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Business purchase and marketing > L9, Purchasing function and process > Flashcards

L9, Purchasing function and process Flashcards

1
Q

How do you communicate the role and importance of the purchasing function within companies?

A

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2
Q

What descriptions are involved in purchasing?

A

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3
Q

Describe the importance of suppliers for purchasing and how they can be integrated or involved?

A

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4
Q

what is b2b purchasing and marketing about?

A

managing relatively stable, long-lasting relationships and networks

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5
Q

Describe the flow between the supplier and the buyer according to Van reelle model!

A

Van reelle model:

The transaction is between the sales manager and the buyer.

The sales manager is working within the marketing/sales department

The buyer is working within the purchasing department.

Both the buyer and the supplier has different:

  • goals
  • resources
  • constraints
  • problem-solving activities
  • people
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6
Q

describe the purchasing process

A
  1. need/problem recognition
  2. determining product specification
  3. supplier & product search
  4. evaluation of proposals and supplier selection
  5. specification of order routine
  6. performance feedback and evaluation
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7
Q

Describe how money can be saved in the purchasing process

A
  1. If applied well the process can save between 2-40% on total costs for a company.
  2. Data shows that the majority of savings can be achieved on the pre-contract phase
    - 10-25% on specification
    - 5-10% on supplier selection
    - 2-5% on negotiation

The price ins internal resistance to change in companies. e.g. doctors or engineers preferring specific brands or suppliers

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8
Q

How and why the decision-making process enacted by organizational customers might vary?

A

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9
Q

Name some variables affecting the purchasing process

A
  1. characteristics of the product
  2. strategic importance of the purchase
  3. sum of the money involved
  4. characteristics of purchasing markets
  5. degree of risk related to the purchase
  6. role of purchasing department
  7. purchased products affecting existing routines
  8. purchasing situation
    —> new task
    —> straight rebuy
    —> modified rebuy
  9. Supplier relationship
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10
Q

what is an in-supplier?

A

A supplier which are already known to an organization and which they will purchase from with confidence

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11
Q

what is an out-supplier?

A

Supplier the buying organization has not had dealings with before and will therefor be considered with risk

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12
Q

What is common during a purchase for a new task with an out-supplier vs an in-supplier?

A

The purchase will be strategic and judgemental

OUT-SUPPLIER

  1. track search and communication behavior
  2. secure purchase and specification information
  3. tailor solutions to specific supply needs

IN-SUPPLIER

  1. Anticipate & monitor changing needs
  2. offer consultation in specifying need
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13
Q

What is common during a purchase for a modifier rebuy with an out-supplier vs an in-supplier?

A

Marketer actions will be complex and simple??

OUT-SUPPLIER

  1. develop customer insight
  2. crate communication messages to present value adding supply alternatives
  3. Deliver messages to march customer search behavior

IN-SUPPLIER

  1. Try to move to straight rebuy
  2. Reduce perceived benefits of supply switch
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14
Q

What is common during a purchase for a straight rebuy with an out-supplier vs an in-supplier?

A

ROUTINE: CASUAL

OUT-SUPPLIER

  1. examine total cost of ownership
  2. Target users, designers, engineers

IN-SUPPLIER

  1. Reinforce relationship with regular communication
  2. automated ordering
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15
Q

Describe maverick buying!

A

42%
— impatience, unwillingness to comply with procurement process

25%
— unplanned items needed

23%
— uniquw, one-off purchases

10%
— off-catalogue items needed

9%
— other

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16
Q

Describe different buyer-supplier relationship types

A
  1. Arm’s length
    —> traditional, cost-based, free market, short duration, purchase-ordered driven relationships
  2. Modifier vendor relationships
    —> value-added services (e.g. supplier managed inventory)
  3. Long-term contracts
    —> long-term supply contracts
4. Non-equity based collaboration
—> R&D consortia
—> cross-marketing agreements
—> cross-production agreements
—> joint purchasing activities
  1. minority equity investments
    —> invest in supplier
  2. Licensing arrangements
    —> provide license to supplier in technology that host firm develops but in which it wants to limit investments
  3. investments integration
    —> coordinate investment jointly
  4. joint venture or strategic alliances
    —> allow firms to exchange certain goods, services, information or expertise while maintaining a formal trade relationship on others
  5. asset ownership
    —> host firm retains ownership for critical assets in adjacent stages of the industry chain but contracts out all other aspects of ownership and control
  6. host firm fully owns activity
17
Q

Strengths and weaknesses with single and close suppliers?

