1.1 - Compare the concepts of procurement & supply chain management Flashcards
Strategic
High level planning, including setting direction and long term goals
Name 8 elements included in procurement
- Added value
- Cost
- Inventory
- Logistics
- Purchasing
- Quality
- Supply
- Waste Management
What is purchasing
The act of physically ordering and buying something
What 2 things link to purchasing
- Ordering
- Expediting
What links to supply
Delivery
Expediting
The process involved in the progress of an order to ensure stock is received as quickly as possible
Primary sector
Industry sector that extracts raw materials
Secondary sector
Industry sector that manufactures things
What does a supply chain involve
A network of individuals, organisations, technology, activities and resources to make sure goods or services flow along the chain
Tertiary sector
Industry sector that provides services
Give an example of the primary sector
Raw materials
Give an example of the secondary sector
Manufacturing
Give an example of the tertiary sector
Services
Supply chain
A channel of goods distribution, which starts with the supplier of raw materials or components, moves through an operational process to the distributor and retailer, and finally to the consumer
Upstream
The supply flow of raw materials, components, parts etc, needed for production
Downstream
The supply chain that the organisation feeds into, from product to end user
Give 2 examples of upstream
- Suppliers obtain raw materials from producers
- Producers extract natural resources
Give 2 examples of downstream
- Distributor collects materials from the manufacturer and delivers them to the customer
- Customer
Who is the only one consumer in a supply chain
The end user
Ethics
Principles that govern a persons or an organisations behaviour
Name 8 things you have to manage effectively to get value in the supply chain
- Price
- Delivery
- Storage
- Ethics
- Environment
- Sustainability
- Communication
- Quality
Supply chain network (SCN)
An evolution of the basic supply chain, which defines the more complex structure, involving a higher level of interdependence and connectivity allowing a two-way exchange of information and materials to successfully meet customer demands between more organisation both upstream and downstream
Which 5 areas are supply chain networks usually designed around
- External suppliers
- Manufacturers
- Distribution/wholesale centres
- Logistics
- Consumer demand
Name 2 types of flows managed in supply chain networks
- Physical flows
- Information flows
Physical flows
Include the movement and storage of materials and end products. These are the tangible parts of the supply chain network. Goods flow one way only
Information flows
Include organisatonal strategies and the way they are communicated, the control processes within the network and the standards to which the chain should work. Information flows two ways
What is the difference between procurement and supply chain
Procurement is about obtaining products and services in response to a need.
Supply chain refers to infrastructure involved in physically getting the products and services delivered
Name 6 things included in procurement
- Preparing specifications
- Monitoring quality
- Sourcing
- Buying
- Stock control
- Disposal of waste
How does procurement fit into supply chain management
Procurement - supplier and input (raw materials)
Manufacturing - input (raw materials), process and output (end product)
Sales - Output (end product) and consumers
Tiering
The structured ordering and organisation of suppliers so that organisations downstream work with fewer suppliers upstream
Name a benefit of tiering
It allows for the concentrated development of a smaller number of suppliers
Name a disadvantage of tiering
Buyers are more susceptible to risk factors including compliance, ethics and sustainability, from suppliers outside of tier one as they have less visibility and control over the supply chain
Original equipment manufacturer (OEM)
Generally perceived as the producer of own-branded parts or equipment which are sold to other manufacturers for retail and production
Audit
An official inspection conducted, either by the procurement organisation itself or by an independent third party, to ensure compliance with requirements and standards
Give an example of a complex supply chain network (5)
- Supplier
- Manufacturer
- Distribution site
- Retailer
- Customer/consumer
Logistics
The control of the flow of goods or services between two points. It is about making sure that people or things are where they need to be at the correct time
Name 5 things logistics includes
- Handling
- Packaging
- Inventory
- Warehousing
- Transportation
Name 5 steps of the inbound supply chain that logistics is involved in
- Producers
- Suppliers
- Manufacturers
- Products
- Inventory
Name 5 steps of the outbound supply chain that logistics is involved in
- Inventory
- Distribution
- Transport
- Retail
- Consumer
Internal logistics
Includes the processes that are related to turning the raw material into the desired end product
Name 3 examples of internal logistics
- Extraction/production
- Warehousing/storage
- Manufacturing
Name 3 examples of external logistics
- Distribution
- Transport
- Retail
Name 5 areas that need to be managed for logistics to run effectively
- Demand planning
- Fleet management
- Inventory management
- Warehousing and storage
- Order fulfilment
Demand Planning
Knowing what is required and when
Fleet management
Covers the solutions an organisation uses to physically transport goods from one place to another
Inventory management
Involves knowing how much inventory (stock) is available
Materials management
- Procurement (delivery)
- Goods in (quality)
- Inspection
- Booking in
- Storage (handling)
- Issuing
- Distribution (transport)
- Customer / consumer (re-ordering)
Waste management
Encompasses the strategies organisations use not only to dispose of waste but also to reduce, recycle and prevent it from occurring in the first place
Name 2 things that are protected by laws around waste management
- Human health & wellbeing
- The environment; rivers and streams, air, land, trees and plants
Name 4 examples of EU waste management regs
- Battery directive
- Landfill Directive
- Hazardous Waste Regulations
- WEEE Directive
Battery directive
Regulation of the manufacturing, accumulation and disposal of batteries
Landfill directive
Regulation to reduce negative effects on the environment caused by waste put into landfill
Hazardous Waste Regulations
Regulation to restrict the movement and storage of hazardous waste
WEEE Directive
Regulation which sets targets for the recovery and recycling of electrical goods
WEEE
The Waste Electrical and Electronic Equipment Directive
Name the 10 steps of effective waste management
- Understand the legal implications of the waste produced in your organisation by identifying the specific legislation that affects you
- Look at your general environment issues - what role does waste play in these?
- Quantify and identify your waste
- Identify a waste management champion or team to drive things forward
- Produce an action plan for reducing your wastes
- Get commitment from senior management for the action plan
- Identify the possible disposal options where you cannot reduce or recycle
- Select your waste carriers carefully and make sure your Duty of Care responsibilities are met
- Monitor and review your achievements
- Communicate your successes to your staff, senior managers and outside your organisation to interested stakeholders
Name the 4 steps of the waste hierarchy
- Reduce amount produced
- Reuse waste
- Recover waste (recycling, composting and waste to energy)
- Send to landfill
Name 4 benefits of effective waste management
- Compliance with regulations, meaning less risk if fines, penalties or reputational damage
- Positive impact on people, the planet and its resources
- Enhanced brand reputation, meaning organisations, stakeholders and suppliers will want to work with you and customers will want to buy from your
- Cost savings associated with the elimination if unnecessary waste from the supply chain
Closed loop recycling
Where recycled waste can be reprocessed or repurposed indefinitely to make either new products or returned to the environment as biodegradable waste
Name 3 examples of closed loop recycling
- Aluminium
- Glass
- Some types of plastic
Name 4 benefits of closed loop recycling
- Preserves natural resources, as less resources are depleted each time a new product is made
- Frees up space in landfill for items that absolutely cannot be recycled
- Minimises the effect on the environment and wildlife
- Contributes towards supply chain sustainability
