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Jemshah
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Asked: 2023-01-08T04:32:47+00:00 In:

ABC Limited has adopted standing orders as a technique of managing its materials requirement. Explain five benefits that the company may derive from such a technique.(10 marks)July 2020

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ABC Limited has adopted standing orders as a technique of managing its materials requirement. Explain five benefits that the company may derive from such a technique.(10 marks)July 2020

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    1. Reduced lead times: Standing orders allow the company to place repeat orders for materials on a regular basis, which can help to reduce the lead time for acquiring these materials. This can help to ensure that the company has a consistent and reliable supply of materials, which can be critical for the smooth operation of its business.
    2. Improved forecasting: By placing standing orders, the company can gain a better understanding of its materials usage patterns, which can help it to more accurately forecast future demand. This can help to prevent shortages and excesses of materials, which can be costly and disruptive to the business.
    3. Cost savings: By placing standing orders, the company may be able to negotiate better pricing with its suppliers, as it is committing to a longer-term relationship and a higher volume of materials purchases. This can help to reduce the overall cost of acquiring materials for the business.
    4. Increased efficiency: Standing orders can help to streamline the materials procurement process, as the company does not need to spend time and resources on placing new orders and negotiating terms with suppliers each time it needs materials. This can help to increase efficiency and productivity within the business.
    5. Improved relationships with suppliers: By placing standing orders, the company can develop stronger and more long-term relationships with its suppliers, which can be beneficial in terms of negotiating better terms and maintaining a consistent and reliable supply of materials.
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