F. Operations

Skill 3. Manage Products and Services

3.1 purchase materials, products and services from suppliers

a) select materials, products and services considering, for example:

• budget cash flows
• cost
• industry trends
• local conditions
• needs of target market
• products offered by competition
• profitability of carrying products or offering services
• reputation of products and services in area
• storage space available

b) research suppliers:

• refer to sources, for example:
  • yellow pages
  • industry associations
  • peers
  • other operators
• determine:
  • quality of products and services
  • financial background
  • reputation
  • location
• contact suppliers to determine:
  • range of products carried and services offered
  • price per item, volume discounts and minimum order
    • delivery policy, for example:
      • who pays for shipping, e.g. free on board (FOB)
      • who pays for insurance
      • delivery days
      • frequency
    • payment policy, for example:
      • forms of payment accepted
      • volume discounts
      • early payment discount
      • line of credit available
    • support available, for example:
      • ease of contact
      • convenience of returns
      • display materials
      • delivery of temperature-sensitive goods
      • delivery of emergency orders

c) compare suppliers

d) select best supplier:

• record:
  • name of contact person
  • mailing address
  • telephone and facsimile numbers
  • e-mail address, if applicable

e) document purchasing procedures, e.g. purchasing deadline, delivery schedule

f) communicate procedures to employees responsible for purchasing:

• follow up, e.g. ensure procedures are adhered to

g) order supplies:

• negotiate prices whenever possible, e.g. high volume items may be discounted

h) maintain good relations with suppliers, for example:

• make payments on or before due date:
  • contact supplier, if other arrangements are necessary
• contact suppliers regularly to obtain information about:
  • new items
  • promotions
  • recommendations
• provide constructive feedback
• be ethical, e.g. advise supplier of over-shipments

i) monitor supplier's services periodically:

• renegotiate terms, if necessary

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3.2 outline benefits of following inventory procedures

a) controls costs by:

• identifying old or slow-moving stock
• recording use, returns and price changes
• identifying discrepancies, e.g. shrinkage
• reducing overhead, e.g. saves money required for storage space

b) improves security

c) provides basis for purchasing, for example:

• improves ability to project sales
• permits adjustment of capital tied up in inventory
• identifies fast-moving items for reorder

d) provides basis for adjusting pricing:

• identifies:
  • increases or decreases in costs
  • slow-moving items for pre-season markdown

e) ensures continued production

f) maximizes sales

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3.3 follow procedures for maintaining inventory

a) order merchandise quantities that can be sold in reasonable time frame:

• consider turnover rate of merchandise
• determine minimum and maximum stock levels

b) receive merchandise:

• check for damaged merchandise or packing

c) update system of inventory control, for example:

• inventory sheets
• requisition forms
• bin cards
• inventory book
• point-of-sales systems

d) monitor inventory:

• count inventory according to needs, e.g. monthly, annually
• compare counts to use, e.g. actual sales:
  • investigate discrepancies, e.g. shortages, damage
  • document discarded items
  • analyze slow-moving items, for example:
    • mark down or return, if necessary
    • document change in price
• rotate items, e.g. use first-in, first-out (FIFO) rotation system
• check dated items before use and take action, if necessary, e.g. put on special, return for credit, dispose of

e) secure storage areas:

• lock up high cost items and hazardous products

f) ensure proper storage conditions, e.g. temperature, light, humidity, safety, organization, accessibility, cleanliness

g) reorder products and supplies, as necessary

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3.4 follow receiving procedures

a) compare invoice to purchase order:

• check for price variations

b) check goods received for:

• number of items
• shortages:
  • confirm if stock is back-ordered or needs to be reordered
• substitutions
• damage, spoilage or poor quality

c) ensure product identification data is accurate, e.g. accurate part numbers, material transfer reports (MTR)

d) note irregularities:

• initiate claim with supplier or carrier

e) flag credit notes for follow-up

f) file invoice for payment

g) store stock as required, for example:

• adhere to Workplace Hazardous Material Information System (WHMIS) for chemicals

h) secure stock

i) record in inventory system