Where does a loaf start?: A customer buys a loaf at the Station Road shop at eight in the morning. It feels like the start of something. It is the end.
Months earlier, Valley Grain's farmers sowed the wheat. Their mill turned it into flour, a lorry brought it to Mill Lane, Priti's bakers baked it at 2 a.m., and a van drove it across town.
Every stage a product passes through, from the raw materials to the person who uses it, is its supply chain. In 1.1.3 you followed this same loaf through the four sectors. The supply chain is that path seen from the bakery's side: who supplies what, and how it moves on.
Raw materials
taken from nature
- Valley Grain's farmers grow the wheat
- Also salt, yeast and water from other suppliers
Processing
made into an input
- Valley Grain's mill turns the wheat into flour
- A lorry brings the flour to Mill Lane
Production
made into the product
- Priti and six bakers bake from 2 a.m.
- The loaves are packed onto racks
Distribution
moved to where it is sold
- The vans leave at five
- Four shops and the cafés
The customer
the end user
- Buys and eats the loaf
- The chain exists to reach this person
Not every stage is yours: Lena's Bakery runs only the middle of this chain. Valley Grain grows and mills; the shops sell.
Any stage can be handed to another business (outsourced, as in 5.4.2). The chain is still one chain: a problem at any link reaches the customer.
Running the chain well is supply chain management: choosing the suppliers, agreeing prices and delivery times, deciding how much stock to hold, and passing information along so that the right amount arrives at the right time.
At Mill Lane the information runs backwards up the chain. At eight each evening the shops send their sales figures, Priti works out tonight's bake, and tomorrow's flour order goes to Valley Grain.
| A change at one link | What reaches Lena's Bakery |
|---|---|
| Valley Grain raises its flour price (5.5.1) | The ingredients for a packet of crackers rise from $0.60 to $0.70. Each packet now leaves $1.80, not $1.90 |
| The road from the mill closes in snow (5.3.2) | No flour arrives; the safety stock keeps the ovens going |
| The shops send their figures late | Priti bakes to a guess, and bread is wasted or runs short |
Three ways to answer a price rise: When a supplier puts its price up, a business can accept a lower margin: on 18,000 packets the 10 cents costs $1,800 of contribution.
It can pass the rise on to its customers, and risk selling fewer. Or it can look for another supplier. Each choice starts at the far end of the chain and ends at the till.
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Two things arrive at Mill Lane from very different places.
The flour comes from Valley Grain, a short drive away, every afternoon. The printed cracker packets come from a printer abroad. They cross the sea by ship, travel on by road, and take six weeks.
Local supply chain: the flour
- Where. Every stage is close by: Valley Grain's farms, its mill, a short lorry trip.
- Speed. Order in the evening, flour the next afternoon.
- Control. Lena can visit the mill, see the flour and sort a problem face to face.
- Cost. Short transport, and Valley Grain gives 30 days' credit.
Global supply chain: the packets
- Where. The stages cross borders: printed abroad, shipped, then driven to Mill Lane.
- Speed. Six weeks from order to delivery.
- Control. Nobody from the bakery sees the printing; faults show up only on arrival.
- Cost. About half the price a local printer quoted, the reason for going abroad.
Why go global
- Lower costs: cheaper labour, materials or specialist firms abroad
- Access to what is not made locally
- Suppliers big enough to produce in large runs
What it costs
- Long delivery times, so more stock must be held
- More can go wrong: ports, weather, borders, exchange rates
- Harder to check quality and working conditions
Why stay local
- Fast, frequent deliveries: little stock needed
- Easier to check quality and to talk
- Shorter transport, fewer emissions, a story customers like
Relying on one supplier: Valley Grain is the bakery's only flour supplier (its primary supplier). That brings a close relationship and 30 days' credit.
It also brings risk. If Valley Grain is busy supplying other bakeries, it may not send extra flour when Station Road sells more than planned. With no second supplier, the bakery has to accept its prices, as it did in 2026. And one bad batch of flour, or one closed road, stops every oven.
A global chain and a slow supplier also change how much stock a business must keep. Flour arriving every day needs only a small safety stock. Packets that take six weeks cannot arrive just in time, which is why 5.3.2 kept them just-in-case. How much to keep, and when to order, is what a stock control chart shows.
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The packet shelf: Every cracker leaves Mill Lane in a printed packet, about 350 a week. On one shelf in the store room sits the stock of empty packets.
Marco watches it fall, week by week. When it gets low he emails the printer abroad, and six weeks later a pallet of 4,200 new packets arrives.
A stock control chart is a picture of that shelf over time. Time goes along the bottom; the number of items in stock goes up the side.
The stock line falls as items are used, and jumps straight up when a delivery arrives. Over a year it looks like the teeth of a saw. Three straight lines across the chart mark the levels that matter.
