Lecture 8

Question 1

Types of Measurement Techniques

Answer 1

Categorical System
Weighted-point system
Cost-Based system

Question 2

Cost-Based System

Answer 2

Deals with SPI
Cost of doing business with a supplier
Least subjective but expensive to implement

Question 3

SPI

Answer 3

It is a total cost index calculated for each item or commodity provided by a supplier
Has a base value of 1.0

Question 4

Weighted Score Method

Answer 4

Less subjective than categorical method and is less expensive to implement than the cost based method

Question 5

Categorical Method

Answer 5

Highly subjective but easy and least expensive to implement

Question 6

Supply Base Optimization

Answer 6

Process of determining the right mix and number of supplier to maintain.

Question 7

Formal Approaches to SBO

Answer 7

Twenty/Eighty Rule
Improve or else approach
Triage approach
Competency Staircase approach

Question 8

Twenty/Eighty Rule

Answer 8

Used for rapid reduction and assumes the best suppliers receive the majority of purchase dollars.
Identifies the 20% receiving the majority of purchase dollars.

Question 9

Improve or Else Approach

Answer 9

All suppliers have a specified time to meet new performance requirements.
This approach can drive fast improvement but can also be “heavy-handed” on suppliers.

Question 10

Triage Approach

Answer 10

Supplier grouped into three categories bases on their current performance:
Marginal Suppliers
Middle-of-the-road Suppliers
World class Suppliers

Question 11

Competency Staircase Approach

Answer 11

Supplier go through series of cuts to remain in the supply base.