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Supply Chain Management > Chapter 3: Procurement Strategies > Flashcards

Chapter 3: Procurement Strategies Flashcards

1
Q

Enumeration:
5 Steps to a Supply Chain Market Analysis

A
  1. Define your objectives, scope, and commodity profile
  2. Research the market and pricing structure for your commodity
  3. Conduct in-depth supplier analysis
  4. Identify key market indicators
  5. Compile your findings and outline final recommendations
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2
Q

T or F.

Before you begin any analysis, it is also critical to understand the scope of your project.

A

False
analysis -> research

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3
Q

Define the ___________ and __________ of your efforts and develop a clear understanding of the profile of the commodity that you will research.

A

breadth
depth

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4
Q

The primary goal of performing a market analysis can vary, but a common goal is to develop key insights to drive better business decisions and improve your competitive position via your supply chain. Since every organization is unique, ensure you and your stakeholders are in alignment prior to executing this analysis

A

Define your objectives, scope, and commodity profile

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5
Q

Make sure you understand how pricing works for the goods or services you are
interested in; factors including material costs, labor costs, transportation costs, energy and utility needs, and overhead can influence the final price you pay.

Is the commodity’s availability influenced by the time of year? By geopolitical
events? By new laws coming into effect? This is the time to find out.

A

Research the market and pricing structure for your commodity

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6
Q

Identify the main players in your market and research them thoroughly. From
geographic locations to target customers and competitive advantage, it’s important to understand the context in which they operate.

A

Conduct in-depth supplier analysis

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7
Q

Enumeration:

Factors how pricing cost works

A

material costs
labor costs
transportation costs
energy and utility needs
overhead

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8
Q

One framework that can be helpful in this step is a ________________ diagram, which can make it easier to compare suppliers against one another.

A

SWOT (Strengths, Weaknesses,
Opportunities, Threats)

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9
Q

T or F.

It’s also not a bad idea to do some digging into their financial background and
research any lawsuits or other risky situations they may be up against.

A

True

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10
Q

Finding the right indicators for your commodity can be difficult, but it can play a
significant role in your research conclusion and ultimately, your recommended
business strategy.

How? When viewed in context, the right indicators can help you understand the
current state of the market, and when tracked over a period of time, these
indicators can become predictors of what’s to come in the market.

A

Identify key market indicators

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11
Q

Enumeration:

Four categories of indicators

A
  • Economic Indicators
  • Pricing Indices
  • Employment Indicators
  • Production Measurements
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12
Q

pricing trends, inflation rates, and production rates

A

Economic Indicators

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13
Q

Consumer Pricing Index (CPI), Producers Pricing Index (PPI), and Import/Export Price Indexes

A

Pricing Indices

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14
Q

unemployment claims, percentage of workforce fully employed

A

Employment Indicators

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15
Q

gross domestic product (GDP), industrial production rates, and capacity utilization rates

A

Production Measurements

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16
Q

In this step, keep in mind the context and culture of your organization. Developed and implemented the right way for your unique organization, your findings can enhance your business’ competitive advantage, reduce risk in your supply chain, and strengthen your financial position.

A

Compile your findings and outline final recommendations

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17
Q

T or F.

From decreasing your supply chain’s strategic impact to enabling business agility to outsmart unexpected circumstances, the outcomes of such an analysis can be far-reaching and surprisingly valuable.

A

decreasing -> increasing

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18
Q

the way in which the companies control and optimize the money they spend.

A

Spend Management

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19
Q

a company needs a mechanism by which they are not only able to save money but control costs

A

Spend Management

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20
Q

It involves cutting operations and other costs associated with doing business

A

Spend Management

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21
Q

raw goods and materials used in the manufacture of products

A

direct inputs

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22
Q

office supplies and other expenses that do no go into a finished product

A

indirect material

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23
Q

temporary and contractual labor, print services, etc.

A

services

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24
Q

__________________ is a continuous process of controlling and
improving the way a company spends money and typically
includes strategic procurement activities such as supplier management, category management, inventory management, and product development

A

Spend management

25
Q

Tor F.

Ideally, an effective expense management strategy includes a comprehensive spent analysis and helps companies maintain control of their purchases, optimizes supplier relationships, and maximizes the ROI of every dollar they spend.

A

False

spent -> spend

26
Q

T or F.

While spend management is often executed by procurement, it impacts many internal and external stakeholders of a business who are also concerned with budgeting and planning future profitability

A

True

27
Q

T or F.
They need spend management to stay in business and improve an organization’s bottom line. Effective spend management will leverage real time analytics and insights to drive better decisions, create value, and cut costs

A

True

28
Q

is meant to represent a holistic view of the activities involved in the “source-to-settle” process which includes the following:

  • spend analysis
  • sourcing
  • procurement
  • receiving
  • payment settlement
  • management of accounts payables and general ledger accounts
A

Spend Management

29
Q

Enumeration:

Companies have recently been utilizing the following new tools that promise not only to automate paper intensive and manual processes, but also to help monitor and control spending activity and to create an integrated process in which each activity feeds into another

A
  1. e-sourcing
  2. e-procurement
  3. e-spend analytics
30
Q

used for bidding and reverse auction

A

e-sourcing

31
Q

used to control and monitor purchasing activities and contracts

A

e-procurement

32
Q

used to gain insights into how much money is being spent on what types of services or products

A

e-spend analytics

33
Q

Enumeration:

HOW SPEND MANAGEMENT IMPROVES PROCUREMENT?

