Asset Management Flashcards
What is the definition of strategic sourcing?
organizational procurement and supply management process use to locate, develop, qualify and employ suppliers that add maximum value to the buyer’s products or services
What is the main objective of strategic sourcing?
locate and form relationships with hose suppliers that best promote the strategic and operational goals of your organization.
How can strategic sourcing be sued as an approach to supply chain management?
it formalizes the way information is gathered and used so that an organization can leverage its consolidate purchasing power to find the best values in the marketplace.
Why might you want to limit the amount of suppliers to your fleet?
allows you to gain leverage and purchasing power for the procurement of quality vehicles at the best price.
Describe the differences between traditional sourcing and strategic sourcing.
Traditional: care about upfront short term costs, vendor turnover, strategic is global and builds relationships. Also, looks at entire lifecycle of vehicles.
What are the benefits of strategic sourcing?
limited number of suppliers, benefits vendors due to longer lasting relationships and larger volume purchases. Also, looks at life cycle cost of vehicles.
How can strategic sourcing generate benefits to the Fleet Department?
Limited number of suppliers to manage, leads to long term savings as well as cost effectiveness by leading to fewer defects and mistakes by suppliers.
Why is it important to supplier performance?
can lead to better decisions when it is time to decide between acquiring a new supplier or staying with the current one.
How does strategic sourcing benefit suppliers?
They get larger purchases, benefit from improved communication and not having to juggle multiple small contracts.
What risks are involved with strategic sourcing?
overpaying initial costs, takes longer, supplier requirements can be too strict, potential change of suppliers.
Describe some of the costs involved with strategic sourcing
lifecycle costs or total cost of ownership
Why is strategic sourcing time consuming?
more complicated, requires more knowledgeable and skilled staff
What are the four steps in the strategic sourcing process?
Understand the spend category, access potential suppliers, create a strategy, select a supplier, cultivate relationships.
What should your purchasing team do during the first phase of the strategic sourcing process?
identify purchasing and pricing constraints, time and money it takes for the supplier to acquire the assets as well as the historic purchase in the asset categories.
What do you want in your strategic sourcing partner?
competent, trustworthy, communicative and those that offer deals that valuable and fairly priced.
How can you create a strategy for strategic sourcing?
start by identifying how competitive the supplier marketplace is. ensure that other departments are on board with your supplier choices.
What tool can be used to select the right supplier?
Use a balanced scorecard to objectively measure and compare each supplier’s offers.
What are Performance Improvement Requirements and how are they used?
crucial to keeping the buying and selling processes a positive experience. Ways to do this are improving cycle time, cost, quality and delivery performance.
What type of team can be created in order to help select suppliers?
team of subject matter experts that will organize, evaluate, select, develop and manage suppliers.
What systems should be developed and how can they help the organization?
develop purchasing systems which will be lead a notable increase in the emphasis of links between external systems along with networking between purchasing sites with suppliers.
What are the team member purchasing responsibilities?
team members must be points of contact with specific suppliers and to research new potential suppliers.
What is a cross functional sourcing team?
comprised of a group of individuals who are maintaining relationships with fleet suppliers and identifying the sourcing needs of the fleet.
What is the Fleet Manager’s Role in the cross functional sourcing team?
oversee the cross functional team in thoroughly examining fleet purchasing activities and supplier selection.
What is the focus of many purchasing groups and what are the fleet manager’s responsibilities?
finding the lowest cost and this provides many benefits, but fleet managers are responsible for voicing concerns when non-fleet members of the forcing team focus only on low cost suppliers without taking other fleet related concerns into mind.
What is rightsizing the fleet?
Determining the correct customer service levels for internal service and rental fleets as well as understanding the vehicle-task suitability (vehicles that are appropriate for staff).
What is the advertising cost on a vehicle invoice?
percent of MSRP (typically 1 percent) or a flat dollar amount set by the factor.
Define the term Bid assistance.
Additional negotiated rebates that may replace or be in addition to the national fleet rebates.
What is the dealer invoice and how is it calculated?
The amount the dealer pays the manufacture for a vehicle (not the actual cost). Actual cost can only be calculated by deducting holdbacks, allowances, incentive, rebates, bonuses and other discounts from dealer invoice.
What are factory to dealer incentives?
money paid to the dealer by the manufacture to sell specific models (they come and go).
What is meant by the term financing on a dealer invoice?
flat dollar amount that is included in the factory invoice.
What are fleet incentives and who funds them?
money given by a vehicle manufacture to a fleet as an added incentive for buying their product. Usually funded 100 percent by the factory.
