Chapter 1

Question 1

DEF: Purchasing/Supply Management

Answer 1

The integration & management of the sourcing & flow of materials & services across multiple functions & tiers of suppliers from a process management perspective.

Question 2

Purchasing/Supply Management Values

Answer 2

1. ) Contributes to competitive advantage
2. ) Increases value – Decreases risk
3. ) Drives innovation & improvement
4. ) Reduces time-to-market
5. ) Generates economic activity

Question 3

1.) Contributing to Competitive Advantage

Answer 3

Early involvement – avoids process design costs

Question 4

2.) Increasing Value and Savings

Answer 4

Buyers will try to negotiate suppliers to lowest possible price – at the end of the day price is in supplier’s hands

Question 5

4.) Reducing time-to-market

Answer 5

Quicker, cheaper, better.

Question 6

5.) Generating economic impact

Answer 6

ISM Report on Business
>50 = economy is EXPANDING
<50 = economy is CONTRACTING

Question 7

Purchasing Objectives

Answer 7

1. ) Supply continuity
2. ) Manage sourcing process efficiently and effectively
3. ) Develop supply base management
4. ) Develop aligned goals with internal stakeholders
5. ) Develop integrated purchasing strategies that support organizational goals and objectives

Question 8

1.) Supply continuity

Answer 8

Lowest possible price
Make sure material is right
On-time

Question 9

2.) Manage purchasing process

Answer 9

Budget…

Question 10

3.) Develop supply base management

Answer 10

Mix between competitive suppliers & new suppliers w/ high potential, so on…

Question 11

4.) Develop aligned goals w/ internal stakeholders

Answer 11

Be on same page as customers

Ex: MTS –> GM

Question 12

5.) Develop integrated strategies that support goals and objectives

Answer 12

Work together – share one common goal

Question 13

Supplier

Answer 13

Vendor, seller, manufacturer

Ex: MTS

Question 14

Firm (Buyer)

Answer 14

Ex: GM, Chrysler, etc.