Fig. 5.1 shows the supply chain for a car manufacturer that receives vehicle components into its factory from international component suppliers. [Figure 5.1] Use Fig. 5.1 to help you answer the following questions.

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

1. [2] A building (1) where raw materials (1) are assembled (1) finished goods/goods are made/produced (1) in secondary production (1) using machines (1)
2. [2] Arrange transport/delivery/moving goods
3. [2] Prepare/carry/complete documentation
4. [2] Arrange Insurance
5. [2] Customs clearance
6. [2] Unloading of goods
7. [2] Arrange payment of freight
8. [2] Inventory management
9. [2] Packaging/labelling
10. [2] Warehousing
11. [2] Security of goods
12. [2] Logistics/planning the best routes/tracking of goods
13. [2] Negotiate contracts
14. [2] The car factory will require many different/large number of components/parts (1) coming from different places/across the world (1) difficult for one freight forwarder to do all this/may only carry a limited amount (1)
15. [2] Some freight forwarders will be specialist in certain services (1) providing a better service than others (1)
16. [2] In case of any disruption/delay/accident in the supply chain (1) the shipping company can continue its work (1)
17. [2] If one freight forwarder is not available (1) they can use another freight forwarder (1)
18. [3] A bill of lading is a receipt for goods shipped. (True)
19. [3] An air waybill is a document of title. (False)
20. [3] A consignment note is a delivery note used by freight forwarders. (True)
21. [6] Wholesalers buy goods from manufacturers and then sell them to retailers so a wholesaler acts as distributor in the chain of distribution and may have specialised knowledge about the products in the market, so make it easier and simpler for the manufacturer to sell.
22. [6] Why wholesalers are important to manufacturers: Aware of the trends in the market, passing on this information to the manufacturer who then knows what is selling well
23. [6] Carry out marketing activities, helping to promote the goods to retailers which helps to increase manufacturer sales
24. [6] Store goods in their own warehouses, so reducing inventory costs and freeing up space for manufacturers to store raw materials rather than finished goods/saving manufacturer costs of providing a warehouse
25. [6] Risk-bearing function – by buying and storing the goods the wholesaler reduces the risks of theft and spoilage to manufacturers
26. [6] Can provide deliveries to customers which saves manufacturer costs/no need for manufacturers to deal with individual retailers
27. [6] Buy in bulk which helps manufacturers clear production lines
28. [6] May break bulk/brand/package so the manufacturer concentrates just on production.
29. [6] Evaluation: These functions make wholesalers very important to some manufacturers as they save on the cost of goods and increase sales, while saving time for manufacturers who want to focus on production. However, some wholesaler functions are performed by manufacturers who sell their goods direct to customers, so wholesalers are very important to some manufacturers but not as important to others.