What is factory holdback?
an amount paid by the factor to the dealer after the car has been sold, usually on a quarterly basis. Most manufactures will pay dealers an amount equal to between 2 and 3 percent of either invoice cost of the MSRP.
Define the term MSRP
retail selling price of the vehicle as determined by the manufacture and printed on the label
What is triple net invoice?
manufacturer to dealer invoice price less holdback, less advertising and financing.
What is the most important document in a vehicle purchase?
factory invoice
What information do you need to know in order to get the lowest possible price for a vehicle?
what the dealer has actually paid for the vehicle or “dealer cost.”
What is a good stating price to use for negotiating with a vehicle supplier
invoice price. true cost or triple net price.
What type of information is contained on a standard factory invoice?
price, features and details regarding the purchase and delivery of the vehicle.
What is the most important strategy to use when considering multiple vehicles?
being consistent in how you evaluate each invoice and to use the same starting point for each negotiation.
What is the formula for Triple Net?
Invoice-Holdback-Advertising-Financing=Triple Net Cost
How can Fleet sales benefit a car dealer?
higher volume of vehicle sales. It typically take much longer to sell a small number of vehicles. Also, they can sell the fleet a service contract.
What are some of the vehicle manufacturer’s requirements for fleet pricing?
can vary. Sometimes minimum of five to ten vehicles. Sometimes can be negotiated one year lease of vehicles.
What are some of the advantages of purchasing vehicles in bulk?
save money, negotiate good deals on servicing and top price on trade-in.
Why would an organization want standard vehicle specifications?
achieves cost-savings benefits
What are the best practices for lowering costs using standard vehicle specifications?
centralize fleet management, Distinguish needs from wants, conduct annual spec reviews, develop standards based on vehicle role and location
Why is it important to centralize fleet management?
To ensure a leader makes the final decision on a vehicle purchase. They need to think globally rather then locally (programs should not make their own decisions).
What are potential areas to save costs when identifying needs and wants?
cloth or vinyl instead of leather, bench seats instead of bucket, 2wd vs 4wd
Describe the two categories of pricing incentives
National fleet incentives: 10-15 vehicles it can receive a fleet ID number and be entitled to a fleet discount through the manufacture.
Competitive pricing assistance: work with manufacture and negotiate an individual incentive instead of national fleet incentive (often lower price)
What is a good indicator of the true value cost?
Total cost of ownership
What warranty considerations does the fleet manager have to keep in mind during the purchasing process?
have a prediction of a vehicle’s expected life and how it adds to the warranty you will be paying for.
Who can a fleet manager contact at the dealership for information on the manufacturers fleet programs?
government or commercial sales person at the dealership
What does a fleet manager need in order to receive fleet discounts?
fleet identification number
What is a volume rebate and how can the fleet manager obtain it?
discount on purchasing multiple vehicles at once, even in some cases where you may not be taking delivery of all vehicles at one.
List the advantages of ordering vehicles from the factory
personalized customization, can specific vehicle to meet specific needs, better pricing, opportunities to add or delete options,
What are some of the disadvantages of ordering vehicles from the factory?
longer wait time, incentives may lost during the wait period, production windows may close, some options or popular models may not be available
Why might order from the factory be cheaper than ordering from stock?
factories do not have to worry about vehicles sitting on lot (no finance charges)
What might make ordering from the dealership cheaper?
dealer incentives may expire while a vehicle is still being built in factory.
What is the basic rue for negotiating vehicle price?
ensuring you use the same terms and the same starting point as the dealer.
What is the vehicle selector list?
predetermined list of vehicles that drivers or others can choose from to meet their vehicle requirements.
What are some questions that managers should address in order to help them in the vehicle selection process?
how many choices of vehicles exist, what is important to management, how much input do drivers have, can drivers purchase additional options, is this work or a perk?
Why can offering too many choice be a disadvantage?
greater administrative burden as well as prevent bulk discounts.
List some of the factors a Fleet manager may consider in the vehicle selection process?
Function, warranties, safety, costs, image
How can a fleet manager get driver input and what information should they ask for?
collect preferences on color, vehicle model and options for the vehicle (usually survey process)
What are some considerations to be made when deciding whether the vehicle should be work or perk oriented?
the organization’s philosophy, the driver’s responsibilities, human resource factor and organizations may place more or less emphasis on perks when making vehicle selections.
Why is it important to select the right vehicle?
upfront cost is significant and a suboptimal vehicle will probably have to wait until the next time the vehicle is replaced.
