L6M8 Innovation in P&S Flashcards
What are the 6 stages of purchasing development model?
- Transaction orientation
- Commercial orientation
- Co-ordinated purchasing
- Internal integration
- External integration
- Value chain orientation
What is meant by transaction orientation in purchasing development model?
Serve the factory.
Finds appropriate suppliers to provide raw materials and components.
Lacks purchasing strategy and goals are primitive.
What is meant by commercial orientation in purchasing development model?
Lowest unit price.
Focused on proactive negotiation with suppliers.
Specialist buyers concentrate on securing good deals.
Monitoring savings.
Measuring performance based on price variance.
What is meant by co-ordinated purchasing in purchasing development model?
Centralised function with uniform policies
Clear purchasing processes
Systems focused on cross unit co-ordination
Compliance on negotiated agreements.
Often bureaucratic and slow but attracts attention from senior management.
What is meant by internal integration in purchasing development model?
Cross-functional purchasing.
Focused on cross-functional problem solving to contribute to cost reduction across the system as a whole.
What is meant by external integration in purchasing development model?
Supply chain management.
Outsourcing strategies are developed in conjunction with co-operation with supply chain partners.
What is meant by system approach and product and process development?
System approach is an approach that focuses on the interdependency and interaction between internal and external organisational factors.
It examines the supply chain holistically and exploring how products flow from the supplier to customer or consumer.
What is meant by value chain orientation in purchasing development model?
Procurement and supply strategy needs to deliver value to the end customer.
Suppliers are challenged to support and participate in Product development.
What is required to move from cost focus approach towards value chain orientation?
Procurement professional must embrace a collaborative approach at all stages of product development and production.
What are the six factors that would compel an organisation to consider the development of cross functional teams?
- Strategic decision-making - procurement involvement
- Work flow requirements - supplier development, and establishment of supply chain processes, requires greater level of integration
- Utilising technology developments - cross-functional teams
- Responsiveness and information sharing - development of enterprise resource planning (ERP), manufacturing resource planning (MRP II) and just in time (JIT)
- Integrated processes
- Performance
What are the benefits of cross-functional teams?
Use of expertise of groups and individuals from relevant internal organisational function and external supply partners to deliver product/service development.
It plays a key role in integrating processes, relationships and information within integrated teams.
What does the cross-functional involvement helps with?
- to confirm the accuracy of information in specifications
- to confirm requirements for raw materials, components, non-production items
- To confirm requirements for product development and production planning
What is created by the development of the cross functional involvement?
Environment were innovation and creativity is utilised in the approach towards the development of specifications and requirements.
What can you access from the use of cross functional teams?
- many ideas
- opinions
- skills
- experiences
- differing approaches to challenges and opportunities that an organisation faces
What are the basic requirements for cross functional teams to succeed?
Basic knowledge of IT
Team-working and behaviours
Interpersonal skills
Communication capability
What scenarios will lead the cross functional team to miscommunicate, tension and even group-work breakdown?
- If goals are not clarified
- If resources and information are not shared
- Were individuals are not actively engaging with the team and falling to fulfil action and job tasks that they have been sent
What does the cross functional perspective provides?
- Access to diversity of views towards the development of specification and requirements
- Variety of different perspectives
- Deliver level of creativity and innovation to thinking regarding development opportunities and improvements in supply chain
What is simultaneous engineering?
First appeared in the late 1980s to explain integrated product design and production processes and a reducing lead-time, improving quality and driving cost efficiencies.
A product design/development in which some stages are carried out at the same time which reduces time to market.
What elements have to be in place for simultaneous engineering to be successful?
- Senior management must be supportive
- Enabling the team to investigate multiple ideas can contribute create greatly to creativity and innovation in a development process
- Effective teaming
- Provision of resources and flexibility
- Open communication channels
- Critical thinking among the team members
What is the key requirement for the organisation to remain competitive?
Liaise between suppliers and buyers and investigate whether the product development process is going to be worth the investment in time and resource.
What is the innovation council?
Innovation council is a governance structure created to co-ordinate and maximise cross-functional innovation through the organisation
What is over-the-wall engineering?
Traditional engineering approach which uses a sequential series of specialised task, one at the time, to deliver development outcomes.
Similar to an assembly line methodology.
What does the simultaneous engineering helps with?
- Helps to solve problems as the development process progresses
- Provides opportunity to operate efficiently
- Consider to be the golden standard of product and service development
What are the three broad principles by which to successfully implement simultaneous engineering?
