exam 3 Flashcards
the process of obtaining goods or services to meet the needs of the organization
Acquistion
the cost of keeping inventory on hand, including: the opportunity cost of invested funds; storage and handling costs, and taxes, insurance, shrinkage, damage and obsolescence. organizations usually state an item’s holding cost per time period as a percentage of the item’s value
Carrying Cost
(1) an agreement with a supplier to stock goods at a customer’s location with the goods remaining the property of the supplier until used or sold; (2) a shipment that is handed over to a common carrier for transport and delivery
Consignment
calculation used to determine profitability at a product level by looking at product variable costs in relationship to product revenue. also called contribution margin
Contribution to Profit
an accounting classification that accumulates the monetary value of direct materials, direct labor and allocated overhead in products sold during a given time period. it is used to calculate earnings for the period, typically a year
Cost of Goods Sold (COGS)
derived from or contingent upon the demand for another component or a finished product
Dependent Demand
a practice that brings together one or more selected suppliers with a buyer’s product or service design team early in the product development process. the objective is to utilize the supplier’s expertise and experience in developing a product specification that is designed for effective and efficient product roll-out
Early Supplier Involvement (ESI)
a measure of an organization’s earning power from ongoing operations, equal to earnings (revenue minus cost of sales, operating expenses and taxes) before deduction of interest payment and income taxes; also called operating profit
Earnings Before Interest and Taxes (EBIT)
model that can be used to determine the quantity of an item to be ordered or manufactured that minimizes total acquisition and inventory carrying costs. although the EOQ concept can be used in a variety of applications, its most common use today is for independent demand items managed in an order-point inventory management system
Economic Order Quantity (EOQ)
(1) charge payable in the short-term, including depreciation, that is not for items to be resold; (2) cost associated with running a business
Expense
a material replenishment system in which the size of the order remain fixed, while the time interval between them changes, depending on how quickly the items are consumed
Fixed-Order Quantity (FOQ)
containing little excess. a ___ organization is one where ___ thinking is applied to identify value-creating activities and eliminate all others which represent waste in systems, processes, procedures and practices
Lean
demand not directly related to the demand for other items or end items produced by the organization
Independent Demand
(1) as a business measure, the ratio of operating profit to revenue; (2) for individual products, the difference between cost and selling price of an item or service; (3) the minimum return below which products or activities are not profitable
Margin
a guideline for decision making
Policy
predetermined inventory level that triggers an order. this level provides adequate inventory to meet anticipated demand during the time it takes to receive the order
Reorder Point
setting the long-term direction of an organization. to be successful, an organization must approach ___ on three levels: (1) corporate: decisions and plans that answer the questions of “what business are we in?” and “how will we allocate our resources among these businesses?”; (2) Unit: the decisions mold the plans of a particular business unit, as necessary to contribute to the corporate strategy; (3) Function: these plans concern the “how” of each functional area’s contribution to the business strategy and involve the allocation of internal resources
Strategic Planning
inventory management system that holds a supplier responsible for ensuring that stock is maintained at appropriate levels in the purchaser’s facility and for replenishing items when these levels drop.
Supplier-Managed Inventory (SMI)
something of economic value. a tangible ___, such as real estate, a building, equipment or cash. can be touched. an intangible ___, such as a brand, trademark, copyright or patent, cannot be touched
Asset
the transfer by one contracting party (assignor) of his/her rights or obligations under a contract to another person (assignee). sometimes also referred to as delegation of duties
Assignment
a contractual provision giving the parties the right to approve or disapprove any requested assignment
Assignment Consent
a legal document, approved and issued by a judge, formalizing an agreement between two parties
Consent Decree
the ratio of current assets to current liabilities
Current Ratio
the amount of money owed to creditors
Debt
total liabilities divided by total assets. when calculating this ratio, it is conventional to consider both current and non-current debt and assets. the debt-to-asset ratio shows the proportion of an organization’s assets which are financed through debt. if the ratio is less than one, most of the organization’s assets are financed through equity. if the ratio is greater than one, most of the organization’s assets are financed through debt. organizations with high debt-to-asset ratios are said to be “highly leveraged” and could be in danger if creditors start to demand repayment of debt
Debt-to-Assets Ratio
disposal or reduction of an asset or investment by sale, liquidation or other means for either financial or social goals
Divestiture
an appreciating or income producing asset; the accumulation of some kind of asset in hope of getting a future return from it
Economies of Scale
business strategy that adds new entities with similar or competitive products or services, often to gain economies of scale and/or scope, enter a new geographic marketplace, or reduce market competition and integrate it into the existing company or as a subsidiary
Horizontal Integration
any obligation incurred as a result of law, rule or agreement; being legally obliged and responsible; a debt or an obligation to another party
Liability
a person or organization that makes goods by hand or by machinery often on a large scale and with divisions of labor
Manufacturer
any various methods of combining two or more business concern, such as absorption by a corporation of one or more others
Merger