A

● Better sourcing opportunities
● Increased process efficiency
● More spend visibility
● Better risk management

34
Q

By mapping out all the costs involved in the supply chain
process, you can identify which suppliers are yielding the most value and which ones are not. Supply chain management becomes more efficient because you have a clearer picture of the vendors who are the most cost-effective.

A

Better sourcing opportunities

35
Q

Spend management software eliminates manual processes
that take up valuable time and money and optimizes procure-to-pay processes like strategic sourcing and contract management

A

Increased process efficiency

36
Q

Spend management systems provide accurate and timely
data that lead to more insightful decisions around procurement. Spend analytics support forecasting efforts that reduce maverick spend and capitalize on savings opportunities.

A

More spend visibility

37
Q

An end-to-end spend management solution provides the means to assess the market, identify risk factors, and develop plans for navigating around them before they occur and well into the future.

A

Better risk management

38
Q

Enumeration:

HOW SPEND MANAGEMENT SAVES MONEY

A
  • Decreasing “maverick” spend
  • Increase of spend economies of scale
  • Increase process efficiencies
  • Increase procurement efficiency
39
Q

“_______” spend is the process whereby requestors buy items or services that are outside that preferred process.

A

Maverick

40
Q

_______ are those who are creating a request for an item or service that will be turned into an order to a supplier

A

Requestors

41
Q

T or F.

This that a “maverick” purchase results in individual or department buying an item that results in paying a premium for that item

A

True

42
Q

Enumeration:

Tis is often hard to enforce unless some control mechanism (often technological) is put in place that:

A
  1. prohibits the type of purchasing
  2. sets up penalties for these types of purchases
  3. puts into place some type of approval or check and balance system
43
Q

by directing more spend toward a particular supplier, a company can negotiate more favorable pricing based on how much money it spends with that supplier in a given year.

A

Increase of spend economies of scale

44
Q

By consolidating this “spend”, and directing it toward one or a few suppliers, companies are able to get bigger discounts

A

Increase of spend economies of scale

45
Q

Automating sourcing, procurement and payment processes will greatly improve the efficiency of paper based and manual processes. The general idea is not just to automate, but it also use the technology to improve upon these processes.

A

Increase process efficiencies

46
Q

Process savings can be measured in various ways such as how long it takes to process a purchase order (PO) how many individuals need to touch the PO before it can be spent, how long it takes to reconcile and pay the supplier, and many other methods to measure these process improvements

A

Increase process efficiencies

47
Q

This involves using e-souring tools for the bidding and contract award process similar to eBay in which there many have one buyer and many suppliers, or one supplier and many buyers.

A

Increase procurement efficiency

48
Q

These supply chain management tools also help to develop product requirements that can be sent to supplier

A

RFP (Request for Proposal)

49
Q

T or F.

The e-procurement of direct items (raw materials) is often much more complex than indirect (office supplies, etc.), as the deciding factor is not just price but also the way the product fits into the overall manufacturing of a product

A

False

e-procurement -> e-sourcing

50
Q

It is managing the firm’s external resources in ways that support the long-term of the firms

A

Strategic sourcing

51
Q

Enumeration:

Strategic sourcing

A
  • Make-or-buy decision
  • Identification and selection of suppliers
  • Managing and improving supplier relationships and capabilities
  • Monitoring and rewarding supplier performance
52
Q

Whether to make or buy components is a strategic decision that can impact an organization’s competitive position. Cost has been the major driver when making sourcing decisions

A

Make-or-buy decision

53
Q

Enumeration:

Reasons for buying or outsourcing

A
  1. Cost advantage
  2. Insufficient capacity
  3. Lack of expertise
  4. Quality
54
Q

Enumeration:

Reasons for making

A
  1. protect proprietary technology
  2. no competent supplier
  3. better quality control
  4. use existing idle capacity
  5. control of lead-time, transportation and warehousing cost
  6. lower cost
55
Q

The process of selecting a group of competent suppliers for important materials, components, and services which can impact on the firm’s competitive advantage is a complex one.

A

Identification and selection of suppliers

56
Q

Enumeration:

Factors that firms should consider while selecting suppliers are

A
  1. product and process technologies
  2. willingness to share technologies and information
  3. quality
  4. cost
  5. reliability
  6. order system and cycle time
  7. capacity
  8. communication capability
  9. location
  10. service
57
Q

Organization must develop the right capabilities for developing long-term relationship with their suppliers

A

Managing and improving supplier relationships and capabilities

58
Q

T or F.

Before entering into any partnerships, it is important for an organization to conduct a thorough investigation of the supplier’s capabilities and core competencies

A

True

Supply Chain Management (6 decks)

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