LECTURE 6 - part 1 Flashcards
Sourcing
finding sources of supply, guaranteeing continuity in supply, ensuring alternative sources of supply and gathering knowledge of procurable resources
Purchasing management
all activities that are required to manage supplier relationships
Strategic Sourcing Process (6)
- Assess opportunities
- Profile internally and externally
- Develop sourcing strategy
- Screen suppliers and create selection criteria
- Conduct supplier selection
- Negotiate & implement agreements
Spend analysis
the application of quantitative techniques to purchasing data in an effort to better understand spending patterns and identify opportunities for imporvement
Category profile
an approach to understand all aspects of particular sourcing category that could ultimately have an impact on the sourcing strategy
Industry analysis
an approach to provide a more detailed understanding of the characteristics of the external supply base
Make or buy decision (definition)
a high level, often strategic decision regarding which products or services will be provided internally and which will be provided by exteranl supply chains
Insourcing (definition)
the use of resources within the firm to provide products or services
Outsourcing (definition)
the use of supply chain partners to provide products or services
Insourcing advantages (3)
- High degree of control
- Ability to oversee the entire process
- Economies of scale and scope
Insourcing disadvantages (3)
- Reduced strategic flexibility
- Require high investment
- Potential suppliers may offer superior products and services
Outsourcing advantages (4)
- High strategic flexibility
- Low investment risk
- Improved cash flow
- Access to state-of- the art products and services
Outsourcing disadvantages (5)
- Possibility of choosing a bad supplier
- Loss of control over the process
- Communication challenges
- ‘Hollowing out’ the competition
- Increased risk of supply chain disruption