a close relationship between a buyer and seller in order to attain some advantages from each other in a positive way. a ___ in this context does not imply a legal relationship. Buyer-seller ___s may be of operational importance, such as a long-term, sing-source with an office supplier or of strategic importance, such as a long-term, single-source relationship with a supplier of a good or service of strategic importance
Partnership
information that has an inherent value to an organization and its business interests such as trade secrets, customer lists, marketing plans and so on; often protected by means of NDA
Proprietary Information
commercial information, usually a plan, process or mechanism, known only to the owner and a limited number of others to whom it is necessary to confide it; commonly protected by use of a confidentiality agreement
Trade Secret
insightful initiatives undertaken to enhance the worth, relevance or importance of a product, service or system
Value Creation
an organization that extensively outsources most of its activities and manages the relationships through key outsourced providers
Virtual Corporation
US agency created in 1914 that has the power to determine the meaning of restraint of trade. the ___ is charged with uncovering unfair methods of competition and unfair or deceptive practices in commerce. all proposed corporate mergers must undergo the __ test for unfair competition
Federal Trade Commission (FTC)
right granted to an agent to act (engage in legally binding transactions) on behalf of a principal
Authority
the amount of overhead
Burden
the process of overseeing and maximizing the financial and operational value of a group of related commodities, products or services by identifying and monitoring total spend and consumption, keeping abreast of market shifts, new alternatives or inventions, forecasting market supply and demand, and continuously evaluating supplier performance in order to drive down cost, improve supplier performance, and respond to changing business requirements and/or enhance stakeholder satisfaction
Category Management
the management of various facets of a contract to ensure that the contractor’s total performance is in accordance with the contractual commitments and that obligations to the purchaser are fulfilled
Contract Administration
the commercial activity of providing funds and capital; the branch of economics that studies the management of money and other assets; to obtain and provide money for; to sell or provide on credit; the management of money and credit and banking and investments
Finance
a newly introduced idea, system of thinking, method, product or process with attributes that do not currently exist
Innovation
an individual or organizational unit with whom purchasing has a working relationship and on whose behalf it obtains specified goods or services from external sources. as opposed to the more traditional term “user”, the term “___” reflects an attitude of mutual respect, open and frequent exchange of questions, ideas and suggestions, and close cooperation in bringing value to the organization. may also be referred to as an internal business partner to reflect the equality of the supply management process with other core business processes and process owners
Internal Customer
a statement about the nature and purpose of an organization. ___s are used to focus energies and decision-making within the organization, as well as to indicate to customers and suppliers those values that are important to the organization
Mission Statement
a comparison of actual performance to a planned level or standard to determine the degree of achievement as well as opportunities for improvement. may be applied to individuals, departments, processes or organizations such as suppliers
Performance Evaluation
a management technique for evaluating the performance of a particular function, person or organization such as a supplier. for suppliers, key performance metrics may include on-time delivery, flexibility, quality, basic competitive pricing and after-sales services
Performance Measurement
a series of integrated processes in new ___ chronicling steps from idea conception to commercialization
Product Development
a framework of measurable corporate policies and procedures and resulting behavior designed to benefit the workplace and, by extension, the individual, the organization and the community as they relate to diversity and inclusiveness of the supply base, workforce, environment, ethics, financial responsibility, human rights, health and safety, and sustainability
Social Responsibility
a description of the technical requirements for a material, product, or service. a ___ for service to be performed is called a statement of work
Specification
a performance measurement and management document that records the ratings from a performance evaluation process
Scorecard
the process of agreeing on a common specification. this process can take place at different levels: (1) across an organization; (2) throughout an industry; (3) across a nation; (4) around the world
Standardization
action of one party pursuant to specific contract language to end a contract for some reason other than breach by the other party
Termination
a systematic and objective evaluation of the value of a good or service, focusing on an analysis of function relative to the cost of manufacturing or providing the item or service. ___ provides insight into the inherent worth of the final good or service, possibly altering specification and quality requirements that could reduce costs without impairing functional suitability
Value Analysis
the process of gathering information on customers, competitors, suppliers, economics and other areas of the market, and then analyzing and formatting the data to assist in decision-making
Market Research
equipment used by an organization for its production potential that costs more than a predetermined threshold value and whose costs will be depreciated over time
Captial Equipment
building, or forming, an agreement regarding decisions through informed discussion, negotiation and participation
Consensus building
groups of individuals from various organizational functions who are brought together to achieve clear, worthwhile and compelling goals that could not be reached without a team. teaming leverages organizational resources while utilizing the expertise of team members. purchasers typically participate on teams dealing with sourcing, commodities, quality and new product/service development
Cross-Functional Teams
the process of minimizing the total time required for a designated process; for example, the time required for production and delivery. efforts to shorten cycle time often focus on reducing wait time and/or eliminating unnecessary steps
