L4M Flashcards
Chapter 3
Name 3 Procurement Structures
Devolved
Hybrid
Centralised
What is a Hybrid Structure?
Is a combination of centralised and devolved structures.
What are the 4 forms which Hybrid structures take?
Consortium
Shared
Lead buyer structures
Outsourced
Name 6 types of Consortia
Loose Voluntary Regional Profit making Member-owned Non profit
Shared services occur when
An organization centralises its support functions
Which functions are often shared?
Human Resources
Administration
ICT
Finance
What are the advantages and disadvantages of Shared Services?
Reduces costs Provides high level of skill & knowledge Puts focus on core activities Pools resources Avoids duplication of work
Disadvantages
Risk of breaching departmental confidentiality is increased
Resistance to change from workforce
New process and procedures take time to adopt
Audit more challenging
Information not readily available within departments
Lead Buyer Structures
Occur when one organizational department or individual takes the responsibilty for setting the framework or the purchasing of a specific product or service such as ICT or stationery
Outsourced advantages and disadvantages
Advantages Cost reduction Reduce training costs Lower headcount-fewer procurement staff required Economies of scale Access to highly skilled buyers
Disadvantages
Changing from internal to outsourced procurement could be difficult in terms of employee relations
Lack of control
Resistance to change from internal staff
Redundancies in current procurement team
What is rapport?
Rapport is about finding common ground. It involves mutual trust and understanding build on good communication.
What are the common functions that can be structured as shared services?
HR
Administration
ICT
Finance
What are the 4 categories of stakeholders according to Mendelows stakeholder Matrix?
- Keep satisfied- interest low, power high eg lnvestors, shareholders
- Manage closely
-Key player
-Interest- high
-Power-high
eg- senior managers - Minimum effort
Power-low
Interest-low
eg-small customers and suppliers
- Keep lnformed
Interest- high
Power-low
eg- local activist group
What are the 4 categories of stakeholders according to Mendelows Stakeholder Matrix?
Keep satisfied
Manage closely
Minimum effort
Keep informed
What are the 4 supplier types identified in Kraljic’s Matrix
- Leverage suppliers-High cost impact yet low risk impact to an organisation
Vast competition
Low cost to move suppliers
Often utility services e.g electricity - Strategic suppliers-high cost and high risk implications
Critical supplier to an organization
Responsible for core products
- Routine suppliers-have low cost and low risk impact
Low value items
Lots of work associated with these suppliers
Lots of variety available eg stationery suppliers
- Bottleneck supoliers- low cost and high risk impact
Holds monopoly in marketplace
Little or no other options
low value items
Rapport does not always come naturally to people
It is progressive, builds overtime and is strongly linked to trust
What methods contribute towards building rapport?
Positive body language
Make eye contact
Listen and use positive gestures for emphasis
Ask questions
Be empathetic
Respect all ideas
Remove preconceptions
Be honest
Justify opinions and feedback
Customer Service
Is the way in which an organisation and its employees conduct themselves
Customer Service can be achived by
Answering the telephone and responding to emails
Do not make false promises
Do what you say you will do
Delivering good and bad news honestly
Encourage feedback
Aim to resolve complaints efficiently and effectively
Always be helpful and appear willing
What is a Maslow’s hierarchy of needs?
A motivational theory based on an individual’s physical and psychological needs
SEBSP
Self actualisation (personal growth)
Esteem needs (achievement, status, repetition)
Belonging and Love needs (family affection, relationships, workgroup)
Safety needs (protection, security, order, law, limits, stability)
Biological and physiological needs (basic needs)
An individual’s esteem can be gained through what?
Customer service across the organisation
Customers place orders based on what?
Price
Quality of the product
Customer Service
Aftercare
What constitutes value for money?
The five rights of procurement
Right quantity Right quality Right time Right place Right price
They help to achieve value for money when sourcing and purchasing, writing contracts and negotiating with suppliers
What are the elements of value for money?
- The five rights of procurement
- Price
- Place
- Time
- Quantity
- Quality - Innovation
- Total life cost
- Customer service
What areas are included in total life costing?
It is also known as TCO- Total Cost of Ownmership
- TCA
- Tooling
- Insurance
- Operation
- Maintanance
- Training
- Storage
- Disposal
3.4
What is a P2P system?
A system which allows payments from customers and to suppliers to be made more quickly, on time, so this creates an opportunity for buyers to negotiate cost reduction.
Apart from faster payments, explain 3 other ways in which P2P has an impact on the sourcing process.
- Reduced errors
- Reduced waste (anything that does not add value)
- Reduced costs
- Continous improvement
- Enhanced relationships
Systems of lnventory management
MRP
JIT
Kanban (a method used to improve efficiency in the system)
What is Materials requirements planning?
MRP is an electronic system which can schedule orders, monitor inventory and manage the production process
It has 3 main obectives:
1. Ensure that the parts needed for manufacturing end products are available
- Establish when to place orders and schedule deliveries
- Keep inventory value as low as possible
