Chapter 4

Question 1

Successful Sourcing Strategies

Answer 1

Are different for functional products & for innovative products.
– Functional Products - MRO items & other commonly low profit margins with relatively stable demands & high levels of competition.
– Innovative Products - characterized by short product life cycles, volatile demand, high profit margins, & relatively less competition.

Question 2

Early Supplier Involvement

Answer 2

Is a highly effective supply chain integrative technique.
- Key suppliers become more involved in the internal operations of the firm, particularly with respect to new product & process design, concurrent engineering & design for manufacturability techniques.

Question 3

Value engineering

Answer 3

Activities help the firm to reduce cost, improve quality & reduce new product development time.

Question 4

Vendor managed inventory (VMI)

Answer 4

suppliers manage buyer inventories to reduce inventory carrying costs & avoid stockouts for buyer.

Question 5

VMI - From the buyer-firm’s perspective:

Answer 5

– Supplier tracks inventories
– Determines delivery schedules and order quantities
– Buyer can take ownership at stocking location.

Question 6

VMI - From the supplier’s perspective:

Answer 6

– Avoids ill-advised customer orders
– Supplier decides inventory set up & shipments
– Opportunity for supplier to educate customers about other products.

Question 7

Strategic supplier agreements can reward suppliers by allowing:

Answer 7

– A share of the cost reductions
– More business and/or longer contracts
– Access to in-house training seminars & other resources
– Company & public recognition

Question 8

purchasing function

Answer 8

–
A firm must periodically monitor the purchasing function’s performance against set standards, goals, and/or industry benchmarks.
–
Surveys & audits can be administered as self-assessments among purchasing staff as part of the annual evaluation process.
–
3Rd party firms can audit or even take over the purchasing function (Outsource)

Question 9

Best Practices

Answer 9

copying what other businesses do best and implementing in your organization
Ex: Watch for culture and organizational fit

Question 10

Benchmarking

Answer 10

comparing what you do to other businesses that do it best and implementing changes
Ex: Normally looking at statistics (TAT, cost, productivity measures)