Cycle Time Reduction
a decision-making process in which group members do not critically evaluate each other’s ideas and proposals. the result is a poor decision reached through a faulty consensus-building process
Groupthink
the process and the result of gathering and analyzing information about the aggregate forces (including economics) at work in trade and commerce in a specific service or commodity
Market Intelligence
the process of coordinating the organization, planning, scheduling, controlling, monitoring and evaluating of activities so that the objectives of a project are met
Project Management
Operational or other improvements to increase the difference between revenue and cost
Revenue Enhancement
a group of individuals from several departments or functions (such as purchasing, operations, engineering and finance) who pool their expertise to make sourcing analyses and purchasing decisions jointly
Sourcing Team
deciding in advance when work will be performed, where it will be performed, what kind of resources will be used and how much they will be used. the ___ process is usually connected with ___ systems, policies, techniques and/or devices
Scheduling
a systematic effort to create and maintain a network of competent suppliers, and to improve various supplier capabilities that are necessary for the purchasing organization to meet its competitive challenges
Supplier Development
the design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer. the development and integration of people and technological resources are critical to successful supply chain integration
Supply Chain Management
the phenomenon that occurs when multiple entities are able to achieve more than the sum of all individual efforts
Synergy
an number of persons brought together in work or activity
Team
made popular by Peter Senge, the idea of a company’s support of continuous learning over time
Learning Organization
an organization’s observance of laws, regulations and specifications applicable to the business
Regulatory Compliance
a key performance indicator representing a supplier’s level of performance against the buyer’s definition of ___
Responsiveness
the act, process or power of producing an effect without apparent exertion of tangible force or direct exercise of command
Influence
a pictorial representation of a car dashboard that includes a small, defined set of key metrics. the position on the dashboard indicates the degree of success in attaining the desired performance target. typically, dashboards are prominently displayed frequently updated and use to provide a quick evaluation of a project or process status
Dashboard
describes the different methods that will be used to communicate the strategic and operating supply management plans to everyone in the organization
Communication Plan
includes items such as deployment schedule, required resources, personnel and training requirements, and a budget
Rollout Plan
total assets minus total liabilities. ___ is an important determinant of the value of an organization, considering it is comprised primarily of all the money that has been invested since its inception. as well as the retained earnings for the duration of its operation/ ___ can be used to determine creditworthiness because it gives a snapshot of the organization’s investment history. also called owner’s equity or shareholder’s equity or net assets
Net Worth
that which one is required to do as part of contract performance. contracts and purchase orders represent monetary ___s of a purchasing organization to a supplier
Obligation
a monopoly created by law that gives the ___ holder the sole right to make, use and/or sell the ___ed articles and to prevent others from doing so without the holder’s permission (license) for a set amount of time
Patent
the personal or organizational responsibility and authority to provide direction, answers and insight to all interested parties on a topic or within a given area
Accountability
an individual whose duties combine the production planning and procurement functions into a single position, who is in charge of a specific line of inventory. the concept is based on the idea that the same person should have the authority and responsibility for both the production planning and the purchasing decisions for specified items
Buyer/Planner
a group of individuals from several departments or functions (such as purchasing, operations, engineering and finance) who pool their expertise to make sourcing analyses and purchasing decisions jointly
Buying Team
goods or services with similar characteristics or attributes that are grouped together for planning and management purposes and are bought and sold in any trading arena
Category
one type of hybrid supply structure in which strategic direction is centralized and execution is decentralized
Center-Led Purchasing
an organizational policy and structure in which the authority and responsibility for most supply related functions and decisions are assigned to a central organization. this term refers to the locus of decision-making, not necessarily that purchasing staff are all physically located in one place. there are numerous advantages including: the ease of standardizing products; reduction of administrative duplication; increase leverage from larger volume; limited interdepartmental competition in times of short supply; more control over purchase commitments; greater administrative efficiency for suppliers; and the development of specialized expertise in purchasing activities
Centralized Purchasing
the process of managing a commodity including the identification and monitoring of total spend and market forces by commodity to control elements such as increasing leverage, managing cost, increasing quality, ensuring continuity of supply and/or focusing on the supplier relationship
Commodity Management
an organizational structure in which decision-making authority is dispersed close to the point of service or action rather than being concentrated in a central group or location
Decentralized
an organizational policy and structure in which the authority and responsibility for most supply related functions and decisions are assigned to individual functions or managers. there is no central locus for purchasing decision-making and no specialized buying expertise
Decentralized Purchasing
a process in which a purchaser pre-qualifies multiple suppliers and invites them to participate in a fixed-duration Web-based bidding or sourcing event
Electronic Auction
purchasing authority and responsibility is shared between a central supply organization and business units, divisions, or operating plants.