- Map the design space - Develop and characterise set of alternative possibilities.
- Integrate by intersection - review the set of possibilities to understand the intersection and overlap between different functions.
- Establish feasibility before commitment - Check the feasibility of a solution by all functions before committing to a particular design.
What is horizontal integration?
It’s integration across the various components of the organisation and innovation landscape to drive efficiency
What is Vertical Integration?
The alignment of innovation activities with the primary objectives of the organisation
What is meant by horizontal integration in an innovation council setting?
Alignment of activities between different organisational functions to ensure that all functions are working on achieving the same outcomes in relation to project outcomes.
Helps to reduce duplication of effort.
What is meant by vertical integration from the perspectives of an innovation council?
Alignment of project activities with the strategic objectives of the organisation.
Preventing projects from using organisational resources which are not focused on helping achieve the organisations strategy.
Who is involved in innovation council?
Small group of senior managers from across the organisation.
What are the benefit of innovation council?
- Better understanding of the opportunities and challenges across the various functions in Organisation
- Help to co-ordinate decision-making across functions
- Can examine all innovation activities across the organisation for alignment to the organisational strategy
- Can assess what activities should be supported with the allocation of resource
What outcomes will innovation council meetings focus on?
- innovation measures
- the requirement to co-ordinate processes arising from innovation
- the development of an innovation culture within the organisation
What is the key to successful supply chain management?
Seeking improved inter-organisational relationships that can enhance innovation
What should be the result of an innovation council?
Strengthening of collaborative relationships across organisational functions, and enhanced continuous innovation.
What would innovation council develop within procurement and supply function?
- supply chain improvements
- reducing costs
- increasing quality
- assuring continuity of supply
- enhancing levels of customer service
What does the innovation council provide?
- Governance structure
- Co-ordination and maximisation innovation throughout the supply chain
- Co-ordinating concurrent innovation efforts across multiple stakeholders within the organisation
Why is it important for the procurement professional to engage with supplier forums and associations?
To keep up to date with changes that are occurring in the wider external environment as well as specific challenges and opportunities in the industry.
Why does the procurement professional needs to interact with wider network?
To understand where the evolution of procurement and supply will occur in the coming years.
What are the benefits of the access to diverse perspectives?
It gives:
• access to different world views
• innovation and ideas that can help to drive the development of innovation in the procurement and supply chain function, and the supply chain
What are the different forums and associations that procurement professional can engage with?
- Chartered Institute of Procurement and Supply (CIPS)
- International Federation of Purchasing and Supply Management (IFPSM)
- Chartered Institute of Logistic and Transport (CILT)
- Council of Supply Chain Management Professionals (CSCMP)
- European Operations Management Association (EUROMA)
- Production and Operations Management Society (POMS)
- Institute of Supply Management (ISM)
How can supplier forums and associations contribute for organisations?
- Provide with the opportunity to meet with other professionals who can offer new perspective on particular challenges or opportunities
- Professional associations provide access to resources, research, training, courses, peer networks and discussion forums
- Development of innovation
- Speed up the diffusion of new ideas, practices and technological advances
- provide basis of specifications and requirements for new products and services
- Increasing the demand for innovation in the supply chain and the procurement and supply function itself
What is proprietary technology?
Technology and its associated processes and systems which are the property of the organisation, providing the organisation with a competitive advantage.
What is the technology transfer?
Process by which the organisation will transfer new technology to a secondary supply partner in an attempt to enhance their business operation.
On macro-economic level, what does the technology transfer between developed and less developed nations offers?
- An acceleration in innovation
- Increased efficiency in technology
- A narrowing of the wage differential
- An increase in living standards in the less developed countries
What are the aims of innovation and transfer technology?
- To increase production
- To broaden the range of goods and services offered within the supply chain
- To increase productivity
- To reduce the cost of producing current goods and services
How can organisation enhance its business operations?
By combining innovation to develop new products with technology transfer to secondary supply partners for existing products.
Why is technology transfer known as regressive?
It reduces the monopoly power of the organisation and dilutes the strength of its innovation portfolio.
What can be one of the disadvantage of technology transfer?
Lower living standard for workers in the developed nations as jobs are moved abroad
(When manufacturing is moved to a lower wage economy)
What are the benefits of technology transfer?
