Chapter 3

Question 1

Strong supplier partnerships

Answer 1

Important to achieving win-win competitive performance for the buyer and supplier – these require a strategic perspective as opposed to a tactical position.
Involve “a mutual commitment over an extended time to work together to the mutual benefit of both parties.

Question 2

Performance Metrics

Answer 2

• Measures related to quality, cost, delivery, & flexibility are used to evaluate suppliers.
• Metrics should be:1) understandable, 2) easy to measure, & 3) focused on real value-added results
• A multi-criteria approach is best

Question 3

ISO 9000

Answer 3

Developed by International Organization for Standardization (ISO)- series of management & quality standards in design, development, production, installation, & service.

Question 4

ISO 14000

Answer 4

• A family of standards for environmental management.
• The benefits include reduced energy consumption, environmental liability, waste & pollution, & improved community goodwill.

Question 5

Supplier development

Answer 5

A buyer’s activities to improve a supplier’s performance and/or capabilities based on the following approach:

1. Identify critical products & services
2. Identify critical suppliers
3. Form a cross-functional team
4. Meet with top management of supplier
5. Identify key projects
6. Define details of Agreement
7. Monitor status & modify strategies

Question 6

Supplier Relationship Management

Answer 6

• Refers to extended procurement processes such as sourcing analytics, sourcing execution, procurement execution, payment & settlement, supplier scorecarding and performance monitoring.
• Should Improve profits & reduces costs.

Question 7

Five key points of an SRM system

Answer 7

• Automation
• Integration spans multiple departments, processes, & software applications.
• Visibility of information & process flows
• Collaboration through information sharing
• Optimization of processes & decision making

Question 8

Trends in SRM

Answer 8

• Sourcing & procurement are increasing in importance in organizations. They are becoming more strategic.
• More companies expect more cost reductions to come from their procurement functions.
• Staff is being reallocated from low-level transaction activities to more strategic & higher value-added positions
• Companies with effective transaction activities tend to reduce costs better & have strategic & automated systems