Q4 Flashcards
Describe measures of performance that can be used for; Cost, Timescales, Processing, Quality, Customer Satisfaction?
Cost:
- Information cost; (IT Cost)
- Inventory carrying cost; (stock)
- Physical flow cost; (fuel)
- Transaction cost; (cost of invoices)
Time:
- Proportion of deliveries arriving on time
- Time to market
- Time between order being made and fulfilled
- Lead time targets
Process:
Capacity
Cycle time
Utilisation
Quality:
- SERVQUAL model
- Quality control reject rates
- PPM failure rates
Customer Satisfaction:
- Loyalty and customer retention
- Return analysis
- Completeness of service
- Recovery
- Complaints per 10000 interactions
Explain the reason for an organisation obtaining stakeholder feedback on the impact of its supply chain strategies?
Without stakeholder feedback mechanisms, an organisation will not be a learning organisation, and will continue to make the same mistakes over again.
Prediction and control:
(understanding links between cause and effect)
Mutual understanding:
(enhancing people’s mutual understanding)
Critical reflection:
(allows people to reflect on the situation)
Discuss, using examples, a range of mechanisms that may be used by an organisation to obtain feedback on its supply chain strategies?
Complaint procedures Questionnaires Response forms Consumer groups Supplier forums Service standard monitoring
Outline 4 ratio’s covering profitability?
Gross Profit Ratio:
(Gross Profit/ Sales)
Net Profit Ratio:
(Net Profit/Sales)
Return on Capital employed:
(Net Profit/Capital Employed)
Return on Assets:
(Net Profit/Total Assets)
Outline 4 ratio’s covering investment?
Dividend per share:
(Total dividend/number of ordinary shares)
Dividend yield:
($ value of dividends paid/share price)
Earnings per share:
(Net income/ordinary dividend paid to share holders)
Price earnings ratio
(Stock price/Earnings Per Share)
Assess the limitations of the use of ratio analysis in measuring the performance of a potential supplier?
Being financially biased
Backward looking
Relatively easy to manipulate
Difficult to compare non like for like
Not indicative of actual performance
Can be difficult to ascertain the reasons for the result
Some ratios extract info from balance sheet on last day
Balance Scorecards (Kaplan & Norton) Financial perspective Internal business process Learning and growth Customer perspective
Propose other sets (besides reduced costs) of performance that could be applied by purchasing organisations to assets their contribution to corporate performance?
Process based metrics
Inventory based metrics
Service based metrics
Quality based metrics
Kaplan and Norton balanced scorecard
Define the term ‘internal bench marking’ and outline its advantages as a method of measuring supply chain performance?
Internal bench marking is where one part of the org compares its performance with one of more parts of the same org. This can happen on; geographical, departmental, business unit or divisional level.
Adv
- Spreads and reinforces org knowledge and learning
- Should already have good comm with benchmark partner
- Fewer problems with confidentiality
- Usually less time and fewer resources needed
- Information should be compatible with current system
Describe a range of potential difficulties that may arise in a supply chain benchmarking exercise?
- Narrows org focus away from the big picture
- Benchmarking is backward looking
- Unrealistic for org to reach best practice in every aspect
- Implies that there is only 1 best practice
- Org may select benchmarks where it can do well, not where it needs to do well
Assess how ratio analysis can assist the purchaser to understand the financial performance of a potential supplier?
- Gives indication of tends over recent past history
- Gives good comparison with similar suppliers
- Enables purchasers to understand suppliers financial performance
- It can allow non-financial people, with a minimum level of training, to understand summarised performance
Explain why cash flow analysis is important when reviewing a potential suppliers performance?
Cash flow analysis normally involves a review of a potential supplier’s cash flow statement which, as part of its annual accounts,
- Enables potential buyer to review how a supplier is managing their cash
- Cash flow statement distinguishes between cash movements and profitability
- Cash flow statement would reveal any extraordinary lines such as new loans.
- If an organisation can fund its dividend payment
- Spending on fixed assets
Discuss how a balanced scorecard methodology can be applied to the measurement of performance in supply chain?
A balanced scorecard approach combines both financial and non-financial measures, thus broadening the scope of information available and increasing the likelihood of organisational objectives being met.
Kaplan & Norton
Financial (ROCE, financial performance)
Customer (customer satisfaction, customer retention)
Business Process (cost & quality measures)
Learning & Growth (employee satisfaction)
Cousins Et Al - Procurement Balanced Scorecard
Q1: How do we look to stakeholders? (Finance)
Q2: How must we excel at internally? (Business Process)
Q3: How must we manage suppliers? (Suppliers)
Q4: How do customers see us? (Customers)
Q5: How do we learn and innovate? (Learning & Growth)
Describe a process for carrying out a benchmarking exercise in a supply chain environment?
Planning Analyse stage-collate data Development of new standards Improvement-closing the gaps Review constantly monitoring
Oakland’s approach to benchmarking
Outline 4 advantages for a supply chain organisation of carrying out an internal benchmarking process?
Fewer problems with confidentiality Easier access to sensitive material Few barriers to implementation of changes Less resistance to change Spreading organisational knowledge Less problems regarding IPR issues Less time and resources required and results More readily accepted Information more compatible with systems
Describe the Total Cost of Ownership (TCO) approach of cost analysis and control?
Total cost of ownership can therefore be defined as an estimate of all direct and indirect costs associated with an asset or acquisition over its entire life cycle. Total cost of ownership concept requires an organisation to map their supply chain and uncover all the points at which cost is added . Typically these can fall into six categories.
Management Delivery Service Communications Price Quality
