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X Business Process Management 3 > Lecture 6 > Flashcards

Lecture 6 Flashcards

1
Q

What does sourcing include? (4)

A
  • Finding sources of supply
  • Guaranteeing continuity in supply
  • Ensuring alternative sources of supply
  • Gathering knowledge about procurable resources
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2
Q

What does purchasing management include?

A

All activities that are required to manage supplier relationships

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3
Q

Stock is another word for

A

Inventory

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4
Q

What are the 6 steps of a strategic sourcing process

A
  1. Assess opportunities
  2. Profile internally and externally
  3. Develop sourcing strategy
  4. Screen suppliers & create selection criteria
  5. Conduct supplier selection
  6. Negotiate and implement agreements
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5
Q

What do you want to ensure when you assess the opportunties in the strategic sourcing process

A

How much do we spend? Is it worth improving?

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6
Q

What do you want to ensure when you profile internally and externally in the strategic sourcing process

A

What features are important?

Who is who in the industry?

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7
Q

What do you want to ensure when you develop the sourcing strategy in the strategic sourcing process

A

Based on my value proposition, what is my strategy?

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8
Q

What do you want to ensure when you screen suppliers and create selection criteria in the strategic sourcing process

A

Request information: ask suppliers what they have to offer

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9
Q

What do you want to ensure when you conduct supplier selection in the strategic sourcing process

A

Which suppliers have the best solutions based on my strategy?

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10
Q

What do you want to ensure when you negotiate and implement agreements in the strategic sourcing process

A

Request quote: suppliers respons in detail to my requirements

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11
Q

What is a Spend Analysis

A

The application of quantitative techniques to purchasing data in an effort to better understand spending patterns and identify opportunities for improvement.

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12
Q

Which two approaches are there to creating profiles?

A

Category Profile

Industry Analysis

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13
Q

What is a category profile

A

an approach to understanding all aspects of a particular sourcing category that could ultimately have an impact on the sourcing strategy

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14
Q

What is an industry analysis?

A

An approach to provide a more detailed understanding of characteristics of the external supply base

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15
Q

What is the make or buy decision?

A

A high level (often strategic) decision regarding which products or services will be provided internally and which will be provided by external partners

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16
Q

What is Insourcing?

A

The use of resources within the firm to provide products or services

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17
Q

What is Outsourcing?

A

The use of supply chain partners to provide products or services

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18
Q

What are advantages of insourcing? (3)

A
  • High degree of control
  • Ability to oversee entire process
  • Economies of scale and/or scope
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19
Q

What are disadvantages of insourcing? (3)

A
  • Reduced strategic flexibility
  • Required high investment
  • Potential supplier may offer superior products and services
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20
Q

What are advantages of outsourcing? (4)

A
  • High strategic flexibility
  • Low investment risk
  • Improved cash flow
  • Access to state-of-the-art products and services
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21
Q

What are disadvantages of outsourcing? (5)

A
  • Possibility of choosing a bad supplier
  • Loss of control
  • Communication/coordination challenges
  • Hollowing out of the corporation
  • May disrupt supply chain
22
Q

What is a total cost analysis?

A

A process by which a firm seeks to identify and quantify all of the major costs associated with various sourcing options

23
Q

What are direct costs?

A

Costs tied directly to the level of operations or supply chain activities

24
Q

What are indirect costs?

A

Costs that are not tied directly to the level of operation or supply chain activity

25
Q

What are direct costs of insourcing? (4)

A
  • Direct Material
  • Direct labor
  • Freight costs
  • Variable overhead
26
Q

What are direct costs of outsourcing? (2)

A
  • Price (from invoice)

* Freight costs

27
Q

What are indirect costs of insourcing? (8)

A
  • Supervision
  • Administrative Support
  • Supplies
  • Maintenance costs
  • Equipment depreciation
  • Utilities
  • Building lease
  • Fixed overhead
28
Q

What are indirect costs of outsourcing? (3)

A
  • Purchasing
  • Receiving
  • Quality control
29
Q

What is a portfolio analysis?

