and flexibility over order size also matter.
5
Why might a business choose a more expensive supplier?
Model answer
The dearer supplier may offer better quality or more reliable delivery. Fewer faults and delays can save more than the difference in price.
6
Why do a supplier's payment terms matter when choosing between suppliers?
Model answer
A supplier that allows 30 or 60 days to pay helps the buyer's cash flow. The buyer may be able to sell the goods before paying for them.

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Business Activity

Marketing

People

Operations

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Customers may receive quality.

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AOwners may gain from higher profit.

BEmployees may lose jobs or face lower pay.

CCustomers may receive poorer quality.

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Aim means a broad long-term goal of a business.

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