Reading lecture 1 Flashcards

1
Q

Purchasing

A

everything a company gets an invoice for

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2
Q

direct purchasing

A

all components bought that will be part of the final product

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3
Q

indirect purchasing

A

all components bought for support activities

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4
Q

ordering

A

placing an order with a supplier and accepting his sales terms and conditions

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5
Q

buying

A

comparing different bids from suppliers and accepting the most attractive one

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6
Q

purchasing

A

asking for different quotations

challenges the specifications of the customer

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7
Q

procurement

A

looks at the acquisition price and total cost of ownership

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8
Q

sourcing

A

choose the best possible supplier for our requirements on a global scale

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9
Q

supply chain management

A

the management of the different parties involved in order to be efficient

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10
Q

value chain management

A

generate and mobilize the expertise of our suppliers to help us deliver better products

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11
Q

how to achieve purchasing excellence

A
  • strategic management processes
  • enabling processes
    they have to be performed in a balance
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12
Q

strategic management processes

A
  • insourcing/outsourcing
  • develop commodity strategies
  • establish a world class supply base
  • supplier relationships
  • integrate suppliers in new product development processes
  • integrate suppliers in order fulfillment processes
  • supplier development and quality management
  • manage costs across the SC
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13
Q

enabling processes

A
  • establish globally integrated supply chain strategies
  • develop organization and teaming strategies
  • deploy globalization
  • develop purchasing and supply chain measurements
  • develop and implement enabling IT systems
  • establish HR development and training
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14
Q

procurement maturity

A
  • it broadly refers to achieving the organizations goals
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15
Q

objectives of PSM

A
  • rationalization
  • development
  • structure
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16
Q

rationalization

A
  • related to efficiency

- optimal price for the products and services that you require

17
Q

development

A
  • has to do with innovation

- how to work together with suppliers in order to innovate processes and final products

18
Q

structure

A

balancing dependence with suppliers

19
Q

purchasing strategy

A

the goals, objectives, and strategies of the PSM function

20
Q

two key drivers of PSM

A
  • purchasing importance

- complexity of supply market

21
Q

Kraljic elaborated purchasing maturity development model

A
  • organizations have to develop from left to right because it increases the maturity and cumulative savings and overall value contribution to the organization
  • if you want to change the organization you need to go to the back stages of the maturity
22
Q

drivers of PSM maturity

A
  • competition in end user markets
  • economic financial crises
  • changes in supply market structure
  • speed of technology developments
  • corporate strategic intent-
  • changes in management and organizations
23
Q

importance of purchasing

A
  • cost of materials
  • value added profile
  • profitability profile
24
Q

complexity of the supply market

A
  • monopoly/oligopoly
  • pace of technological advance
  • entry barriers
  • logistics costs
25
Q

shaping the supply strategy: the four stage approach

A
  • classification
  • market analysis
  • strategic positioning
  • action plans
26
Q

classification

A

sorting items on different categories:

  • strategic items
  • bottleneck items
  • leverage items
  • noncritical items
27
Q

strategic items

A

high profit impact, high supply risk

28
Q

bottleneck items

A

low profit impact, high supply risk

29
Q

leverage items

A

high profit impact, low supply risk

30
Q

noncritical items

A

low profit impact, low supply risk

31
Q

market analysis

A
  • companies weight the bargaining power of suppliers with its own strength
  • supplier capacity utilization indicates the risk of bottlenecks
32
Q

strategic positioning

A
  • high company strength, low supply market strength –> exploit
  • medium company strength, medium supply strength –> balance
  • low company strength, and high supply market strength –> diversify
33
Q

action plans

A

see photo in notes

34
Q

strengthening the organization

A
  • effective relations
  • systems support
  • staff and skills requirement
35
Q

effective relations

A
  • purchasing function must reflect the corporate setup
  • ## centralization increases the purchasing clout but it decreases flexibility
36
Q

systems support

A
  • purchasing departments need proper data on business plans and objective for prices, rescheduling supply quantities, and balancing raw materials inventory
  • improve systems support allow to focus on long term analytic work and planning
37
Q

staff and skills requirements

A

companies must upgrade the skills and experience it requires from key purchasing people

38
Q

the 6 step purchasing process

A
  • define specifications
  • select supplier
  • contract supplier
  • order
  • expedite and monitor
  • follow up and evaluate