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IDIS 424 > IDIS 424 Lect 1-4 > Flashcards

IDIS 424 Lect 1-4 Flashcards

Exam 1

1
Q

What is Purchasing?

A

A value-added function with the ability to leverage supply base capabilities.

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2
Q

Why is Purchasing Important?

A

It impacts the quality and reputation of a product

ex. Samsung Battery

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3
Q

Leverage Principle

A

Relatively small cost reductions (easy to achieve) have a greater impact on profits than other fields

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4
Q

How do you decrease Purchasing Cost?

A
  • Bidding
  • Supplier Relationship Development
  • Vendor quantity discounts
  • Selection of Transport Modes
  • Supplier Selection
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5
Q

Purchasing

A

A Functional group (formal entity) as well as a functional activity (buying goods)

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6
Q

Five Rights

A

Right quality, right quantity, right time, right price, right source

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7
Q

Supply Chain

A

a set of three or more organizations linked by 1 or more of the upstream or downstream flows of products, services, finances, and information from a source to a customer

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8
Q

Supply chain management

A

Proactive management of the 2-way movement and coordination of goods, services, information, and funds from raw materials through end user

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9
Q

Supply Continuity

A

Uninterrupted flow of high-quality material to support the operational requirements of internal customers

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10
Q

Purchasing Objectives

A
  • Supply Continuity
  • Manage the Purchasing Process Efficiently and Effectively
  • Develop Supply Base Management
  • Develop Strong Relationships with Other Functional Departments
  • Support Organizational Goals and Objectives
  • Develop Integrated Purchasing Strategies that Support Organizational Strategies
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11
Q

Manage the Purchasing Process Efficiently and Effectively

A

Make best use of limited resources to satisfy the need of internal customers

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12
Q

Develop Supply base Management

A

Improve existing and develop new, reliable, high-quality sources of supply base

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13
Q

Develop Strong Relationships with Other Functional Departments

A

Two-way communication, positive and problem solving relationship

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14
Q

Support Organizational Goals and Objectives

A

Should be developed as a core competency to achieve the organizational goals and objectives

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15
Q

Develop Integrated Purchasing Strategies that Support Organizational Strategies

A

Purchasing should be part of the strategic team and its acts should be in alignment with the company’s goals

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16
Q

Functional Responsibilities (or legitimate authority) of Purchasing

A
  • Spend analysis
  • REVIEW Specifications and FORECASTING
  • EVALUATE and SELECT Suppliers
  • Act as a PRIMARY CONTACT with suppliers
  • Determine the Method of AWARDING PURCHASE CONTRACTS
  • Cost management (Total cost of ownership)
  • Supply Relationship Management
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17
Q

Six major Tasks in the Purchasing Process

A
  • IDENTIFY user requirements
  • EVALUATE potential suppliers
  • Competitive bidding or negotiation and supplier selection
  • Purchase approval
  • Release and receive product or service
  • Update supplier performance scorecard
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18
Q

Purchase Requisitions

A
  • DESCRIPTION of required material or service
  • Quantity and Date Required
  • Estimated unit COST
  • Account to be charged
  • Date of requisition
  • Authorized Signature
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19
Q

Evaluate Potential Suppliers

A
  • Existing Supplier
  • New Supplier
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20
Q

RFI

A

Request for Information

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21
Q

RFP

A

Request for Proposal

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22
Q

RFQ

A

Request for Quotation

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23
Q

When is competitive bidding preferred?

A
  • Volume is high
  • Clear specifications/requirements for product
  • Marketplace is competitive
  • Buyer does not have a preferred supplier for that item
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24
Q

When is Negotiation preferred?