Hybrid Purchasing Organization
a management-level process to develop an operating plan based on input from sales (sales plan or forecast), manufacturing (capacity), materials management (inventory levels and material availability), finance and other stakeholders. demand is compared to production capability, and a strategy is developed including a production plan, materials plan, budget and workforce requirements. a primary goal is establishment of production rates that satisfy demand (by maintaining, raising or lowering inventory or backlog) while keeping the workforce relatively stable
Production Planning
a section of an organization that has authority to affect both revenue and costs incurred by and allocated to that section. performance is measured by the profit generated
Profit Center
a legally binding document prepared by a purchaser to describe the terms and conditions of a purchase. in contracting process the ___ may function as an offer, an acceptance, a confirmation of an oral agreement or a trigger for periodic performance (release) under an established contract
Purchase Order (PO)
term used to refer to the formal structure and reporting relationships of the members of a purchasing team
Purchasing Organization
supply is the amount of goods or services available at a given price at any time. demand is how many customers or consumers desire the goods or services that are in supply
Supply and Demand
the process of collecting and analyzing job-related information. it is the cornerstone of all human resource management processes. job-related data allow the organization to make hiring decisions, determine types of training employees should receive, identify performance-related successes and problems, and make compensation decisions. the job analysis is composed of the job description, job specification, and job evaluation
Job Analysis
this is composed of all job-related items, and states the essential functions of a job. this should be written by direct examination of the job itself
Job Description
defining knowledge requirements as well as disseminating information to ensure that it is effectively applied in key impacted business sectors
Stakeholders Requirements
the way interrelated people, processes, and activities are arranged. organizatinoal structure reflects decisions about who should do which tasks, who reports to whom, and how decisions are made. structure addresses the complexity, formalization, and centralization between and among the interrelated people, processes, and activities
Organizational Structure
the indication of an offeree to be bound by the terms of an offer; may be by communication or behavior
Acceptance
a performance management system developed by Kaplan and Norton which links performance measures to each other and to the organizations vision and strategy. the key performance categories are financial performance, customer knowledge, internal business, and learning and growth
Balanced Scorecard
a quantitative expression of planned costs, schedule and technical requirements for a defined project; a known value or quantity with which an unknown is compared when measured or assessed; information gathered at the beginning of a study from which variations found in the study
Baseline
controls that are put in place before activities are executed. they include budget, plans, forecasts and procedures
Before the fact controls
an ongoing and comprehensive process for ensuring the continuity or uninterrupted provision of operations and service, including risk or contingency planning, disaster planning, disaster recovery, business recovery, business resumption and contingency plan
Business Continuity Planning
preparation to deal with unforeseen events, such as supply disruptions from single sources or natural disasters
Contingency Planning
graphs or diagrams used in statistical process control (SPC) to record, measure, analyze variations in processes to determine whether or not outside influences are causing a process to go “out of control”. the objective is to identify and correct such influences to keep the process “in control”
Control Chart
in numerical data sets, the difference or distance of individual observations or data value from the center point (often the mean) of the set distribution
Deviation
developing a contingent plans in the event of a man-made or naturally disruptive event such as a strike, earthquake, hurricane or fire
Disaster Planning
methods used to monitor and manage quality during the production process
During the Fact Controls
measurements considered critical to the performance of a business or process, usually calculated and reviewed on a regular basis
Key Performance Indicator (KPI)
a measure of economic activity that tends to change after the state of the general economy has changed, for example unemployment rate
Lagging Indicator
that percentage of total market demand which an organization or product fulfills
Market Share
a technique utilizing the application of statistical control charts in measuring and analyzing the variation in processing operations. the methodology monitors the process to determine whether outside influences are causing the process to go out of control
Statistical Process Control (SPC)
application of a set of statistical techniques to control quality. ___ includes both statistical process control and acceptance sampling
Statistical Quality Control
