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Ency VO > chapter 24 > Flashcards

chapter 24 Flashcards

1
Q

“Sourcing”, “Purchasing”, “Procurement”:

A
  • Sourcing: Identifying, managing suppliers
  • Purchasing: Buying goods, services from suppliers
  • Procurement: Includes sourcing, purchasing, covers all activities in sourcing of materials, services, production facilities, human resources, information, capital and delivery
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2
Q

Functions and Objectives of Purchasing:

A
  • Prepare specifications: Quality, quantity, dates required
  • Placing order: Includes system entry for handling, costing, visibility
  • Order management: Monitor, track, modify orders
  • Receive purchases: Ensure quality, quantity, cost compliance
  • Supplier management: Selection, classification, development, policy determination
  • Buying market research: Collect, analyze, prepare, transfer market info
  • Make-or-Buy decisions: In-house production or external purchasing

Objectives
* Strategic: Assurance of supply, flexibility, risk spreading, vertical integration, independence, long-term growth, input sided diversification
* Tactical/Operative: Optimizing purchasing costs, assurance of material’s quality, liquidity, readiness for delivery, buyer market positions, company’s image, price stability

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3
Q

Impacts of Core Competences and Outsourcing:

A
  • Concentration on core competences leads to increased external sourcing
  • Impact on company’s supplier structure, interaction with supplier
  • Increased supplier numbers and responsibilities
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4
Q

Procurement Strategy:

A

Steps: Past and projected spend analysis, risk analysis, procurement profile development, strategy development per procurement profile category

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5
Q

Process Simplification and Product Standardization:

A
  • Simplifying processes: Integration of purchasing into business processes, simplifying interfaces, IT-usage
  • Standardizing products: Decreasing commodities and suppliers, increasing buyer market power, decreasing average unit buying price
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6
Q

Aspects of Supplier Selection:

A
  • Number of suppliers (Single, Double, Multiple, System Sourcing)
  • Supplier’s location (Local or Global sourcing)
  • Duration of supply relationship (Long term relationships)
  • Procurement channel (Direct or Indirect purchase)
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7
Q

Buyer-Supplier Relationships:

A
  • Stable supply with materials/services for key products and strategic products
  • Integration of key suppliers into development, rationalization and quality processes
  • Requirements: Mutual trust, open corporate culture
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8
Q

Traditional Purchasing Process:

A

triggered when demands (goods/services) are recognized during the process of processing an order

  1. Order preparation
  2. offer comparison
  3. order placement
  4. contract performance monitoring and control
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9
Q

Value Chain Optimization:

A
  • Supply Chain Management (SCM): Oversee each touch point of a company’s product or service
  • Just-In-Time (JIT): Minimum units in smallest quantities at the latest possible time, eliminating need for inventory
  • Advantages JIT: Short production lead time, flexibility, reduced costs, no goods inspection, less raw materials costs
  • Disadvantages JIT: Dependency on supplier, unexpected order delay, higher transportation costs, strong dependence from suppliers.
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10
Q

Procurement marketing (sketch)

A
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11
Q

Define Supply market analysis?

A
  • Systematic collecting, classification, analysis of data
  • Relevant market characteristics for goods/services
  • Provides critical information for procurement strategies
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12
Q

What are the strategic understandings provided by Supply market analysis?

A
  • Market functioning
  • Market direction
  • Market competitiveness
  • Market capability and capacity
  • Key suppliers
  • Supplier/market development
  • Market sustainability performance and capability
  • Pricing over time
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13
Q

What are the objects of Supply market analysis?

A
  • Purchased goods/services and their characteristics, usage possibilities
  • Price, including total cost of ownership and considering delivery/payment conditions
  • Current and potential suppliers’ technical and economic power
  • Market structure including supplier quantity, quality, scales, market dynamics
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14
Q

What are the objectives of Supply market analysis?

A
  • Information provision for procurement decision-making
  • Increasing market transparency
  • Early detection of supply risks
  • Opening new sources of supply and substitution products
  • Part of procurement marketing and supplier management
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15
Q

What does an active policy in influencing supplier’s input factors involve?

