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 Delivery
. 
The 
lead time 
between placing and delivery of an order can be crucial to efficient 
inventory control and production planning. The reliability of suppliers' delivery arrangements must 
also be assessed. 
1.2.3 Purchasing and profits 
The professionalism of the purchasing function affects profit in three ways. Effective purchasing does 
three things. 

It obtains the 
best value for money
, giving the company more flexibility in its pricing strategy. 

It assists in meeting 
quality targets
, with an impact on a firm's long-term marketing strategy if 
quality is an issue. 

It minimises the amount of purchased material held as inventory, so minimising inventory-holding 
costs. 
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PART B: BUSINESS ORGANISATION STRUCTURE, FUNCTIONS AND GOVERNANCE 
 
150
 
1.3 Production 
The production function
plans, organises, directs and controls the necessary activities to provide 
products and services, creating outputs which have added value over the value of inputs. 
Activity 
Example 
Obtain 
inputs
to the production 'system', such as 
plant facilities, materials and labour 
Inputs: timber, screws, nails, adhesives, varnish, 
stain, templates, cutting tools, carpenters 
Adding of value
. The activities below occupy most 
of the production manager's attention. 

Scheduling jobs on machines 

Assigning labour to jobs 

Controlling the quality of production and/or 
service delivery 

Improving methods of work 

Managing materials and equipment, to avoid 
waste 
Operations: sawing, sanding, assembly, finishing 
Create 
outputs
, ie finished products and services 
Outputs: tables, chairs, cabinets, and so on 
1.3.1 Production management decisions