a measure of the velocity of total inventory movement through the organization, found by dividing annual sales (at cost) by the average aggregate inventory value maintained during the year. the higher the ___, generally, the more favorable the measure
Turnover
all processes and activities that transform raw materials into an end product or service for the customer
Value Stream
creating an innovative and effective function that retains the best people within the business through succession planning, upskilling their abilities, and creating a progressive and evolving environment
Talent Management
an improvement process used by an organization to define requirements, map current processes, identify gaps between requirements and current processes, and develop and implement solutions to fill those gaps
Gap Analysis
orientation method where a new employee is rotated through a series of brief assignments, both within purchasing and in a number of other functions, to gain a broad understanding of the organization as a whole
Functional Rotation
the process in which an experienced collague is assigned to an inexperienced individual and assists in a training or general support role as part of employee development.
Mentoring
a group of physically connected computers (or work stations) that are attached to a file server. it allows users to share software and some hardware, thus, reducing costs while providing the user with more applications
Network
a process in which a purchaser pre-qualifies multiple suppliers and invite them to participate in a fixed-duration web-based bidding or sourcing event
Online Auction
a ratio created by dividing EBIT (earnings before interest and tax) by total net assets that is used to determine how effectively assets are utilized to generate income within the organization
Return on Total Assets ( ROTA)
a broad category of applications and technologies for gathering, providing access to and analyzing data for the purpose of helping enterprise users make better business decisions
Business Intelligence
an organization’s reporting and decision-making structure
Chain of Command
making changes in a planned or systematic fashion through the use of methods, models and practices common to the multi-disciplinary body of knowledge surrounding the task of managing planned or unplanned change
Change Management
data about the business environment, such as the markets, the industry, competitors and/or customers, that an organization collects, reviews and uses to enable it to make sound decisions regarding current and future plans and operations. For example, an organization may use ____ to compare itself to other organizations, to identify risk and opportunities and/or test plans against market response in order to gain a competitive edge
Competitive Intelligence
any type of transaction that requires, as a condition of the original sale, that goods be bought either as a trade-balancing mechanism or as full or partial payment for the goods sold. some form of ___ frequently is used in international business
Countertrade
the time required to complete a process, such as replenishing inventory
Cycle Time
involves assigning tasks to subordinates, granting authority to them, and them responsible for results
Delegation of Authority
an entire business organization, from front-line employees to top management, and all functions in-between
Enterprise
an authorization given to a supplier to ship a specified quantity of material against an established contract
Release
the physical relationship between an organization’s output and input
Productivity
the extent to which people interact with and influence others outside their span of control both within and outside the organization. mechanisms such as dual reporting and matrix structures serve to encourage an increased ___
Span of Influence
the process where one or more successors are identified for critical supply management positions
Succession Planning
training employees to be able to perform different types of work in the supply management function, such as training a commodity manager to understand the process of acquiring capital equipment in addition to the regular commodity assignment
Cross-Training
projects or tasks that are above and beyond an employees current knowledge, skill, or ability level
Stretch Assignments
formal process in which an experienced college is assigned to an inexperienced individual, and assists in a training or general support role as part of employee development
Mentoring
businesses pair newer employees who have knowledge of newer trends and technologies, such as social media and the perspectives of Gen Y, millennials, Gen Z, with more senior employees
Reverse Mentoring
the ability of the individual to increase skills and knowledge of current and future job responsibilities to attain career objectives through both training and work assignments
Professional Development
provide key tasks to subordinates allowing the opportunity to make and execute decisions that are important to the success of the organization and critical to developing talent depth in the managerial ranks
Delegation of Authority
designed to give the employee experience in as many of the areas of supply management for which the employee is being prepared for should the need for succession arise
Job Rotation
the ability to respond rapidly to changes in the physical or business environment
Agility
the use of business data to discover statistics, metrics, patterns and measures that might otherwise not be found or understood
Analytics
