Strategic Sourcing

Question 1

Questions

Answer 1

Answers

Question 2

1.1.1 According to the experts what is the definition of strategic sourcing? (p.1)

Answer 2

Strategic sourcing is an organizational procurement and supply management process used to locate, develop, qualify, and employ suppliers that add maximum value to the buyer’s products or services

Question 3

1.1.2 What is the main objective of Strategic Sourcing? (p.1)

Answer 3

To locate and form relationships with those suppliers that best promote the strategic and operational goals of your organization.

Question 4

1.1.3 How can Strategic Sourcing be used as an approach to supply chain management? (p.1)

Answer 4

This approach formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best values in the marketplace

Question 5

1.1.4 Why might you want to limit the amount of suppliers to your Fleet? (p.2)

Answer 5

If this allows you to gain leverage and purchasing power for the procurement of quality vehicles at the best price

Question 6

1.1.5 Describe the traditional P2

Answer 6

Focus: Cost
Approach: Ad Hoc w/ Suppliers
Playing Field: National
Buyers Motives: Shert Term ( Initial cost )
Suppliers Motives: Turnover
Number of Suppliers: Numerous
Relationship: Contract
Risk: Individual
Activities: Standard

Question 7

1.1.5 Describe strategic sourcing. P2

Answer 7

Focus: Competence
Approach: Network
Playing Field: Global
Buyers Motives: Long Term - TCO
Suppliers Motives: Customer
Number of Suppliers: Few
Relationship: Trust
Risk: Shared
Activities: Specific

Question 8

1.2.1 What are the benefits of Strategic Sourcing? (p.2)

Answer 8

Limited number of Suppliers
New opportunities may arise from strategic sourcing

Question 9

1.2.2 How can Strategic Sourcing generate benefits to the Fleet department? (p.3)

Answer 9

Limited vehicle providers may yield a number of benefits including lower prices for paying in bulk.

Question 10

1.2.3 Why is it important to measure Supplier Performance? (p.3)

Answer 10

Having a system to measure supplier performance in these areas can lead to better decisions when it is time to decide between acquiring a new supplier or staying with the current one.

Question 11

1.2.4 How does Strategic Sourcing benefit Suppliers? (p.3)

Answer 11

1. Getting larger purchases and more orders from you,
2. Benefit from improved communication and not having to juggle multiple small contracts with a vast array of customers

Question 12

1.3.1 What Risks are involved with Strategic Sourcing? (p.3)

Answer 12

1. Overpaying for Initial costs
2. When supplier requirements are too strict or narrow.
3. Potential change in Supliers

Question 13

1.3.2 Describe some of the costs involved with Strategic Sourcing. (p.4)

Answer 13

TCO

Question 14

1.3.3 Why is Strategic Sourcing time consuming? (p.4)

Answer 14

because it is more complicated, and requires more knowledgeable and skilled personnel. Also, your organization’s sourcing and purchasing work flows may need to be restructured

Question 15

1.4.1 What are the four steps in the Strategic Sourcing Process? (p.4-5)

Answer 15

1. Understand the Spend category - identify their purchasing and price constraints, the time
2. Assess Potential Suppliers: competent, trustworthy, communicative, that offer deals that are valuable and fairly priced
3. Create a Strategy: Start by identifying how competitive the supplier marketplace is - Ensure that other departments are on board with your supplier choices.
4. Select a Supplier: Negotiate with potential suppliers for a fair dollar value
5. Cultivate Relationships: maintain a positive relationship with them

Question 16

1.4.2 What should your purchasing team do during the first phase of the Strategic Sourcing Process? (p.4)

Answer 16

Identify their purchasing and price constraints & the time and money it takes for the supplier to acquire the assets, as well as the historic purchases in asset categories

Question 17

1.4.3 What do you want in a Strategic Sourcing partner? (p.5)

Answer 17

Competent - Trustworthy - Comunicative - Good Deals

Question 18

1.4.4 How can you create a strategy for Strategic Sourcing? (p.5)

Answer 18

• Start by identifying how competitive the supplier marketplace is. In the marketplace different suppliers may become incumbents in trying to obtain a contract to supply your fleet. By showing suppliers the value in your business, new deals can be made and incumbent suppliers will know the importance of sourcing your fleet.

• Ensure that other departments are on board with your supplier choices. Management and financial officers will be relying on you to find the best price for quality goods. Other managers and employees may be focused on finding suppliers that they can build relationships
with or maintaining positive relationships with current suppliers. In making your sourcing decision both of these factors should come into play.

Question 19

1.4.5 What tool is discussed in order to help select Suppliers? (p.5)

Answer 19

Balanced Scorecard

Question 20

1.5.1 What are Performance Improvement Requirements and how are they used? (p.5)

Answer 20

Performance improvements are crucial to keeping the buying and selling processes a positive experience. Some ways to accomplish this are by improving the cycle time, cost, quality, and delivery performance. This can be done both internally with your fleet and by the suppliers.

Question 21

1.5.2 What type of teams should be created in order to help select suppliers? (p.6)

Answer 21

Teams that will organize, evaluate, select, develop, and manage suppliers
Creating cross-functional sourcing teams to complete different supply chain management tasks will ensure positive collaboration

Question 22

1.5.3 What systems should be developed and how can they help the organization? (p.6)

Answer 22

Purchasing systems
1. Will be a notable increase in the emphasis of links between external systems along with networking between purchasing sites with suppliers.
2. lead to an increase in useful technology and information systems

Question 23

1.5.4 What are team member purchasing responsibilities? (p.6)

Answer 23

Assign members of the team to be points of contact with specific suppliers and to research new potential suppliers.
By clearly identifying the responsibilities involved in the purchasing process you will be sure to see positive results.

Question 24

1.6.1 What is a cross functional sourcing team? (p.7)

Answer 24

Assign members of the team to be points of contact with specific suppliers and to research new potential suppliers.

Question 25

1.6.2 What is the Fleet Managers role in the cross functional sourcing team? (p.7)

Answer 25

The manager’s role will be to oversee this cross functional team in thoroughly examining fleet purchasing activities and supplier selection

Question 26

1.6.3 What is the focus of many purchasing groups and what are the fleet managers’ responsibilities? (p.7)

Answer 26

1. Finding the lowest cost
2. FM responsible for voicing concerns when non-fleet members of the sourcing team focus only on low cost suppliers without taking other fleet-related concerns into mind.

Question 27

1.6.4 What is rightsizing the Fleet? (p.7)

Answer 27

Sourcing vehicles that are appropriate for specific tasks.