Chapter 16 Global sourcing and procurement Flashcards
the development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business
Strategic sourcing
a process suitable for procuring products that are strategically important to the firm
Sourcing
how common the item is and, in a relative sense, how many substitutes might be available
Specificity
USB flash drive are commonly available from many different vendors and would have ___ specificity
low
the custom made apple airpods case is an example of ____ specificity
high
a solicitation that asked for a detailed proposal from a vendor interested in supplying an item
Request for proposal (RFP)
In the RFP, the bed is included in the proposal, whereas in a request for bid or reverse auction, vendors actually bid on the item in real time and often using Internet software
when a customer actually allows the supplier to manage the inventory policy of an item or group of items for it
Vendor managed inventory
refers to when a customer, responding to a promotion, as far in advance of when an item will be used
Forward buying
(no one wins this deal)
the variability in demand is magnified as we move from the customer to the producer in the supply chain
○ Indicates a lack of synchronization amongst supply chain members
○ Because the supply patterns do not match and demand patterns, inventory accumulates at various stages, and shortages and delays occur at others
Bullwhip effect
A program for automatically supplying groups of items to a customer on a regular basis
Continuous replenishment
include the staples that people buy in a wide range of retail outlets. Because such product satisfied, basic needs, which do not change much overtime, they have stable, predictable, demand, and long life cycles. But there’s stability invites competition, which often leaves to low profit margins
Functional products
product lifecycle of more than two years, contribution margin of 5 to 20%, only 10 to 20 product variations, in average forecast error at time of production of only 10%, and a lead-time for me to order products of six months to one year
Specific criteria for identifying functional products
products, such as fashionable clothes and cell phones that may have a life cycle of just a few months
Innovative products
Imitators quickly rode the competitive advantage that innovative products enjoy, and companies are forced to introduce a steady stream of newer innovations. The short life cycles and the great variety typical of these products further increase unpredictability
innovative products
where the manufacturing process in the underlying technology are mature in the supply base as well established
Stable supply process
manufacturing process, and the underlying technology are still under early development in our rapidly changing
Evolving supply process
requires a lot of fine-tuning and is often subject to breakdowns and uncertain yields. The supply base may not be reliable, because the suppliers themselves are going through process innovations.
manufacturing process of evolving supply process
the act of moving some of the firms, internal activities and decision responsibility to outside providers
Outsourcing
Allows a firm to focus on activities that represent its core competencies. Thus, the company can create a competitive advantage while reducing cost. An entire function may be outsourced, or some elements of an activity may be outsourced, with arrest kept in-house. Identifying a function as a potential outsourcing target, and then breaking that function into its components allows, decision-makers to determine which activities are strategic or critical and should remain in-house and which can be outsourced like commodity
reasons to outsource
the management functions that support the complete cycle of material flow: from the purchase and internal control of production materials; to the planning in control of work in process; to the purchasing, shipping, and distribution of the finished product.
Logistics
key to the business, but do not confer a competitive advantage, such as a bank information technology operations
Core activities
a key source of competitive advantage
Strategic activities
an estimate of the cost of an item that includes all the cost related to his procurement and use, including any related cost in disposing of the item after it is no longer useful
Total cost of ownership (TCO)
a measure of supply chain efficiency
Inventory turnover/weeks of supply
Inventory turnover =
formula
cost of goods sold / average aggregate inventory value
the annual cost for a company to produce the goods or service provided to customers (does not include the selling and administrative expenses of the company)
Cost of goods sold/cost of revenue
the average total value of all items held in inventory for the firm valued at cost (it includes raw materials, work in process, finished goods, and distribution inventory considered owned by the company
Average aggregate inventory value
a measure of how many weeks worth of inventory is in the system at a particular point in time
Weeks of supply
Weeks of supply =
formula
(average aggregate inventory value/ cost of goods sold) * 52 weeks
