Chapter 16 Global sourcing and procurement

Question 1

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

Answer 1

Strategic sourcing

Question 2

a process suitable for procuring products that are strategically important to the firm

Answer 2

Sourcing

Question 3

how common the item is and, in a relative sense, how many substitutes might be available

Answer 3

Specificity

Question 4

USB flash drive are commonly available from many different vendors and would have ___ specificity

Answer 4

low

Question 5

the custom made apple airpods case is an example of ____ specificity

Answer 5

high

Question 6

a solicitation that asked for a detailed proposal from a vendor interested in supplying an item

Answer 6

Request for proposal (RFP)

Question 7

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

Question 8

when a customer actually allows the supplier to manage the inventory policy of an item or group of items for it

Answer 8

Vendor managed inventory

Question 9

refers to when a customer, responding to a promotion, as far in advance of when an item will be used

Answer 9

Forward buying
(no one wins this deal)

Question 10

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

Answer 10

Bullwhip effect

Question 11

A program for automatically supplying groups of items to a customer on a regular basis

Answer 11

Continuous replenishment

Question 12

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

Answer 12

Functional products

Question 13

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

Answer 13

Specific criteria for identifying functional products

Question 14

products, such as fashionable clothes and cell phones that may have a life cycle of just a few months

Answer 14

Innovative products

Question 15

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

Answer 15

innovative products

Question 16

where the manufacturing process in the underlying technology are mature in the supply base as well established

Answer 16

Stable supply process

Question 17

manufacturing process, and the underlying technology are still under early development in our rapidly changing

Answer 17

Evolving supply process

Question 18

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.

Answer 18

manufacturing process of evolving supply process

Question 19

the act of moving some of the firms, internal activities and decision responsibility to outside providers

Answer 19

Outsourcing

Question 20

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

Answer 20

reasons to outsource

Question 21

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.

Answer 21

Logistics

Question 22

key to the business, but do not confer a competitive advantage, such as a bank information technology operations

Answer 22

Core activities

Question 23

a key source of competitive advantage

Answer 23

Strategic activities

Question 24

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

Answer 24

Total cost of ownership (TCO)

Question 25

a measure of supply chain efficiency

Answer 25

Inventory turnover/weeks of supply

Question 26

Inventory turnover =
formula

Answer 26

cost of goods sold / average aggregate inventory value

Question 27

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)

Answer 27

Cost of goods sold/cost of revenue

Question 28

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

Answer 28

Average aggregate inventory value

Question 29

a measure of how many weeks worth of inventory is in the system at a particular point in time

Answer 29

Weeks of supply

Question 30

Weeks of supply =
formula

Answer 30

(average aggregate inventory value/ cost of goods sold) * 52 weeks