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Supply Chain Management 3050 > Chapter 5 - Sourcing > Flashcards

Chapter 5 - Sourcing Flashcards

1
Q

Order Fulfillment

A
  • Purchasing, producing, and logistics are responsible.
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2
Q

Purchasing

A

Acquires the inputs used to support production and day-to-day business activities.

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3
Q

Production

A

Converts sourced inputs into a product or service that customers value.

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4
Q

Logistics

A

Transports and stores goods, assuring that inbound materials are available for operations and that outbound finished products are available when and where the customer wants to buy them.

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5
Q

SCOR Model (Supply-Chain Operations Reference)

A
  • Creates a common vision for managing and coordinating five SC processes.
    1. Plan
    2. Source
    3. Make
    4. Deliver
    5. Return
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6
Q

Plan

A
  • Balance demand and supply
  • Develop a course of action to meet needs.
  • Aligns SC plan with financial plan.
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7
Q

Source

A
  • Processes that purchase goods and services to meet planned or actual demand.
  • Selecting suppliers
  • Establish policies
  • Schedule deliveries
  • Assess performance
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8
Q

Make

A

Process that transforms product to a finished product.

  • Scheduling production
  • Measuring performance
  • Managing inventory
  • Configuring the network
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9
Q

Deliver

A

Providing the finished goods and services to customers.

  • Order management
  • Warehouse management
  • Transportation management
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10
Q

Return

A

Processes associated with the return of products for any reason.

  • Includes post delivery customer support.
  • Reverse logistics
  • Long term customer support
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11
Q

Purchasing as a Strategic Function

A
  • Purchased inputs became a primary operating cost.
  • Just in time manufacturing place greater emphasis on long time supplier relationships.
  • New technologies made it possible to store and track info.
  • Better trained and more competent managers began to enter the supply arena.
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12
Q

Cost of Sourcing

A
  • .55 of each dollar spent on purchased goods and services.
  • 60-80% of operating expenses
  • The single largest cost category.
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13
Q

The Sourcing Process

A
  1. Need is Identified and Communicated
  2. Supplier is selected
  3. An order is placed and transaction is managed.
  4. Performance is measured and relationships are developed.
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14
Q

Recognition and Description of a Need

A
  • Begins the sourcing process
  • Use of a purchasing policy or procedure handbook, guidelines in place.
  • Purchase Requisition
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15
Q

Purchase Requisition

A
  • Clearly describe and communicates needs to sourcing.
  • Item description
  • Requisitioning Department
  • Authorizing Signature
  • Purchase quantity
  • Delivery date
  • Location
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16
Q

Supplier Selection

A
  1. Identification
  2. Evaluation
  3. Approval
  4. Monitoring
    * Most important step
    - High quality, low cost
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17
Q
  1. Identification
A

Make a list of all potential suppliers.

18
Q
  1. Evaluation
A
  • Identification of supplier selection criteria
  • Gather performance info.
  • Assess and compare suppliers
19
Q
  1. Approval
A
  1. Identifies the suppliers eligible to receive an order if price is competitive.
  2. Number of suppliers on list depends on item being purchased.
    - Commodity type = multiple suppliers
    - Unique items = sole-sourcing.
20
Q
  1. Monitoring
A
  • Assures high level of performance

- Scorecards are used to give ratings.

21
Q

Transaction Management

A
  1. Price Determination
  2. Purchase Order
  3. Follow-Up and Expediting
  4. Receipt and Inspection
  5. Supplier Payment
22
Q
  1. Price Determination
A
  • Best Price = buying at list price, competitive bidding, negotiation.
23
Q

Buying at list price

A
  • Lower-volume or lower-valued items.
24
Q

Competitive bidding

A
  • Relies on the market forces to get suppliers to offer a low price.
  • Real-time, on-line bidding, revers auctions = 10-30% reductions in price.
  • Dollar value of purchase is high enough to justify work.
25
Q

Negotiation

A
  • Used when the dollar value of purchase is large
  • High uncertainty exists
  • Long-term relationships desired.
  • Price agreement that is mutually beneficial.
26
Q
  1. Preparation of the purchase order
A
  • Specifies the terms and conditions of the purchase agreement and initiates supplier action.
  • Blanket order, web catalogs (place order with click of a mouse), corporate procurement cards (small dollar purchases).
27
Q

Blanket Order

A
  • Overall terms of agreement for a given time period.
  • 1 to 2 yrs.
  • Covers entire quantity to be purchased.
  • Buying organization submits a materials release to trigger a new shipment.
28
Q
  1. Follow-Up and Expediting
A
  • Assures that suppliers comply with the purchasing agreement.
29
Q

When problems occur…

A
  1. Increase frequency of follow-up efforts
  2. Send personnel to work with the supplier
  3. Use higher-cost emergency transportation
  4. Arrange for delivery from an alternative supplier
  5. Alter the buying organization’s production schedule.
30
Q

Expediting

A

The efforts to speed up the delivery of an order.

31
Q

Penalty Clauses

A

Built to avoid delivery problems.

  • late fees
  • incentives
32
Q
  1. Receipt and Inspection
A
  • Order arrives at buying company
  • Passes through receiving process
  • Invoice matched to contents (physical count and quality inspection)
33
Q

Reasons for failure in receipt

A
  1. Count is off

2. Quality is inferior.

34
Q

Supplier Certification

A
  • Simplifies the receiving process
  • Improve supplier’s abilities to eliminate inspections.
  • dock to dock suppliers
  • better quality and reduced cycle times are benefits.
35
Q
  1. Invoice Clearance and Supplier Payment
A
  • Timely payments help build good relationships.

- 2% discount if payment made in 10 days with full pmt. due in 30 days.

36
Q

Relationship Management

A
  1. Performance Monitoring and Improving
37
Q

Information that should be tracked

A
  1. Current status of POs
  2. Performance on selected evaluation criteria for all suppliers
  3. Info. on each part type
  4. Info. regarding all contracts and relationships.
38
Q

Purchasing Skills

A
  1. Knowledge Management
  2. Relationship Management
  3. Process Management
  4. Technology Management
39
Q

Knowledge Management

A
  • Commodity expertise
  • Understanding of suppliers capacities
  • Clear idea of upstream processes
  • Increase global awareness and skill set
40
Q

Relationship Management

A
  • Building right relationships with suppliers.

- Build new and maintain fair relationships.

41
Q

Process Management

A
  • Constantly improve the sourcing process
  • Manage collaborative processes (NPD, supplier certification, cycle-time reduction)
  • Help suppliers improve their own processes.
42
Q

Technology Management

A
  • Web catalogs, web scorecards, EFT, online bidding, real-time info. exchange.
  • ERP and CRM software are expensive - purchasers can help make decisions with these.

Supply Chain Management 3050 (8 decks)

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