LECTURE 6 - part 2

Question 1

Total cost analysis (definition)

Answer 1

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

Question 2

direct costs

Answer 2

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

Question 3

Indirect costs

Answer 3

costs that are not tied directly to the level of operations or supply chain activity

Question 4

Portfolio analysis (definition)

Answer 4

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

Question 5

Routine items

Answer 5

are readily availabe and represent small % of a firm’s purchasing. Strategy is simplifying the acquisition process

Question 6

Leverage items

Answer 6

standardized and readily available products, large % of total. Strategy is leveraging the firm’s spending levels to get most favorable terms possible

Question 7

Bottleneck items

Answer 7

unique or complex products or services supplied by a few suppliers. Strategy is not to run out; ensure supply continuity

Question 8

Critical items

Answer 8

unique or complex products, representing lare % of total. Strategy is to spend considerable time negotiating favorable deals and building partnerships with suppliers

Question 9

Single sourcing (definition)

Answer 9

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

Question 10

Multiple sourcing (definition)

Answer 10

the buying firm shares its business across multiple suppliers

Question 11

Cross sourcing (definition)

Answer 11

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

Question 12

Dual sourcing (definition)

Answer 12

Using two suppliers for the same purchased product or service