Module 3 Flashcards
Clockspeed
rate of change in an industry
What is dual- or multi-sourcing?
If your primary supplier suffers a disruption, you have a backup supplier.
What is geographical diversification?
By sourcing from geographically diverse regions, you have a backup when a disaster strikes, disabling suppliers in a specific region.
What is inventory pooling?
Inventory can reduce the costs of a supply disruption. To reduce your inventory investment, you may pool safety stock with firms, including rivals in your own industry.
What is part standardization?
Using standard parts increases the number of supply options you can turn to when a disruption occurs.
What is hedging
tool that can reduce price-escalation risk for commodity buys.
the purchase of a futures contract that guarantees you a specific price.
Near Sourcing
process that empahsizes sourcing from close locations to mitigate risk
Advantages of nearsourcing
Shorter Lead Times. You don’t tie up as much inventory in transit or in safety stock.
Better Relations. You can more easily work with local suppliers. It costs less to send a quality team to help a crosstown supplier than to help a supplier half way around the globe.
Better Insight. You are (or should be) more aware of local culture, economics, and politics than of the global scene. You are thus able to avoid cultural gaffes and economic/political instability.
Postponement
Delaying final production as late as possible while maintaining customer service
Risk heatmap definitions
Severe: Network wide service and cost consequences impact annual financial results.
Major: Complete plant shutdown, damaging customer relations and quarterly profits.
Medium: Interruption of operations, significantly increasing short-term costs.
Minor: Decreased service levels with small increase in costs.
Trivial: No impact on service levels due to sufficient safety stock.
Risk Tolerance Levels
The Many Acceptable Risks. You’re not going to waste time, effort, and money to develop mitigation plans for the many acceptable risks.
Risks You Can Tolerate. To address the tolerable risks, you may provide some training, but you won’t invest in a lot of extra inventory or in redundant supply capacity to alleviate these risks. Rather, you’ll focus on fast response and recovery.
The Few Risks You Can’t Live With. For unacceptable risks, you will take preemptive action.
Law of Agency
laws that goven supplier relationships
Required aspects of a contract
Offer, Acceptance, Consideration, Authority, Legaility
Consideration
something of value to be exchanged
Cancellation for Default
buyer cancels agreement since supplier did not fulfill terms of the contract
Cancellation for convienience
the buyer cancels without any reasoning. They are responsible for any costs the supplier incurred
Cancellation by Mutual Consent
Buyer and supplier agree to cancel the contract
Mediation
third party is involved in an attempt to resolve buyer-supplier disputes by dertiming in their opinion what would be a resonable solution - usually not binding
Arbitration
third party is involved in an attempt to resolve buyer-supplier disputes by dertiming in their opinion what would be a resonable solution - usually binding
What is the definition of Information exchange?
The salesperson presents facts and evidence without requesting specific action from you.
Example: “Many of our other customers have benefited a great deal from our vendor managed inventory services.”
What is the definition of Recommendations?
The salesperson implies that you will benefit if you follow the salesperson’s suggestions.
Example: “Having us as a supplier will likely cut your current quality problems in half.”
What is the definition of Requests?
The salesperson frankly states what they would like you to do.
Example: “We would like to ship to you on an FOB basis.”
What is the definition of Ingratiation?
The salesperson praises your accomplishments so that you are more likely to agree to certain conditions.
Example: “Your company has been a real pleasure to work with over the last ten years, and you have been a great partner.”