- potential of outsourcing particular supply chain activities if supplier will adapt the transfer technology
- supply chain efficiencies
- greater level of productivity
- increase in capacity for P&S function to focus on innovation
- increased opportunities for new product development
- managed well, can affect the breadth of distribution avenues, opening new marketplaces and marketing opportunities
How quickly innovations are copied?
Within 18 months
What are the capabilities required for technology transfer (according to Bessant and Rush)?
- Recognition
- Exploration
- Comparison
- Selection
- Acquisition
- Implementation
- Operation
What is meant by Big Data?
It’s large data sets which are analysed using data management systems to identify patterns and trends
What can data mining and predictive analytics can help to provide for business leaders?
Ability to examine assumptions, make predictions and develop tools to identify risks and opportunities and planning interventions.
Helps to understand the past, and take that experience and knowledge forward to make decisions that are robust and more scientific.
What tools can help to predict the future of the procurement and supply function in the organisation?
Statistics Data mining Machine learning Artificial Intelligence (AI) Text analytics
What can you use data analytics for?
Help to better understand the capacity of suppliers.
Determine whether supply partners are meeting performance requirements.
What are the subtypes of advanced analytics?
- Descriptive analytics - what happened?
- Diagnostic analytics - why did it happen?
- Predictive analytics - ability to forecast using a number of statistical methods
- Prescriptive analytics - scenario analysis, simulation and game theory
What is the challenge of big data for procurement professionals?
To manage the volume of data that is available, the speed with which data is generated and the differing formats in which data arrives.
What is included in system integration tools according to Blair and Ragusa?
Tightly coupled system integration
Service-orientated architecture (SOA)
Enterprise service bus (ESB)
Integrates platform-as-a-service (iPaaS)
What is an e-sourcing?
An application enabled by the internet to facilitate buyer and supplier interactions, including online auctions and reverse auctions
What are the 7 forms of e-procurement tools?
Electronic data interchange (EDI) networks
Business-to-employee (B2E) requisition application
Corporate procurement portals
First-generation trading exchanges
Second-generation trading exchanges
Third-generation trading exchanges
Industry consortiums
What are the benefits of e-procurement?
- Reduction of procurement costs
- Reduction in order processing times
- Ensure that organisation purchase from the right sources
- Increase efficiency in procurement process
- Aid more strategic approach to procurement and supply within an organisation
What is an e-catalogue?
An electronic catalogue supported by internet ordering and payment capabilities
What are the essential elements of e-catalogues?
- Inclusion of product names and descriptions
- Specific product hierarchy information
- Pricing
- Order or item codes
What are the benefits of e-catalogue?
- Ability to edit and modify catalogue
- Keeping it up-to-date
- Updating if product developments and innovation
- Able to quickly respond to any mistakes and flex any changes in an availability of products and services
- Buyer activity can be easily monitored to understand e-procurement transactions
- Can support global trade
What are the 3 types of e-catalogue?
- Sell-side catalogues
- Buy-side catalogues
- Third-party catalogues
What are the four main phases of product development?
- Idea generation
- Concept development
- Product and process design
- Production and delivery
What does the continuous improvement in process design helps the organisation to gain?
Edge over the competition by providing high levels of customer service to the customer base through innovations such as:
• Responsiveness
• Flexibility
• Personalised service
What is the goal of product and process design?
To effectively and efficiently deliver products to Customer at the right time and place.
What is included in the model of product design?
Page19
- New product definition
- Development of conceptual solutions
- Selection of components
- Design and build of prototypes
- Feedback to suppliers
- Confirmed concept
- Manufacturing planning
- Procurement of components
What are the benefits of the procurement and supply involvement in product design?
- Increase capability to positively influence the validity and viability of present design
- Ensures that procurement and supply process can deliver the requirements of the product efficiently and effectively in the early stages of product development
What is Kraljic Portfolio Matrix?
The KPM analyse a supply risk and profit impact in order to develop the process design that manages suppliers relationships against a map, which segment suppliers.
It would allow to guard against this disastrous supply interruptions and cope with the change in economics and the new opportunities brought on by new technologies.
What are the segments in Kraljic Matrix?
- Non-critical items - low-supply Risk goods and services with a low impact on profitability
- Leverage items - low-supply risk goods and services with a high impact on profitability
- Bottleneck items - high supply risk goods and services with a low impact on profitability
- Strategic items - high-supply risk goods and services with a high impact on profitability
What are the criticism of Kraljic Matrix?
