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Introduction To Supply Chain Management > Week 5&6 - Purchasing And Global Logistics Supply Chain Management > Flashcards

Week 5&6 - Purchasing And Global Logistics Supply Chain Management Flashcards

1
Q

What is offshoring?

A

Offshoring involves moving business operations oversees (far distance)

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2
Q

Ways of entering international markets (4)

A
  • License
  • Export
  • Local Packaging / assembly
  • Foreign direct investment
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3
Q

What is newshoring?

A

Involves moving business operations overseas but not far e.g USA to Mexico

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4
Q

Globalisation trade offs (4)

A
  • production costs decrease the more global you are
  • Transport costs more the more global you are
  • The more global you are the raw materials are slightly cheaper
  • Risk & environmental harm will increase with increased globalisation
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5
Q

Three global logistics strategies

A
  • Focused factory
  • Centralised inventories
  • Postponement
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6
Q

What is focused factories? - global logistics strategies (4)

A
  • Focus each plant on a limited concise, manageable set of products technologies, volumes and markets
  • Structure basic manufacturing policies and supporting services so that they focus on one explicit manufacturing task instead of on many inconsistent, conflicting and implicit tasks
  • Global/regional distribution
  • E.g Heinz ketchup, Ryanair
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7
Q

What are centralised inventories? - logistics strategies (3)

A
  • Centralise inventories in distribution centres or regional distribution centres
  • Helps to rationalise distribution
  • Helps to focus training ultimately allowing businesses to cut costs
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8
Q

What is postponement? - logistics strategy

A
  • Customised components in a product are completed last and largest portion is standardised as a result allowing to cut costs
  • e.g printers
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9
Q

What are the major driving forces for globalisation? (4)

A
  • Market drivers
  • Technology forces
  • Cost drivers
  • Political/economic drivers
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10
Q

What are the two main market drivers? - driving forces for globalisation?

A
  • Changes in global markets

* Changes in product proliferation

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11
Q

Features of changes in global markets being a market driver (4)

A
  • increased foreign competition
  • growth in foreign demand
  • shorter product lives, more customisation and faster response
  • variety of products have increased dramatically
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12
Q

Feature of product proliferation being market drivers (5)

A
  • Greater variety of products
  • Different products for different markets
  • Difficulties in forecasting demand
  • More complex manufacturing facilities
  • Marketing, warehousing, distribution
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13
Q

Where do we have globalisation? (4)

A
  • Purchasing/sourcing
  • Production - products made all over the globe
  • Marketing/selling
  • Outsourcing - e.g call centres in Asia
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14
Q

Main causes for globalisation (5)

A
  • Cheaper transportation around the world
  • Trade of goods and services
  • Global capital flows (new market segments)
  • Migration of people
  • Product design
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15
Q

What is the SCOR framework? (3)

A
  • Has 3 main components which are source, make and deliver
  • These three components are related to the supplier, the company and the customer
  • Supply network - there are multi tier suppliers when sourcing a product
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16
Q

What is purchasing? (Bailey, farmer, Jessie and Jones, 2005)

A

Is the ability to purchase the right quality of material, at the right time, in the right quantity, from the right source, at the right time

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17
Q

Why do we need purchasing management? (2)

A
  • To ensure we have enough stock to not only satisfy and meet customer demand but also minimise wastage or have no waste at all
  • Ensure that we are getting a good price from suppliers - which can be determined by supplier scouting/selection costs, supplier negotiation costs, transportation costs, supplier monitoring and development costs
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18
Q

What is a direct buy?

A

Are things that go specifically into a product such as materials

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19
Q

What is an indirect buy?

A

Are things that don’t go directly into the product itself but are things that are bought such as advertising, labour and machinery costs

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20
Q

What are the 8 stages of the procurement/purchasing process?

A

1 - Internal customer

2 - Specify

3 - Select supplier

4 - Contract

5 - Order

6 - Expedite

7 - Vendor rating

8 - Supplier

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21
Q

1- Internal customer: Stages of the procurement process

A

Identify what is needed for each department which is given to purchasing department

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22
Q

2 - Specify: Stages of the procurement process

A

Purchasing department asks for specifications on what product is needed internally and how much of it is needed

23
Q

3 - Select supplier : Stages of the procurement process (2)

A
  • Very time consuming due to importance
  • Involves scouting, identifying the criteria to make sure the supplier is going to help the business meet its objectives
24
Q

4 - Contract : Stages of the procurement process

A

Negotiation stage to receive the best offer

25
Q

5 - order : Stages of the procurement process

A

Place an order from suppliers

26
Q

6 - Expedite : Stages of the procurement process

A

Tracking your order making sure it arrives on time

27
Q

7 - Vendor rating : Stages of the procurement process

A

Rating suppliers based on performance and identify who was the best

28
Q

8 - Supplier:Stages of the procurement process

A

Managing relationship with supplier through identifying and criticising their capabilities - may involve risk assessment

29
Q

When does purchasing, sourcing, buying and supply occur in the procurement/purchasing process?

A
  • Purchasing occurs from specify to vendor rating
  • Sourcing is from select supplier to contract
  • Supply is from order to vendor rating
  • Buying is from select supplier to vendor rating
30
Q

What is the main difference between purchasing and buying?

