Purchasing Flashcards
A contract is a good tool to define:
What is bought and the cost
Ordering, shipping and receiving processes
Quality and acceptance standards
Payments and warranty procedures
A contract should include:
Also in the contract management:
Information flow
Goods flow
Financial flow
Relationship
What is procurement?
The act of obtaining or buying goods and services. The process includes preparation and processing of a demand as well as the end receipt and approval of payment
What is Sourcing?
The process of identifying, selecting and developing suppliers
What are the pros and cons of a global supplier?
Pros: Capacity, variety and unit cost
Cons: Lead time,
supply and quality risk, transportation cost, inventory cost, supplier relationship
What are the pros and cons of a local supplier?
Pros: Supplier relationship Lead time Supply risk Transportation cost Inventory cost Marketing potential Quality
Cons: Capacity
Variety
Unit cost
What are the pros and cons of Single sourcing?
Pros: Allows cooperation, shared benefits
Willingness to invest in new facilities or new tech
Lower purchasing price
Cons: Great dependency between the two parties
Increased vulnerability of supply
Increased risk of supply interruption
Pros and cons of Multiple sourcing?
Pros:
Alternative sources of materials in case of delivery stoppage by one supplier
Reduced probability of bottlenecks due to insufficient production capacity to meet peak demand
Increased competition among suppliers leads to better quality, price, delivery, product innovation and buyer’s negotiation power
More flexibility to react to unexpected events that could endanger supplier’s capacity
CONS:
Reduced efforts by supplier to match buyer’s requirements
Higher costs for the purchasing organization (transaction cost)
The four phases of the Kraljic portfolio model are?
Phase 1: Classification of materials and components
Phase 2: Market analysis
Phase 3: Strategic positioning
Phase 4: Action plans
The three phases of the Bensaou’s portfolio model are:
Phase 1: Classification of relationships
Phase 2: Contextual profiles
- Product characteristics
- Market characteristics
- Supplier characteristics
Phase 3: Management profiles
Problems with portfolio models are?
The dimensions in the matrixes are aggregated measures for various (and often difficult to define) factors
Difficult to classify products and suppliers unambiguously in the matrixes
Focus on given products, thus it is not possible to take product development into account
Too much focus on classifying and too little on implementing strategies
The strategies based on the classification can be ambiguous
Benefits from using portfolio models:
Highlight the strategic importance of purchasing
Provide an opportunity for increased specialisation in the purchasing function
Simple tool and easy to use (the world is complex and needs to be simplified to be managed)
Need to separate between different groups of materials and components
Need to group the suppliers
Develop different strategies for different groups
Focus on some important aspects
What are the three dilemmas of knowledge-sharing networks?
- Motivate members to participate and openly share valuable knowledge
- Prevent free riders
- Reduce the costs associated with finding and accessing different types of valuable knowledge
What is the difference between open and closed innovation?
Open: All best experts are not in the enterprise
External R&D has the capability to produce significant value. Internal R&D is needed to capture part of that value
It is not necessary for us to be initiator of an innovation to benefit from it
CLOSED:
The best experts work in our enterprise
To benefit from R&D we need to invent, develop, and commercialize innovations based on work done in our enterprise
If we invent the innovation, we are the first to bring it to the market
What can purchasers contribute to NPD?
Knowledge and better understanding of: Construction Suitable materials Suppliers Supplier knowledge
