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LSM 600 SC Governance > Ch. 2-Purchasing > Flashcards

Ch. 2-Purchasing Flashcards

1
Q

Merchant

A

Firms that buy goods in large quantities for resale purposes. Purchase their merch in volume to take advantage of quantity discounts and other incentives such as transportation economy and storage efficiency Exs: Wholesalers and retailers

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2
Q

Industrial Buyers

A

purchase raw materials for conversion purposes. Also purchase services, capital equipment, and MRO supplies. Ex: manufacturers, restaurants, landscapers, and florists

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3
Q

Purchasing

A

acquisition of required materials, services, and equipment

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4
Q

Contracting

A

acquisition of services

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5
Q

supply mgmt

A

expanded set of responsibilities of purchasing professionals: identification, acquistion, access, positioning, management of resources and related capabilities the org needs or potentially needs in the attainment of its strategic objectives

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6
Q

Procurement

A

development, value analysis, negotiation, expediting, contract administration, supplier quality control, and logistics activities

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7
Q

Goals of purchasing

A
  • uninterrupted flows of raw materials at the lowest total cost
  • improve quality of finished goods produced
  • maximize customer satisfaction
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8
Q

Profit leverage effect

A

calculates the impact of a change in purchase spend o a firm’s profit before taxes, assuming gross sales and other expenses remain unchanged

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9
Q

ROA (return on assets)

A

ratio of firm’s net income to total assets: net income/total assets

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10
Q

Inventory turnover

A

of times inventory is used & replaced over an accounting period: cost of goods sold/ avg inventory

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11
Q

Material requisition

A

internal document used to request materials from the warehouse or purchasing dept

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12
Q

Purchase requisition

A

internal doc used to request the purchasing dept to buy specific goods or services

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13
Q

Traveling requistion

A

materials & standard parts that are requested on a recurring basis.

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14
Q

Follow-Up

A

proactive act to contact the supplier to ensure online delivery of the goods ordered

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15
Q

expediting

A

contacting a supplier to speed up an overdue shipment

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16
Q

UCC (Uniform Commercial Code)

A

Legislation that governs the purchase and sale of goods in every state except Louisiana

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17
Q

E- Procurement Steps

A
  1. Material user enters a purchase request (relevant info such as quantity and date needed)
  2. Purchase requisition approved & transmitted electronically to buyer
  3. Buyer reviews requisition, assigns qualified suppliers to bid (If over $50,000)
  4. Buyer reviews closed bids & selects suppliers
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18
Q

Advantages to E-procurement

A
  1. Time Savings
  2. Cost savings
  3. accuracy
  4. real time use
  5. mobility
  6. trackability
  7. mgmt benefits
  8. suppliers benefits
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19
Q

Small-value purchases

A

minimized so buyers are not overburdened with trivial purchases that may prevent them from focusing on more crucial purchases

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20
Q

Outsourcing

A

buying materials or components from suppliers instead of making them in-house

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21
Q

Reasons to buy or outsource

A
  • cost advantage
  • insufficient capacity
  • lack of expertise
  • quality
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22
Q

Reasons to make

A
  • protect proprietary technology
  • no competent supplier
  • better quality control
  • use existing idle capacity
  • control of lead time, transportation, and warehousing costs
  • lower cost
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23
Q

Break-even analysis

A

computes cost effectiveness of sourcing decisions when cost is the most important criterion

24
Q

Supply Base

A

list of suppliers that a firm uses to acquire its materials, services, supplies, and equipment

25
Q

Factors to consider while selecting supplies

A
  • Process and product technologies
  • Willingness to share technologies and info
  • quality
  • cost
  • reliability
  • order system & cycle time
  • capacity
  • communication capability
  • location
  • service
26
Q

OEM (original equipment manufacturers)

A

Companies that make the final products

27
Q

Tier-1

A

Company’s direct suppliers: provides parts or services directly to the OEM

28
Q

Tier-2

A

suppliers’ suppliers of a company. provides outputs to tier 1 suppliers

29
Q

Tier-3

A

suppliers’ suppliers suppliers of a company that sells their outputs to tier 2 suppliers

30
Q

Sole sourcing

A

when the supplier is the only available source

31
Q

Single sourcing

A

deliberate practice of concentrating purchases of an item with one source from a pool of viable suppliers

32
Q

Reasons for a single supplier

A
  • establish a good relationship
  • less quality variability
  • lower cost
  • transportation economies
  • proprietary product or process purchases
  • volume too small to split
33
Q

Reasons for multiple suppliers

A
  • need capacity
  • spread the risk of supply interruption
  • create competition
  • info
  • dealing w/ special kinds of businesses
34
Q

Centralized purchasing

A

single purchasing dept makes all the purchasing decisions

35
Q

Decentralized purchasing

A

individual, local purchasing depts (such as plant level) make their own purchasing decisions

36
Q

Advantages of centralization

A
  • concentrated volume
  • avoid duplication
  • specialization
  • lower transportation costs
  • no competition between units
  • common supply base
37
Q

Advantages of decentralization

A
  • better knowledge of unit requirements
  • local sourcing
  • less bureaucracy
38
Q

Global sourcing

A

int’l purchasing

39
Q

Import broker

A

Sales agent who performs transactions for a fee

40
Q

import merchant

A

buys and takes title to the goods then resells them to the buyer

41
Q

tariff

A

list or schedule showing the duties, taxes, or customs imposed by the host country on imports or exports

42
Q

Non-tariff barriers

A

import quotas,licensing agreements, embargoes, laws, and other regulations imposed on imports and exports

43
Q

World Trade Org

A

largest and most visible intl trade org dealing with the global rules of trade between nations: ensures that intl trade flows smoothly, predictably, and freely among member countries

44
Q

NAFTA

A

remove trade and investment barriers among the U.S., Canada, and Mexico

45
Q

EU

A

Consists of Belgium, France, Luxembourg, Italy, Netherlands, and Germany: create a single market without internal borders for goods and services, allowing member countries to better compete with markets like the U.S.

46
Q

Barter

A

complete exchange of goods or services of equal value without exchange or currency

47
Q

Offset

A

exchange agreement for industrial goods or services as a condition of military related export

48
Q

Direct offset

A

joint venture and exchange of related goods

49
Q

Indirect offset

A

exchange of goods or services unrelated to the initial purchase

50
Q

counterpurchase

A

original exporter agrees to sell goods to a foreign importer and simultaneously agrees to buy specific goods or services from the foreign importer

51
Q

Public procurement

A

(public purchasing) mgmt of purchasing and supply mgmt function in he govmt and nonprofit sectors such as educational institutions, hospitals, and fed, state, and local govmts

52
Q

FAR (Federal Acquisition Regulation)

A

All fed govmt purchases must comply with this

53
Q

GSA (General Services Administration)

A

responsible for most federal purchases

54
Q

(FASA) Federal Acquision Streamlining Act

A

removes many restrictions on govmt purchases below $100,000

55
Q

Buy American Act

A

mandates the U.S. govmt purchases and third party purchases that utilize federal funds to buy domestic produced goods, if the the price differential between the domestic and foreign products don’t exceed a certain % amount

56
Q

green purchasing

A

environmental and health considerations while making purchasing decisions

LSM 600 SC Governance (1 decks)

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