Using jit means that even though transport costs

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What impact does storage and transport costs play on the final decision? Using JIT means that even though transport costs increase, the cost of storage decreased. This means that warehousing costs would decrease. The question of whether the organisation should purchase externally or not should require organisation representatives being close to suppliers to find out what they have to offer. One should not lose sight of the fact that using an external supplier can contribute to the efficiency of your organisations operations. For these reasons, supplier relationships can be one of the most important assets that an organisation can have. Suppliers can also be seen as important because of their immediate monetary consequences Ford (2003, p.92) writes that the main issue facing your employer is no longer “buying the right products at the right time and the right price” , but of handling and relationships with key suppliers over long periods.” Internal suppliers So far we have considered external supplier relationships. It is important to also identify internal supplier relationship. Supplier relationships internal to the business include: f Franchisee’s – If you were to purchase a franchise it is important that you ensure that an open relationship occurs between your franchise and other franchise’s. There will be times in which you will need to rely on each other when there is a supply problem with the stock. f Networks are another way in which internal supplier relationships can be nurtured. A network is where a body or group of people meet together or are in contact with each other for the supply of information. f Customer – Some customer’s even supply organisation’s with components, products and services. For example, your customer has special needs for a product but does not have the ability to design and develop a component of the product. Your organisation may design and develop the product for the customer who supplies them with preliminary parts. The customer may purchase the final product from your organisation. It is important that you understand the difference between external and internal suppliers. This understanding will ensure that you know the needs that you will be required to fill to establish a strong relationship with them. Suppliers can also be seen as important because of their immediate monetary consequences. The impact of a supplier on the business cannot be measured solely on the relationship itself. You need to consider: f What the supplier is looking for in the relationship. f The way that the supplier is used by your organisation f How it relates to your organisations relationships with other suppliers
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30 WORKBOOK | © 2016 YOUNG RABBIT PTY LTD, AUSTRALIAN PACIFIC COLLEGE BSB51915 DIPLOMA OF LEADERSHIP AND MANAGEMENT | OPERATIONAL PLANNING_V2.4 Some of the ways in which costs can be identified are through: f Relationship costs Since supplier relationships play a large role in the organisations ability to survive the effects of globalisation, it is important to reduce procurement costs. Each purchasing transaction is associated to the cost
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