A

Influencing the inputs purchased by the company’s supplier

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16
Q

What decisions does Purchasing method policy determine?

A
  • Procurement channel (direct or indirect purchase)
  • Procurement facilitator (internal purchasing department or external sales facilitators)
  • Supplier structure (number of suppliers and spatial distribution of delivery locations)
17
Q

What are the key areas of Purchasing conditions policy?

A
  • Price, delivery, payment conditions
  • Delivery time
  • Conditions of transportation
  • Guaranteeing of goods/services purchased
18
Q

: What increases price political margins?

A
  • Increasing purchasing quantity and value
  • Increasing market transparency
  • Increasing buyer’s market power
  • Higher standardization level of the good
  • Novelty of the goods
19
Q

What is the primary objective of purchasing communication policy?

A
  • Presenting the company as a good buyer on supply markets
  • Strengthening current supplier relations
  • Acquiring new suppliers
20
Q

What are the objectives of strategic supply management?

A
  • Identifying opportunities and threats in supply areas
  • Designing strategies to improve organization’s position
21
Q

What methods are used in strategic supply management?

A
  • Strategic supply gap-analysis
  • Buyer-Supplier-Market power-Portfolio
22
Q

How can you increase buyer’s market power?

A
  • Easy to substitute materials/parts
  • Knowledge about alternative suppliers, price structure, quality
  • Low changing costs in case of supplier change
  • Free capacities for in house production
23
Q

What factors influence supplier’s market power?

A
  • Supplier is a monopolist
  • Buyer is a C-customer with low purchase volume
  • Material/units are key components of buyer’s product
  • High changing costs in case of supplier change
  • Buyer’s production capacities are fully used
24
Q

What are some key questions to position suppliers in the Power Matrix?

A
  • Objective power resources of buyer and suppliers
  • Current and future potential power position management
  • Full range of sourcing options
  • Sourcing option(s) to achieve improved value for money
25
Q

What are some methods of operative procurement-controlling?

A
  • Structural analysis of the material demand
  • Make-or Buy decision
  • Supplier analysis
  • Calculation of economic optimal order quantity
  • Ordering policy
  • Readiness to deliver (Service level)
26
Q

What are the key components of an ABC-Analysis?

A
  • Material classification based on value and quantity
  • Identifying crucial types of supplier or articles
  • Distinguishing between essential and non-essential
  • High economic value areas are of interest to improve efficiency
  • Categorizing goods into A-goods, B-goods, and C-goods
27
Q

What is the purpose of XYZ-Analysis?

A
  • Dynamic extension of ABC analysis
  • Enables stock classification based on prediction accuracy or regularity of demand for materials
28
Q

What considerations are involved in a Make-or-Buy Decision?

A
  • Concentration on core competencies
  • Cost optimization
  • Product life cycle, complexity and variation
  • Supplier specialization
  • Rapid technical progress
  • Capital intensity of production
29
Q

What are the context dimensions of Make-or-Buy-decisions?

A
  • Occasions: First time or Subsequent
  • Objects: Goods or Services
  • Considerations: Core competency, Production capacity, Costs, Demand fluctuations, Knowledge leakage, Hold up problem, Capital requirement
30
Q

What are some decision support tools for Make or Buy decision?

A
  • Break-Even-Analysis
  • Make or Buy Portfolio
  • Investment appraisal
31
Q

What are the key steps in supplier selection process?

A
  • Identifying suppliers
  • Collecting information from suppliers
  • Setting contract terms
  • Negotiating with suppliers
  • Evaluating suppliers
32
Q

What is the importance of supplier qualification screening process?

A
  • Reduces risk of non-performance
  • Ensures responsible and responsive business relationship
33
Q

What are some methods for supplier evaluation?

A
  • Supplier database
  • ABC-Analysis
  • Quality audit
  • Scoring systems

Ency VO (10 decks)

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