sourcing Flashcards

1
Q

what are the responsibilities of a purchasing function

A
  • developing supplier base
  • negotiating and administering long-term contracts
  • monitoring supplier performance
  • placing orders
  • maintaining good supplier relations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is sourcing

A

the process of selecting suppliers to provide goods and services
Important considerations:
- how to choose between suppliers? (availability, cost, quality, speed, reliability)
- one or more suppliers per item?
- partnership with a supplier?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

what is vertical integration

insourcing vs outsourcing

A

measure of how much of the supply is owned or operated by the manufacturer

  • insource: the manufacturer provides products and services in house
  • outsource: the manufacturer pays supplier or third parties for their products or services (manufacturing, warehousing, transportation)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

difference between subcontracting and outsourcing

A
  • outsourcing is a long-term partnership where part of the activities are performed by another company
  • subcontracting is hiring another company to fulfill halft the demand at a higher price becsause you dont have enough capacity to fukfill demand
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

how to decide between outsourcing and insourcing?

A

A product/ service should not be outsourced if its a core competency or it is critical to the company’s success or survival

make or buy decision could be based on:

  • volume (compute indifference point-> how many units we must buy or produce when the total costs are equal)
  • —> if we need exactly the same as the indifferent point, we would be indifferent to buying or making
  • —-> if we need less, we choose lower fixed cos and higher variable cost
  • —–> if we need more, we choose lower variable cost
  • quality and functionality
  • required skills
  • available capital for investment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Kraljik matrix

A
  • portfolio analysis using 4 different sourcing strategies
  • aim is to develop a strategy for specific products you’re buying from different suppliers on how to interact with the suppliers

4 main purchase categories:

  1. leverage items -> significant impact on business activity, abundant supply, targeted pricing strategies/negotiations
  2. strategic items -> business activity depends on these items, natural scarcity, development of long-term relationships
  3. non-critical items -> little impact on business activity, abundant in supply, product standardization, process efficiency
  4. bottleneck items -> low business risk but limited supply, low control of suppliers, production0-based scarcity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

how many suppliers? single or multiple?

A

depends on the supply chain structure

Single-> product quality/ consistency, ease of scheduling deliveries, partnership relation, collaborative product development, quantity discount in some case

Multiple -> probability of assured supply is better, competition may provide better service, greater flexibility of volume, purchasing price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

partnering / ESI

A
developing a long-term relationship with a supplier 
- long term orientation 
- strategic in nature 
- based on a common vision
- sharing of information 
sharing of risk and opportunities 
- sharing of short and long term plans 
- driven by end-customer expectations 

ESI -> early supplier involvement -> critical suppliers are part of cross-functional product design team (Dawn and Olay partnership)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

critical success factors of partnering

A
  • Impact: attaining higher levels of productivity and competitiveness (elimination of duplication and waste, leveraging core competencies, creating new opportunies)
  • Intimcacy -> trust to share all information on sales, operations
  • Vision -> agreement on the goals of the partnership and the role of each partner
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

benefits of partnering

A
Manufacturer: 
reduce costs 
reduce duplication of efforts
improve quality 
reduce lead time 
implement cost reduction program 
involve suppliers earlier 
reduce time to market 
reduce inventory 
Supplier: 
Increase sales volume 
increase customer loyalty 
reduce costs 
improve demand data 
improve proffitability 
reduce inventory
How well did you know this?
1
Not at all
2
3
4
5
Perfectly