A

STRENGTHS

  1. potentially higher quality as easier to assess Q-work
  2. Stronger relations
  3. higher dependence creates higher commitment
  4. better communication
  5. more Economy of scale, gives lower cost and stronger negotiation power
  6. easier to work with joint process- and product innovations

WEAKNESSESS:

  1. Increased sensitivity for delivery probems
  2. being more affected of volume fluctuations
  3. decreased supply market knowledge
  4. supplier could increase prices if no alternative supplier exists
18
Q

Strengths and weaknesses with multiple and transactional suppliers?

A

STRENTHS

  1. purchaser can put pressure on pricey competition
  2. suppliers can easily be replaced if delivery problems
  3. a broad competence base is created b having many suppliers

WEAKNESSESS:

  1. Difficult to get commitment
  2. Difficult to make deep assessments e.g. quality of work
  3. more work to communicate
  4. suppliers less interested to invest in new processes
  5. more difficult to leverage economy of scale
19
Q

How should a company treat it’s different suppliers?

A
  1. Due to the different economical importance of different suppliers, a company cannot provide the same attention to all suppliers
  2. A company should utilize a mix of different models which can be individualized for any specific supplier or specific type of suppliers
20
Q

Name 2 different ways of segmenting the suppliers!

A
  1. Customization
    —> highly customized parts
    —> semi customized parts
    —> standard parts
2. Ownership of supplier
— Fully or partly owned suppliers
—> very close relationship
—> sharing information
—> co-design and planning

— Partly owned/independend suppliers
—> close relationship
—> sharing information
—> development planning

— independent suppliers
—> upon contract relationship
—> arm length relationship

21
Q

Describe the kraljic’s portfolio approach

A

The model is categorizing products into 4 categories depending n their customer value and customer risk.

Routine products:
— Products with low customer value and low customer risk

Leverage products:
— Products with high customer value and low customer risk

Bottleneck products:
— products with low customer value but high customerr isk

Strategic products:
— products with high customer value and high bottleneck products

22
Q

Give an example of the purchasing portfolio for cykepick

A 
Routine products:
— indirect material
— uniforms 
— paint
— bikers

Leverage products:
— GPS-system
— cell-phones

Bottleneck products:
— handling space?
— trailers

Strategic products:
— advertisement
— electric bikes
— charging station

23
Q

How could the supplier strategies be adapted to krajlic’s portfolio approach?

A 
Routine products:
— Category management and E-procurement solutions
—> large product variety
—> high logistics complexity
—> labor intensive

Leverage products
— Competitive bidding
—> alternative sources of supply available
—> substitution possible

Bottleneck products:
— secure supply
—> monopolistic market
—> large entry barriers

Strategic products:
— Performance based partnership
—> critical for product’s cost price
—> dependence on supplier

24
Q

In what way can the supplier be involved at different stages of the purchasing process?

A

The development process traditionally consist of 5 phases

  1. idea generation
  2. business and technology assessment
  3. concept development
  4. ergonomics and detailed design
  5. prototype/ ramp-up

Suppliers in the early phases:

  1. suppliers of more complex items
  2. suppliers of systems or sub-systems
  3. suppliers of critical items or technologies
  4. strategic allience suppliers
  5. “blackbox” suppliers

Suppliers in the later phases:

  1. suppliers of simpler items
  2. supplier of single components
  3. support of less-critical items or technologies
  4. non-allied suppliers
  5. “white-box” suppliers
25
Q

Name some important questions with regard to supplier base?

A
  1. how many suppliers will you work with?
  2. where are they. from?
  3. local or global?
  4. Hw close should you be with them?
26
Q

Name the different supplier base size!

A
  1. single sourcing
  2. multipel sourcing
  3. sole sourcing
  4. dual sourcing
  5. parallel sourcing
27
Q

Name the drivers of global sourcing!

A
  1. globalization
  2. new tehcnology
  3. availability of local suppliers
  4. lower costs of labor and material
  5. better quality
  6. supplier willingness to solve problems
  7. on-time delivery
  8. to gain competitive advantage
28
Q

How does the out-sourcing look ina global perspective?

A
  1. 82% of large firms in Europe, Asia and North America have some sort of outsourcing arrangements
  2. 51% source offshore
  3. 10% are happy with cost savings
  4. 6% are happy with the overall offshore sourcing
29
Q

name some challenges with global sourcing

A
  1. infrastructure availability
  2. compatibility
  3. total cost of purchase
  4. transport delays
  5. quality assurance
  6. supply chain integrity
  7. political instability
  8. Currency fluctuation
30
Q

What was Toyotas plan to reduce the risk of outsourcing in Japan?

A
  1. Suspended production in Japan
  2. Asking suppliers to make the same part at multiple locations or getting it from multiple suppliers
  3. carry larger inventories of sensitive parts
31
Q

How has the digital technology facilitated the tasks of organizational buying and what are the consequences of this for the B2B marketer?

A

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Business purchase and marketing (15 decks)

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