How does a business manage its stock and its relationships with suppliers?
Managing stock (interpreting bar gate stock graphs and using just-in-time stock control); the role of procurement (relationships with suppliers based on quality, delivery, availability, cost and trust); and the impact of logistics and supply decisions on costs, reputation and customer satisfaction.
A focused answer to Edexcel GCSE Business 2.3.2, covering stock management (bar gate stock graphs and just-in-time), the role of procurement and supplier relationships, and the impact of logistics and supply decisions on costs, reputation and customer satisfaction.
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What this dot point is asking
Edexcel wants you to explain how a business manages stock (reading a bar gate stock graph and using just-in-time), the role of procurement and good supplier relationships, and how logistics and supply decisions affect costs, reputation and customer satisfaction.
Managing stock: the bar gate stock graph
The graph typically shows stock falling steadily as it is used, then jumping back up when a delivery arrives, in a saw-tooth pattern. The reorder level is the key feature: the business places a new order when stock falls to this level, timed so the new delivery arrives before stock hits the minimum level. This avoids a stock-out (running out), which would stop production or leave customers unserved. Reading the graph lets a business control stock so it never runs out but never holds too much.
Just-in-time (JIT) stock control
JIT keeps stock to a minimum by having supplies delivered just as they are needed. This cuts storage costs and waste and frees up cash, which is why it suits businesses with perishable or expensive stock. The price is risk: with almost no buffer, the whole system relies on suppliers delivering the right goods, on time, every time. A single late delivery can stop production. JIT therefore demands excellent, trusted suppliers and good logistics.
Procurement and supplier relationships
Choosing and managing suppliers well is central to operations. A good supplier offers the right quality at a competitive cost, with reliable, fast delivery and the availability to meet demand, built on trust. A business often weighs these against each other: the cheapest supplier may be unreliable, while a slightly dearer one may deliver consistently. Strong supplier relationships make JIT possible and keep production running smoothly.
The impact of logistics and supply decisions
The way a business manages its stock and suppliers ripples through to the customer. Good logistics and supply keep costs low and ensure products are available, so customers are satisfied and the business's reputation stays strong. Poor decisions, an unreliable supplier, running out of stock, late deliveries, raise costs and damage reputation and customer satisfaction. This is why operational decisions about suppliers and stock are not just internal admin; they directly shape the customer experience.
Try this
Q1. State one benefit to a business of using just-in-time stock control. [1 mark]
- Cue. Lower storage costs, less cash tied up in stock, or less waste.
Q2. Explain one quality a business looks for in a good supplier. [3 marks]
- Cue. Reliable, fast delivery (or competitive cost, or consistent quality), with a brief reason why it matters to the business.
Exam-style practice questions
Practice questions written in the style of Pearson Edexcel exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Edexcel 20203 marksA bar gate stock graph shows a maximum stock level of units and a reorder level of units. Explain what the reorder level tells the business. (Paper 2, Section B)Show worked answer →
A 3-mark explain question rewards understanding of the graph developed through a chain.
The reorder level of units is the stock level at which the business must place a new order (point), because it allows enough time for the new delivery to arrive before stock runs out (because), so the business avoids running out of stock (a stock-out) and being unable to meet customer demand while waiting for delivery (effect).
Markers reward linking the reorder level to the lead time and to avoiding a stock-out. A bare statement that "it is when they reorder" without explaining why caps at one mark.
Edexcel 20229 marksA growing restaurant is considering using just-in-time (JIT) stock control. Justify whether it should adopt JIT. (Paper 2, Section C)Show worked answer →
A 9-mark justify question (Section C) needs a clear judgement, a developed chain, and the alternative weighed.
For JIT: stock (ingredients) arrives just as it is needed, so the restaurant holds very little, which cuts storage costs and waste from food spoiling, important for a restaurant with perishable stock, and frees up cash that would be tied up in stock.
Against JIT: it relies completely on reliable, prompt suppliers; if a delivery is late or wrong, the restaurant runs out of ingredients and cannot serve dishes, harming customer satisfaction and reputation, so it carries real risk.
A strong answer judges that JIT suits a restaurant because ingredients are perishable and waste is costly, but only if it has trusted, reliable suppliers and good logistics; without them, the risk of running out outweighs the savings. The decision must weigh lower costs and waste against supply risk. Markers reward the supported judgement.
Related dot points
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A focused answer to Edexcel GCSE Business 2.3.1, covering the purpose of business operations, the job, batch and flow production processes and their impacts, and how technology affects production.
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A focused answer to Edexcel GCSE Business 2.3.3, covering the concept of quality, the difference between quality control and quality assurance, and how quality helps a business control costs and gain a competitive advantage.
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A focused answer to Edexcel GCSE Business 2.3.4, covering the elements of the sales process (product knowledge, speed and efficiency, customer engagement, responses to feedback, post-sales service) and the importance of good customer service.
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A focused answer to Edexcel GCSE Business 1.3.4, covering short-term sources of finance (overdraft, trade credit) and long-term sources (personal savings, venture capital, share capital, loans, retained profit, crowd funding) for a start-up or small business.
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Sources & how we know this
- Pearson Edexcel GCSE (9-1) Business (1BS0) specification — Pearson Edexcel (2017)