A

Any situation that is not favorable for competitive bidding ( new, technically complex items)

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25
Q

Raw material

A

petrol, coal, lumber

26
Q

Semi-finished Products

A

Subassemblies, semi finished products

27
Q

Finished Products

A

Complete, saleable product

28
Q

MRO

A

Maintenance, repair and operating items

29
Q

Classifications of Goods or Services:

A
  • Production Support Items
  • Services
  • Capital Equipment
  • Transportation and 3PL providers
30
Q

Production Support Items

A

Packaging materials, tapes, glues, boxes

31
Q

Services

A

Payroll services, lawn care, snow removal

32
Q

Capital Equipment

A

Production machinery, material handling equipment

33
Q

Transportation and 3PL providers

A

Logistics services, management of inbound and outbound materials

34
Q

Purchasing Integration

A

Process of bringing together different groups, functions or organizations to work jointly on a common business-related assignment

35
Q
A
36
Q

Collaborative Buyer-Seller Relationships

A
  • Mutual Trust
  • Long-term Contracts
  • Joint Development of Technology
  • Joint Cost Reduction Efforts
37
Q

Obstacles to Closer Relationships

A
  • Confidentiality
  • Limited Interest by Suppliers
  • Legal Barriers
  • Resistance to Change
38
Q

Push Technique

A

Make all we can just in case.

Anticipated Usage

39
Q

Pull Technique

A

Make what needed when we need it

40
Q

Lean SCM

A

produces or provides only what is needed and when it is needed

41
Q

Just-In-Time Supply Scheduling

A

Scheduling where the entire supply channel is synchronized to respond to the requirements of customers

42
Q

Just-In-Time Supply Sched Characteristics

A
  • Close Relationships with FEW suppliers
  • Information is shared btw suppliers and buyers
  • Frequent production/purchase in small quantities with resulting minimal inventory levels
  • Elimination of uncertainties
  • High quality goods
43
Q

JIT drawbacks

A
  • Does not handle unexpected demand
  • Risk of running out of stock
  • More planning required
44
Q

Centralized Purchasing

A

Corporate HQ has the authority for purchase expenditures

45
Q

Adv to Centralized Purchasing

A
  • Leverage Purchase Volumes
  • More uniform consistent performance standards across all locations
  • Reduce duplication of purchasing effort
  • Development of specialized expertise
46
Q

Decentralized Purchasing

A

Business branches have authority for purchase expenditures

47
Q

ADV of Decentralized purchasing

A
  • Speed and Responsiveness
  • Understanding unique operational requirement
48
Q

Center-Led Purchasing

A

Combines central for common purchases and decentralized for unique requirements

49
Q

Factors that influence Centralized or Decentralized structure

A

Overall Business Strategy
- Comp adv built on efficiency moreso than competition –> more centralized
- Built on responsiveness to customer needs –> More decentralized

Similarity of Purchases
- Purchases are fairly similar –> More Centralized
- Purchases are very different across business units –> More decentralized

50
Q

Types of Strategies

A
  • Corporate Strategy
  • Business Strategy
  • Functional Strategy
51
Q

Corporate Level Strategy

A

What’s the firm’s business? Nokia partnering with Microsoft to make a phone

52
Q

Business Level Strategy

A

How does the firm compete? Product differentiation. iPad lighter, thinner, better software, etc.

53
Q

Functional Level Strategy

A

How do the functions of the firm support the firms business level and corporate level strategies? Increase market share. Identification of new market segments, brand identification programs, quality assurance

54
Q

Scope of Business

A

Refers to the breadth of activities your business engages in (having a bar and catering vs a business who doesn’t)

55
Q

Translating Objectives to Goals

A

Objectives are broad whereas goals are specific, measurable, focused and will have a time-frame

56
Q

Category Strategy

A

Which suppliers should provide a group of products or services in the form of the contract, the supplier performance measures, price, quality, and delivery arrangements

57
Q

Routine products

A

cleaning materials, scraps, office supplies / Automate requisitioning process, minimize admin costs, little negotiation

58
Q

Leverage products

A

Concrete, foodstuff, etc. / Promote competitive bidding

59
Q

Bottleneck Products

A

Equipment spare parts, custom made materials / Widen specification, increase competition, develop new suppliers, attempt comp bidding

60
Q

Critical Products

A

OLED Screens / Heavy Negotiation

61
Q
A

IDIS 424 (3 decks)

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