- Subjectivity of the high and low characterisation of the dimensions
- Can lead to the imprecise positioning of particular products and services on the matrix, this can lead to prices design decisions that may be arbitrary
- Does not take into account the intricacies of the complex interdependence is of an integrated supply chain
What are the key responsibilities for all elements of products and process design?
- Engage in strategy planning to analyse the gap between the current and future requirements in order to determine development plan
- Develop procurement strategy, identifying risk that could affect organisations core business
- Need to level up a business case for product and process design changes or new development to determine priorities and plan for next steps
- Cross-functional collaboration to establish specifications and requirements, needs to determine make it or buy strategy
How can procurement professional achieve improvement in the supply chain?
By engaging in qualitative and quantitative data analysis and work with cross-functional team members.
What is supply chain integration?
The alignment and coordination of supply chain partners for information sharing and management information systems.
It recognises how important effective relationships are and how to make communication drives added value in the supply chain.
What does the supply chain integration require from procurement professional?
- To develop strategic collaboration with key supply chain partners
- Understand customer requirement
- Manage processes within (intra) and between (inter) organisations in order to maintain competitive advantage
Goal is to achieve effective and efficient flows of products and services, information, money and decisions, to provide maximum value to the customer at low cost and high speed.
What is participatory innovation?
Multidisciplinary innovation which has a contingency approach and involves users and other stakeholders innovation.
What behaviours enhance innovation?
- Task behaviours - in-role behaviours, examine how an individual execute technical aspects of the job role
- Organisational citizenship behaviours - result of social and psychological factors, how engaged is individual with the organisation. Quality of interpersonal action.
- Counterproductive work behaviours - harmful to others, function or organisation as a whole. Sabotage, create conflict, disruption and delay.
What is an early supplier involvement?
Co-operation between suppliers and the organisation at the product conceptualisation stage and the extent to which supplier is willing to commit to working on innovations with the organisation.
What are the 4 types of supplier involvement?
- Arm’s length development - low development risk and a high degree of supplier development responsibility
- Strategic development - high development risk and high degree of supplier responsibility for development. Requires involvement at the conceptual stage.
- Routine development - low development risk and low levels of responsibility for the development by supplier.
- Critical development - high development risk, although supplier development responsibility is low.
What is the innovation Council?
A governance structure created to co-ordinate and maximise cross-functional innovation throughout the organisation.
What are the benefits of using simultaneous engineering in operational setting?
- Improve competitive advantage
- Makes the organisation more focus on external factors
- Increases the responsiveness of the organisation to customer needs
- Leads to cost reduction
- Increases cross-functional accountability
- Increases organisational learning
What is e-sourcing?
An application enabled by the Internet to facilitate buyer and supplier interactions, including online options and reverse options.
What are the benefits of developing an online procurement portal?
- Streamline sourcing process
- Greater economics of scale
- Prices Reduction
- One-stop portal for supply information
- Flexible system for cross functional teams to make their own purchasing decisions
- Controlled setting
When will E-sourcing processes be the most likely successful?
- Procurement professional is positive and proactive in promoting
- Senior management to support his present
- There is an easy access
- No extensive training is required
What is an E-auction?
In procurement options are used to get suppliers to bid for contracts.
E-auctions are useful tool for creating the competitive open and transparent process, which creates cost savings from price reductions and efficiency within the supply chain.
What are the four types of e-auctions that I used on the Internet? (Page 53)
- English bid process
- Dutch bid process
- Sealed-bids
- Reverse-bid auctions
When will the auction be considered a useful tool?
In a highly commoditised market with little opportunity for innovation.
What is purchase to pay system?
Procurement process that enables purchasers to pay for goods and services using an electronic transaction without the use of checks or cash.
What are the forms of payment options in P2P systems?
- Credit and procurement cards
- E-Wallet
- E-check
- Stored-value card
How to ensure the P2P system is secure?
With the Use of: • Encryption • Authentication • Authorisation • Settlement protocols
What are the advantages of using P2P over traditional payment systems?
- Ability to trade internationally with the E-payment system
- Speed of payments processing
- Low transaction costs
What are the types of P2P systems? (Page 57)
- Electronic funds transfer (EFT)
- Electronic payment initiation
- XML invoices
- Electronic invoice presentment
- PC banking
- Internet banking
- T&E card
- Purchasing card
- Email invoices
- Electronic data interchange is (EDIs)
- Self billing
- Magnetic media/CD-ROM invoices
- Electronic file transfer of invoices
What is data integration?
Combining data from various sources using technical and business processes to create meaningful information which can then be used for decision-making.