Chapter 2 And 9 Flashcards
Integrated buying model
Draw
Determinants if choosing a purchasing strategy
(Crew)
Competitive prioritizes
resource capabilities
The environment
Organization’s strength as weaknesses
Information
Value and savings
Determinants if choosing a purchasing strategy
(Crew)
Competitive prioritizes
resource capabilities
The environment
Organization’s strength as weaknesses
Information
Value and savings
Lean and Agile supply chain
Lean SC
Is focused on eliminating waste and maximizing efficiency. The goal is to reduce cost and improve productivity by eliminating non-value adding activities
Agile sc
Aims to quickly respond to changes in demand, supply and market condition can while being adoptable and flexible
Key difference
Lean sc focuses on efficiency and cost reduction, while agile focuses on responsive and flexibility
Issues to be considered in developing a strategic sourcing plan
A complete understanding of corporate strategizes and Marketing plan in order to provide a well integrated purchasing system
An extensive evaluation/ study of current suppliers how performance is measured and the expectations of suppliers relati be to the industry
Study the degree of global purchasing opportunities
Four phases of strategic sourcing plan
(SOII)
Phase 1: sourcing audit
Used as a diagnostic that identifies opportunities for increased profitability.
Phase 2: organisational development
Includes developing sourcing strategies establishing sourcing control system based of frequent analysis and systematic approach, making provision for training, outlining areas to cut cost and improve profitability formulating incentive programs
Phase 3: implementation and evaluation
Introducing strategies implantation of new procedures, monitoring sourcing activities, feedback mechanisms and refinement of sourcing process
Phase 4: in-house training session
Learning state of the art purchasing techniques, negotiation strategies and cost containment methods
Outsourcing risk
Potentially high cost of services
Difficulty of insuring consistency and corporate social responsibility
Potential loss of control over key areas of performance
Lost of client focus, added distance from the customer or end-user by having an intermediary service provider
Ineffective management - company may be unable to realize expected deliveries
Strategic sourcing analysis
Step 1: identify major strengths and build on them
Step 2: define core competencies
Step 3: look for current and future requirements
Step 4 : make decisions to make or buy
Drivers of outsourcing
Financial drivers - the need to free up capital funds for investments in competitive, value adding business activities
Quality driver - increased quality demands, outsourcing to bridge the gap by providing resources and capacity to meet demand
Cost driver - the potential if outsourcing to control or decrease cost, supporting competitive advantage
Business focus driver - the use of outsourcing to enable the organization to focus its effort and resource on primary value adding and revenue generating activities
Human Resources drivers - the need to acquire skills, expertise and experience relatively swiftly, compared to in-house recruitment and development
Benefits of outsourcing
Cost minimization
Refocus on core competencies
Improvement in operating performance
Increased market share and revenue
Greater budget flexibility and control
Strategic and operational factors to consider in make or buy decision
•Strategic importance of the item or activity or “core “to a business.
•Availability of in-house competencies and production capacity
•Control of production
•Availability of suitable external suppliers and positive supplier relationship
•Degree of risk
•Human resource impact/workforce stability
•Management capabilities
Strategic outsourcing process
•Step 1: Strategic evaluation
•Step 2: Financial evaluation
•Step 3: Supplier selection and contracting
•Step 4:Transition to external sourcing model
•Step 5: Managing relationships
