Stock Control and Forecasting Techniques Used by Cadbury

Stock Control and Forecasting Techniques Used by Cadbury

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I am going to relate the stock control and forecasting techniques that
Cadbury use.

C3: The relationship between stock control and forecasting techniques

Used in the production methods employed

For this part of my assignment I am going to relate the stock control
and forecasting techniques that Cadbury use with the production
methods that Cadbury use.

When Cadbury buy stock, it has to be considered carefully by Cadbury,
the correct quantities of the stock should be purchased to reduce the
amount of wastage should be controlled so that loses are controlled.

Cadbury purchases its main ingredient cocoa beans from Ghana, which is
then taken to marlbrook where the cocoa beans are cleaned and
grounded. After this they are imported to the UK in the Bourn Ville
factory where the production of the product is completed.

Cadbury knows how much stock that has to be purchased due to the time
series analysis that is done. The time series analysis shows
historical data which Cadbury use to analyse and predict the future
trends of the sales of products.

This is the reason for why Cadbury needs to ensure that the time
series analysis is accurate and up to date so that Cadbury can produce
enough products so that there is no wastage or shortage of products,
this is also meeting the customers demands. If Cadbury decided to
purchase more stock than needed then Cadbury would be overspending its
money and the wastage figure is likely to increase because more
products than needed are being produced and it would be wastage
because if the trend continues that the time series analysis shows
then customers are less likely to purchase more products (Cadbury
would be purchasing more products than customers would purchase).

Retail pricing

Once the product is made, Cadbury have to price the product at a
competitive price for it to be sold at retail shops. The price of the
product has to be competitive and stay stable so that customers will
purchase the product without considering the cost as a drawback about
the product.

For example if Cadbury decided to lower the price of the product by
25% then the sale trends are likely to change and the amount of stock
purchased has to be increased as well, because if the price of the
product decreases then it is very likely that customers are going to
be purchasing the product more often during the set time period that
the time series analysis covers. However if Cadbury decided to
increase the price of the product then it is very likely that
customers are less likely to purchase the product hence less stock
would be needed because Cadbury would have to produce less products.

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Employing staff

The staffs that the manager at Cadbury employs needs to have
experience about the job role they are employed for. Employees need to
adapt to their job role quickly so that they can work efficiently. At
Cadbury it is vital that customers receive an exceptional service, for
this the staff need to know about the objectives that have to meet and
the standards that have to be met. If unsuitable members of staff are
employed it is likely that they will produce insufficient goods that
will not meet the customers demands.

Security

Security is a vital part of any business. Premises can be made secure
by having a burglar alarm, security cameras and having shutters for
when the Cadbury factory closes. Security is vital for both the
employees of Cadbury and the products that are being produced, because
if either one of them doesn’t have enough security then Cadbury would
make a loss. For example if products/stock got stolen or vandalised
then Cadbury would make a loss because of the amount of time and money
that was spent in producing those products, however if an employee got
harmed due to a violent burglar then Cadbury would make a loss because
that employee helped Cadbury reach the production targets etc, and it
may be hard to find a replacement for the person because of the skills
that are needed for that job role.

Forecasting

Forecasting gives Cadbury a prediction of the selling trends of
products. To make the forecast, the trend line must be accurate. That
is the reason for why forecasting products for Cadbury is vital, this
relates to stock control because forecasting helps Cadbury to predict
how much stock is needed to produce the required amount of products.

Problems with forecasts

The accuracy of Cadburys forecast depends on many factors below are
the most common:

- Will the external environment remain the same?

Will there be significant changes in the economic, technical and
social environment? For example if customers all started to earn more
maybe this would change their lifestyle and encourage them to buy more
luxury products and chocolate is a luxury item.

- Will the external environment remain stable?

Will Cadbury keep the same objectives and follow the same polices?
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