A

A structured approach used by decision-makers to develop a sourcing strategy for a product or service, based on the value potential and the relative complexity or risk represented by a sourcing opportunity.

30
Q

What are the 4 categories in the Kraljic Matrix?

A
  • Bottleneck
  • Critical
  • Routine
  • Leverage
31
Q

What is a Bottleneck product?

A

Products with limited source supply. Their supply risk is high but does not have a major profit impact. The strength is in the hand of the supplier, the market consists of few suppliers that can behave freely and force prices upward.

> > > The purchasing strategy here would be to ensure continuity of supply and to develop plans to reduce the dependence on the supplier by adapting products and investigating alternative products or suppliers.

32
Q

What is a Critical/Strategic product?

A

Strategic items have high supplier risk and high-profit impact and are bought mainly from strategic suppliers. These items are critical to the business. This power between buyer and supplier is balanced and the goal here is to ensure long-term availability.

> > > The company needs to look for a win-win negotiation that benefits both parties. The purchasing strategy to use here includes collaboration and strategic partnerships.

33
Q

What is a Routine product?

A

Low risk and low-profit impact. They are usually the lowest on the priority list in a sourcing strategy because they can be purchased in different varieties and from different suppliers. By increasing product standardization, much time and money can be saved.

> > > The purchasing strategy mostly focuses on reducing administrative costs and logical complexity.

34
Q

What is a Leverage product?

A

These have a financial impact on the organization however these items are in abundant supply. They are highly standardized and easily available. Buyers possess the balance of power in the relationship and leverage this strength to obtain greater returns.

> > > The purchasing strategy includes tendering and competitive bidding.

35
Q

What is Single sourcing?

A

the buying firm depends on a single company for all or nearly all of an item or service

36
Q

What is multiple sourcing?

A

the buying firm shares its business across multiple suppliers

37
Q

What is cross sourcing?

A

using a single supplier for a certain part or service and another supplier with the same capabilities for a similar part.

38
Q

What is dual sourcing?

A

using two suppliers for the same purchased product or service

39
Q

What are criteria to evaluate suppliers? (4)

A
  • Process and design capabilities
  • Management capability
  • Financial condition and cost structure
  • Longer-term relationship potential
40
Q

What is the weighted-point evaluation system?

A

an evaluation system to evaluate potential suppliers, track supplier’s performance over time and rank current suppliers.

41
Q

How do you apply the weighted-point evaluation system?

A
  1. assign weights to performance dimensions
  2. rate the performance dimensions of each supplier with the regard to each dimension
  3. calculate the total score.
42
Q

What are the two types of suppliers assessment?

A
  • subjective method

- objective method

43
Q

What is the subjective supplier assessment method

A

are used when companies evaluate supplier through personal judgments

44
Q

What is the objective supplier assessment method

A

attempt to quantify the supplier’s performance

45
Q

What tools can be used in supplier assessment? (5)

A
  • Spreadsheets
  • Personal Assessment
  • Vendor Rating
  • Supplier Audit
  • Cost Modeling
46
Q

How do you use spreadsheets for supplier assessment?

A

used to systematically compare and assess quotations obtained from suppliers. Important criteria are listed on one axis and the supplier quotations on the other

47
Q

How do you use personal assessment for supplier assessment?

A

used for suppliers with whom exist close business relationships. Specialists who have experience with the suppliers rate them according to an agreed checklist.

48
Q

How do you use vendor rating for supplier assessment?

A

Limited to quantitative data only. Entails measuring the aspects of price, quality, and delivery reliability per supplier

49
Q

How do you use supplier audit for supplier assessment?

A

Entails that the supplier is periodically visited by specialists from the customer. They investigate the production process and quality organization

50
Q

How do you use cost modeling for supplier assessment?

A

Specialists from the buying company estimate based on the production technology, the cost of the product. This may lead to ‘should cost’ discussions with the supplier.

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