Strategic sourcing
The development and management of supplier relationship to acquire goods and services in a way that aids in achieving the immediate needs of the business
Specifity
Refers to how common the item is and how many substitutes available
Request for proposal (RFP) When used?
Used for purchasing items that are complex or expensive
Vendor managed inventory
when a customer actually allows the supplier to manage the inventory policy for an item or group of items
Bullwhip effect
A supply chain phenomenon describing how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer and raw material supplier levels
Continuous Replenishment
Inventory is replaced frequently,
as part of an ongoing process to reduce variability
Stable supply process
Manufacturing process and underlying technology are mature and supply base is well established, it is not changing anymore (e.g. Functional products)
Evolving supply process
Manufacturing process and underlying technology are still under early development and are rapidly changing (e.g. Innovative products)
Efficient supply chain strategy
Utilize strategies aimed at creating the highest cost efficiency
Risk Hedging supply chain strategy
Utilize strategies aimed at pooling and sharing resources in a supply chain to share risk
Responsive supply chain strategy
Utilize strategies aimed at being responsive and flexible
Agile supply chain strategy
Utilize strategies aimed at being responsive and flexible to customer needs
Financial reasons to Outsource
- Improve return on assets
- Generate cash by selling low-return entities
- Gain access to new markets
- Reduce costs through lower cost systems
- Turn fixed costs into variable costs
Improvement reasons to Outsource
- Improve quality and productivity
- Shorten cycle time
- Obtain expertise, skills and technologies that are otherwise unavailable
- Improve risk management
- Improve credibility and image by associating with superior providers
Organizational reasons to Outsource
- Improve effectiveness by focusing on what the firm does best
- Increase flexibility to meet changing demand for products and services
- Increase product and service value by improving respons to customer needs
Logistics
Management functions that support the complete cycle of material flow. (All about moving the products within the supply chain.)
Green sourcing
The awareness of firms to be environmental responsible in order to deliver “green results” with their supply chain.
Green Sourcing Six-Step Process
- Assess the opportunity
- Engage sourcing agents
- Assess the supply base
- Develop the sourcing strategy
- Implement sourcing strategy
- Institutionalize the sourcing strategy
Total Cost of Ownership (TCO)
An estimate of the cost of an item that includes all the costs related to the procurement and use of an item