The four figures on the chart
Lead time: 6 weeks
The time between placing an order and the delivery arriving. The printer takes six weeks.
Buffer stock: 700 packets
The safety stock the bakery plans never to use: two weeks of packets in case a delivery is late. The same idea as the 50 sacks of flour kept for a closed road in 5.3.2.
Reorder level: 2,800 packets
The stock level at which a new order is placed. It has to cover the six weeks of waiting, with the buffer still untouched when the delivery arrives.
Reorder quantity: 4,200 packets
How many are ordered each time: one print run. It is the height of each jump on the chart.
Two formulas: Reorder level = buffer stock + (usage per week × lead time in weeks) 700 + (350 × 6) = 700 + 2,100 = 2,800 packets
Maximum stock = buffer stock + reorder quantity, so reorder quantity = maximum stock − buffer stock 700 + 4,200 = 4,900 packets, and 4,900 − 700 = 4,200
| Week | Packets on the shelf | What happens on the chart |
|---|---|---|
| 0 | 4,900 | A delivery has just arrived: stock is at its maximum |
| 3 | 3,850 | Falling by 350 a week |
| 6 | 2,800 | Stock reaches the reorder level: Marco orders 4,200 packets |
| 9 | 1,750 | Still falling while the order is printed and shipped |
| 12 | 700, then 4,900 | Stock is down to the buffer when the delivery lands, and jumps up by 4,200 |
| 18 | 2,800 | The reorder level again: the next order goes |
| 24 | 700, then 4,900 | The next delivery: the saw has two teeth |
Read the table as the chart. The order goes at week 6 and the packets arrive at week 12: that gap is the lead time. The stock never falls below 700: that is the buffer. Each jump is 4,200: that is the reorder quantity.
Most questions hand you a chart and ask you to read one figure off it. Each figure has one place to look.
| Asked for | Where to look on the chart | Lena's packets |
|---|---|---|
| Lead time | Along the bottom: from the week stock reaches the reorder level to the week the delivery arrives | Week 6 to week 12 = 6 weeks |
| Buffer stock | The lowest line, or the lowest point the stock falls to before each delivery | 700 packets |
| Reorder level | The line where each order is placed | 2,800 packets |
| Reorder quantity | The height of a jump: maximum stock − buffer stock | 4,900 − 700 = 4,200 packets |
Two slips that cost the mark: The reorder quantity is not the maximum. The delivery lands on top of the buffer, so the jump is 4,900 − 700 = 4,200, not 4,900.
Give the unit. 4,200 packets, 6 weeks, 700 units. A bare number reads as half an answer, and when asked to show your working, write the subtraction too.
Drawing the chart yourself
Axes
Time in weeks along the bottom, 0 to 24. Packets in stock up the side, 0 to 5,000.
Three level lines
Straight across: maximum stock at 4,900, reorder level at 2,800, buffer stock at 700. Label each.
The falling stock
A straight line from 4,900 at week 0 down to 700 at week 12: 350 a week for 12 weeks.
The order and the jump
Mark the order where the line crosses 2,800, at week 6. At week 12 draw the stock straight up from 700 to 4,900.
Repeat and label
Draw the next tooth to week 24. Mark the lead time, week 6 to 12, with an arrow along the bottom.
When the figures change: A slower delivery. If the printer took 8 weeks, the reorder level would rise to 700 + (350 × 8) = 3,500: order earlier.
Faster use. If café orders rose to 500 packets a week, it would rise to 700 + (500 × 6) = 3,700, and the same buffer would last under a week and a half.
A real shelf is messier than the chart. Cafés order more crackers in some weeks than others, and a ship can be held up in port, so the stock line is never perfectly straight.
The buffer is there for that. At 700 packets it covers a delivery up to two weeks late. A bigger buffer is safer but ties up more cash and space, the just-in-case trade-off from 5.3.2.
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How this comes up: Stock control comes as a chart in a case. Read one figure for one mark: the lead time, the buffer stock or the reorder quantity. Or calculate the reorder quantity with working shown, for two.
Supply chains come as short questions on the same case: describe one feature of a supply chain, explain one disadvantage of relying on one main supplier, or explain one impact of a supplier raising its prices, each for two marks.
The two-mark calculation
- Read the maximum stock. The top line, or the top of each jump.
- Read the buffer stock. The bottom line, or the lowest point before each delivery.
- Write the formula and subtract. Reorder quantity = maximum stock − buffer stock.
- Give the unit. Packets, units, kg: whatever the chart counts.
The trap: reading the top of the chart as the order: The maximum is where the stock ends up after a delivery, not the size of the delivery. The delivery lands on top of the buffer, so the order is the gap between them.
And read the axis scale: a chart in thousands (000s) turns 50 into 50,000.
Using Figure 1, calculate the reorder quantity for Lena's Bakery Ltd's cracker packets (show all your working).
Model answer plan
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