3.4 - Explain the common IT systems that can be used by a procurement or supply chain function Flashcards
Name 5 things IT systems can be used for
- P2P process
- Inventory management
- Enterprise resource planning (ERP)
- To enhance communication
- To support e-sourcing, e-tendering and e-auction
Name 6 benefits if P2P systems
- Reduced errors
- Reduced waste
- Reduced costs
- Faster payments
- Continuous improvement
- Enhanced relationships
Name the 3 principles of Womack and Jones’ lean approach
- Purpose
- Process
- People
Name 8 areas where there can be waste (TIMWOODS)
Transport
Inventory
Motion
Waiting
Over-production
Over-processing
Defects
Skills
Name the 5 steps that define continuous improvement
- Step 1 - map the process workflows and identify any opportunities for improvement
- Step 2 - Plan how the existing processes can be modified for improvement
- Step 3 - Action: allocate the required resources and implement the changes
- Step 4 - Review the implemented changes
- Step 5 - Identify and amend any relevant areas for improvement and return to step 1
electronic data exchange
The exchange of data between companies in a computerised format
Kanban
A scheduling system that supports lean and just in time manufacturing processes, used to signal when inventory is low, and trigger reordering of materials
Name 3 systems for inventory management
- Materials requirement planning (MRP)
- Just in time (JIT)
- Kanban
Materials requirement planning
A system designed to manage the flow of raw materials and components through an organisational process. This should not be confused with a manufacturing resource planning (MRPII) system, which is used to manage the flow and throughput in a manufacturing system
Name the 3 objectives of an MRP system
- Ensure that the parts or materials needed for manufacturing and end products are available
- establish when to place orders and schedule deliveries
- Keep inventory value as low as possible
Minimum order quatity
The smallest amount of a product a buyer can order from the supplier
Batch quantity
Number of products produced at a time
Buffer stock
Amount of stock held as inventory at any time in addition to immediate requirements
Lead times
The amount of time from placing the order to the goods/services being delivered
Cycle time
The amount of time it takes from receiving raw materials to creating a finished product
Bill of materials (BOM)
A comprehensive list of component items, materials and parts to create a product, essentially a recipe for the production of an item
Just in time
A system that contributes towards the reduction of waste in the supply chain
Whats the aim of kanban
Ensure that an organisation never runs out of components needed to make products, yet does not hold surplus amounts which tie up the business’ cash unnecessarily and require valuable storage space
Name 4 major advances in technology that have aided the development of these inventory control systems
- The internet
- Bespoke software
- Barcodes, scanners and tag readers
- AI
Radio frequency identification (RFID)
A wireless method of communication that uses digital tags to identify and locate specific items to identify and track goods by means of tags that transmit a radio signal. the tags contain electronically stored information. Items of inventory can be tagged and tracked in this way
Name 9 advantages of IT systems when managing inventory
- Accurate data provided
- Saves resources
- Improves efficiency
- Speeds up communication
- Promotes consistent working methods
- Traceability
- Supplier visibility
- Customer visibility
- Allows remote working
Name 6 disadvantages of IT systems when managing inventory
- Reliant on accurate set up information
- Time consuming to install
- Large financial outlay to implement
- Staff may resist change and be concerned for their job
- Incorrect data input could cause major problems
- Less direct contact with suppliers
ERP
An IT system that coordinates and integrates business processes and automates back office procedures to enhance efficiency
Name 6 features of ERP
- Supply chain management
- Manufacturing
- HR
- Project management
- Finance / accounting
- Customer relationship management
Name 3 recent developments within ERP systems
- Remote access
- Cloud-based systems
- Social media modules
Name 8 ERP elements of supply chain management
- Requisitions
- PO creation and sending
- Delivery of PO
- Invoice payment
- Contract management
- Supplier relationship management
- Supplier database
- Supplier evaluation
Name 7 elements that communication contributes towards
- Agreeing specifications
- SRM
- Customer service
- Conflict resolution
- Expediting
- Supplier performance management
- Contract management
Name 3 things communication have evolved to be
- Machine to human
- Human to machine
- Machine to machine
Name 3 ways procurement use machine to machine communication
- Vending machines can send messages to MRP systems to generate orders
- Warehouse locations can send messages to IT systems when inventory is getting low
- Logistics can be tracked through messages sent from vehicles to machines
Internet of things (IoT)
A system of linked technology including machines, animals, people or objects that can transfer data over the internet, mobile phone network or computer network with no human intervention
Name 7 advantages of IT related communications
- Speeds up processes
- reduces errors
- Increases control
- Aids traceability
- Not reliant on human input
- No distortion in communication
- Receipt of messages can be tracked
Name 7 disadvantages of IT related communications
- Relationships may suffer
- Impersonal
- Could result in job losses
- Costly to implement
- IT support for systems required
- Power failures may cause systems to crash
- E-mails may be open to interpretation
Name 4 forms of electronic sourcing
- E-requisitioning
- E-catalogues
- E-auctions
- E-tenders
Name 3 advantages of e-requisitioning
- It is a faster process than using paper
- It has full traceability
- It saves time
Name the 4 steps in the e-approval flow diagram
- E-requisition is raised
- Low level e-approval
- High level e-approval
- Procurement places the e-purchase order
Name 4 advantages of e-catalogues
- Accessible at the click of a button
- Various perspectives
- Live information
- More detail
name 2 e-auction formats
- Standard auction (e-auction)
- Reverse auction
Standard e-auction
Where a supplier offers goods for sale on the internet and potential customers place bids against the items
Reverse auction
Where the buyer states its requirements or need and the suppliers respond
Name 5 advantages of using reverse e-auctions
- reduction in manual process which saves time
- No need for face to face negotiations
- Enhanced savings for procurement due to suppliers constantly reducing bids
- Opportunity to interact with larger volumes of suppliers
- Opportunity for suppliers to gain information on their competition
Name 5 disadvantages of using reverse e-auctions
- Possibility of technical issues which could disadvantage potential suppliers
- Impersonal
- Supplier may end up bidding lower than is economically viable
- Lack of relationship with suppliers
- Suppliers may lose competitive edge
Name 13 benefits of e-tendering
- Process efficiencies
- Consistency
- Technological safeguarding
- Free up time
- Promotion of cross-functionality
- Environmentally friendly
- Screening of bids
- Storage
- Reduced risk
- Assurance
- auditing
- Consistency of process
- Transparency