A

Purchasing is specific and identifying what is needed then buying occurs once it has been identified

31
Q

6 Stages of the purchasing process

A

1 - Specifying

2 - Selecting

3 - Contracting

4 - Ordering

5 - Expediting

6 - Evaluating

32
Q

What is modified re-purchase? (2)

A
  • Occurs from the contracting to evaluations stage of the purchasing process
  • Contract may change for a number of reasons such as changes in demand, behaviour of suppliers etc
33
Q

What is straight re-purchasing? (2)

A
  • Occurs from the ordering to evaluation stages of the purchasing process
  • Occurs when stock runs out and company needs more
34
Q

Relationship between the type of purchase, newness and the risk & uncertainty (3)

A
  • Straight re-purchase: has a low newness and therefore has a low risk & uncertainty
  • Modified re-purchase: had medium newness and therefore has a medium risk & uncertainty
  • New purchase: has a high newness and therefore has a high risk & uncertainty
35
Q

1 - Specify: Stages of the purchasing process (5)

A
  • Qualtity: technical standards, norms, certificates etc
  • Logistics: qualities and delivery times
  • Maintenance
  • Legal/environment: health, safety, environmental and ethical
  • Target budget: financial constraints
36
Q

Types of purchasing specifications (2)

A
  • Functional

* Detailed

37
Q

What are functional specifications? (3)

A
  • Provide an overall global specification
  • Leaves details to suppliers
  • Encourage supplier innovation
38
Q

What are detailed specifications? (2)

A
  • They specify the product/service with no ambiguity

* Discourages supplier information but avoids misunderstanding

39
Q

2 - Supplier selection : Stages of the purchasing process (6)

A
  • Scout the supply market
  • RFI: request for information
  • RFP: request for proposal
  • RFQ: request for quotations
  • E - Auction/negotiation
  • Suppliers become supply base
40
Q

3 - Contract - what is included? : Stages of the purchasing process (5)

A
  • Prices and terms of delivery
  • Terms of payment
  • Penalty clauses
  • Warranty conditions
  • Indirect costs
41
Q

What are the two main types of contracts?

A
  • Performance-based contracts (PBCs)

* Service legal agreements

42
Q

Features of performance-based contract (3)

A
  • Less prescriptive allowing for more freedom and flexibility regarding specific details of the transaction relevant to the contract
  • Allows suppliers a certain degree of autonomy which can in turn faster innovation
  • PBCs underline the outcome of the transaction rather than prescribing how (processes) to deliver it or which resources to use
43
Q

Feature of service level agreements (5)

A
  • Basic contract: goal, date, period, parties service definition
  • specification: coverage and levels of service (no of working days, peal workloads, availability etc. Actual service inputs and outputs man power and other resources available)
  • Reaction times
  • Precision
  • Availability (for problem solving)
44
Q

4 - Order : Stages of the purchasing process (2)

A
  • Generated through MRP (Material requirement planning) / ERP (enterprise resource planning) e,g SAP (electronic order)
  • Clear instruction (order number, product service description, unit price, quantity, delivery date and address)
45
Q

5 - Expedite : Stages of the purchasing process (2)

A

• Types of expediting:

  • traditionally based on buyer’s status assessment
  • collaboration with suppliers (VMI)

• Acceptance test: checking deliveries against orders

46
Q

6 - Evaluate : Stages of the purchasing process (6)

A
  • Investigate only warranty issues and penalties e.g late delivery
  • Document and maintain order records
  • Develop and update vendor (supplier) rating: ranking supplier performance on cost, quality and delivery
  • Evaluation feeds into next supplier selection round I.e who becomes ‘preferred’ suppliers
  • On-going monitoring and auditioning
  • Supplier development programmes
47
Q

What is the role of the buyer/procurement manager? (2)

A
  • Create an appropriate level of competition to manage the level of risk and value that the business faces when sourcing or procuring goods, services or works
  • Manage a portfolio of contracts or category of spend with similar characteristics that can be grouped and considered in strategic terms in relationship to supplying across different business units or parts of an organisation
48
Q

What is strategic sourcing?

A

Refers to the process of identifying the spend profile of an organisation and its suppliers to ensure their business requirements are aligned with the suppliers

49
Q

Strategic decisions in sourcing

A
  • Commodity/category strategy (critically, risk and opportunity)
  • Make vs buy (making refers to raw materials and buy is finished products)
50
Q

Strategic supplier selection (2)

A
  • Relationship management (partnerships, arm’s length)

* Supply base rationalism (spend optimisation)

51
Q

Features of single sourcing (3)

A
  • Fulfilment of all corporate requirements for a particular product by one selected supplier
  • High risk due to high degree of buyer-supplier dependency
  • Enables economies of scale and reduces transaction costs
52
Q

Features of multi-sourcing (4)

A
  • Use of several suppliers for buying the same or very similar products or services
  • Avoids dependency on any single supplier therefore spreading risk
  • Creates competition by playing off suppliers against each other
  • Focus on getting the best deal: low prices e.g Airbnb
53
Q

What is parallel/dual sourcing?

A

Is where you have two suppliers and is less risky than single sourcing e.g Boeing and airbus

54
Q

Features of Kraljic portfolio model: (4)

  • Supply risk/complexity
  • Importance of purchase/impact on profit
A
  • Bottleneck: high supply risk/complexity and low importance of purchase/impact on profit e.g recycled textiles
  • Non-critical: low supply risk/complexity and low importance of purchase/impact on profit e.g stationary, bolts, screws
  • Strategic: high supply risk/complexity and high importance of purchase/impact on proft e.g engines, major subsystems
  • Leverage: low supply risk/complexity and high importance of purchase/impact on profit e.g

Introduction To Supply Chain Management (7 decks)

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