Exam 3 Flashcards
How do you determine your sourcing method for each item?
Use the portfolio approach
Portfolio approach step one
Assess each items supply risk and profit impact
Supply risk
The extent to which an item is difficult to source
Causes of supply risks
Lack of qualified sources, raw material scarcity, lack of substitutes, complex high logisitical costs, existence of a monopoly or oligpoly
Profit impact of step one
A result of the sheet volume of spend or the items unique added value
Portfoilo approach step two
Plot each item on the portfolio model
Portfolio approach step three
Execute plan of action based on category
Routine items
Low value, small volume, individual transactios
Routine items action
Simplify and automate
Routine items example
Negotiate office supply rate oce and allow employees to make needed purchases using company cards
Leverage items
High spend, many qualified suppliers
Leverage items action
Max your position by volume discounts and promotong competitive bidding
Leverage items example
Heinz ketchup purchase of tomatoes using reverse action
Bottleneck items
Few alternate suppliers, complex or new specifications or tecnologies
Bottleneck items action
Ensure supply continutity while finding new suppliers
Bottleneck items example
Hospital supply manager working with internal customers to change cast colors
Critical iteams
High spend, quaility and design of upmost importance. Few qualified suppliers
Critical items action
Form and alliance with suppliers and create a contingency plan if supply should fail
Critical iteam example
McD creates in depth relationshops with critical suppliers
