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SCM 301 (ISU) > Chapter Two/Three > Flashcards

Chapter Two/Three Flashcards

1
Q

Who are Merchant Buyers?

A

Wholesalers and retailers who purchase for resale

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2
Q

Who are Industrial Buyers?

A

Purchase raw materials for conversion, services, capital equipment, & MRO supplies

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3
Q

What are the primary goals of purchasing?

A
  1. Ensure uninterrupted flows of raw materials at the lowest total cost
  2. Improve the quality of the finished goods produced
  3. Optimize customer satisfaction.
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4
Q

What objectives does purchasing contribute to?

A
  1. Actively seeking better materials and reliable suppliers
  2. Work closely with strategic suppliers to improve quality materials
  3. Involving suppliers and purchasing personnel in new product design and development efforts.
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5
Q

What are the steps of the old system to the Manuel purchasing process?

A
  1. Material Requisition (MR)/Purchase Requisition (PR)
  2. The Request for Proposal (RFP) & Quotation (RFQ)
  3. The Purchase Order (PO)
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6
Q

What is a Material Requisition (MR)/Purchase Requisition (PR)?

A

Stating product, quantity, and delivery date. May originate as a planned order release from the MRP system.

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7
Q

What is a The Request for Proposal (RFP) & Quotation (RFQ)?

A

Buyer identifies suppliers & issues a request for quotation (RFQ) for routine items or a Request for Proposal (RFP)for highly technical products.

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8
Q

What is a The Purchase Order (PO)?

A

Is the buyer’s offer & becomes a binding contract when accepted by a supplier?

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9
Q

What is The e-Procurement Purchasing Process?

A
  1. Material user inputs a materials requisition: Relevant information such as quantity and date needed.
  2. Materials requisition submitted to buyer: At purchasing department (electronically).
  3. Buyer assigns qualified suppliers to bid: Product description, closing date, & conditions are given.
  4. Buyer reviews closed bids & selects a supplier
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10
Q

What are the four sourcing decisions?

A
  1. Make or buy decision (theory)
  2. Make or buy (simple) financial evaluation
  3. Managing the supply base (portfolio)
  4. Total Cost of Ownership
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11
Q

Define Backward Vertical Integration

A

Refers to acquiring sources of supply

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12
Q

Define Forward Vertical Integration

A

Refers to acquiring customer’s operations.

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13
Q

Reasons for favoring a single supplier

A
  1. To establish a good relationship
  2. Less quality variability
  3. Lower cost
  4. Transportation economies
  5. Proprietary product or process
  6. Volume too small to split
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14
Q

Reasons for favoring multiple suppliers

A
  1. Need capacity
  2. Spread risk of supply interruption
  3. Creates competition
  4. Information
  5. Dealing with special kinds of business
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15
Q

What is Purchasing Organization?

A

Is dependent on many factors, such as market conditions & types of materials required.

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16
Q

What is Centralized Purchasing?

A

Purchasing department located at the firm’s corporate office makes all the purchasing decisions.

17
Q

What is Decentralized Purchasing?

A

Individual, local purchasing departments, such as plant level, make their own purchasing decisions.

18
Q

Advantages to Centralized Purchasing

A
  1. Concentrated volume
  2. Leveraging purchase volume
  3. Avoid duplicationSpecialization
  4. Lower transportation costs
  5. No competition within units
  6. Common supply base
19
Q

Advantages to Decentralized Purchasing

A
  1. Closer knowledge of requirements
  2. Local sourcing
  3. Less bureaucracy
20
Q

What is a Decentralized-Centralized organization?

A

Decentralized corporate and centralized at the business unit

21
Q

What is a Centralized-Decentralized organization?

A

centralized large national contracts at a corporate level and decentralized items specific to business unit

22
Q

Supplier Relationship Management

A

Refers to streamlining the processes and communication between buyer and supplier using software applications manage processes more efficiently and effectively.

23
Q

What is Transactional SRM?

A

Used to track supplier interactions such as order planning, order payment and returns

24
Q

What is Analytic SRM?

A

Allows the company to analyze the complete supplier base.

25
Q

What are the five key points of an SRM system?

A
  1. Automation
  2. Integration
  3. Visibility
  4. Information sharing
  5. Optimization of processes & decision making
26
Q

What is Vender Managed Inventory (VMI)?

A

Suppliers manage buyer inventories to reduce inventory carrying and stockout costs for the buyer.

27
Q

What is Third-Party Logistics (3PL) Provider?

A

An external supplier that performs all or part of a company’s logistics functions

28
Q

What is the Total Cost of Ownership and what type of costs does it include?

A

Cost of a product is MORE than just per unit cost.

  1. Unit cost
  2. Ordering cost
  3. Logistics costs
  4. Inventory cost
  5. Maintenance cost
  6. Capital costs
  7. Others?
29
Q

What is supplier development?

A

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

SCM 301 (ISU) (9 decks)

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