Chapter 11 SCMT 335
Average Accounts Payable Period= ?****
(Accounts Payable/Purchases) * 365
Average Collection Period = ? ***
(Accounts Receivable/Sales) * 365
Responsibility for Source Selection: Who normally has the final say when determining who to source products from?
A company's purchasing department, however in highly technical products, a company's engineers will sometimes pick suppliers.
Receivable to Sales = ? ***
Accounts Receivable/ Sales
Management means ___ management and not ___ management.
Active, Passive
Appendix B pg268 ****
Appendix B pg268 ****
Conditions Demanding Negotiation: As a general rule, competitive bidding assumes that products are equal between supplier and the only differentiator between suppliers is ___. The supplier with the __ price normally gets the job. However, in the oil and gas industry, companies value safety and reliability from suppliers, so price is not always the only differentiator in competitive bidding.
Price, Lowest
World class Supply Management requires supply management to develop a _____ ____ ____ that details how supply management will discover, evaluate, select, develop, and manage a viable supplier base. ***
Strategic Souring Plan
A higher Cp means more ____ requirements.
Stringent
Bidding Vs. Negotiation: The time available for a job to be undertaken must be ____. Sometimes companies need the job to be taken as soon as possible, however the competitive bidding process is not an immediate process and the process takes time.
Sufficient
Customers can set the UT(Upper Tolerance) and the LT (Lower Tolerance) for a process control chart. UT and LTs are set by the customer while UCL and LCL would be set by a ___ to ensure if a process is statistically effective.
Supplier
The gross margin percentage measures the gross profit earned on each dollar of sales. Thus, this ratio may be used to inter the typical markup percentage used by a _____. ***
Supplier
What are the potential methods to Evaluate potential suppliers? *** (Do not memorize this entire list)
Supplier Surveys, Financial Condition Analysis, Third-Party Evaluators, Evaluation Conference, Facility Visits, Quality Capability Analysis, Capacity Capability Analysis, Management Capability Analysis, Service Capability Analysis, Flexibility Capability Analysis, and Information Technology Capability Analysis
What are the various ways that you can Discover suppliers? ***(don't need to memorize all of these)
Supplier WebSites, Supplier Information Files, Supplier Catalogs, Trade Registers & Directories, Trade Journals, Phone Directories, Filing of Mailing Pieces, Sales Personnel, Trade Shows, Company Personnel, Other Supply Management Departments, and Professional Organizations.
Supplier Websites would be like a ___ actual website. Supplier websites are actually operated by suppliers.
Supplier's
Company Personnel: Personnel from other departments in a supply managers firms often can provide supply management with helpful information about prospective suppliers. Through their associations in professional organizations, civic associations, and social groups, these employees often learn about outstanding ____.
Suppliers
Other Supply Management Departments: Supply management departments in other firms can be helpful sources of information about ____. Information exchanged among individuals from these departments can be mutually beneficial for all the participating companies; therefore, this source of information should be developed actively.
Suppliers
Supplier Catalogs are pretty much just catalogs that house information over _____ .
Suppliers
Professional Organizations: Local supply chain management organizations such as The Institute of Supply Management tend to be a great way for members to locate and evaluate new source of ____.
Supply
Sometimes reverse bidding is ____, which means allows multiple times to bid, and sometimes reverse bidding is ____ , which means only one chance to bid (give best price and drives down the bid).
Synchronous, Asynchronous
Development of a strategic souring plan is driven by the recognition that ____ sourcing will not succeed in developing a supply base that will yield the benefits of collaborative relationships and alliances.
Tactical
What arguments favor dual sourcing? (ESSAY QUESTION) ***
The arguments that favor dual sourcing would be the benefits that companies can achieve by using the "70-30" approach. With this approach, one supplier is awarded 70 percent of a buyer's volume, while a second supplier is awarded the other 30 percent of the buyer's volume. Through this system, a buyer can obtain economies of scale through the "big buyer", while the "little supplier" will provide competition. Additionally, another benefit would be that whenever a "big supplier" fails to perform, the percentages may be reversed from the "big supplier" to the "little supplier".
Sales Personnel are excellent source of information about suppliers and materials. Not only are they usually well informed about the capabilities and features of their own products, they are also familiar with similar and competitive products. Because of their specialized knowledge, salespeople often can suggest new _____ for their products which will eliminate the need to search for new suppliers.
Applications
An ____ is when someone has a product that they want to sell, and they say what the minimum price to sell their product will be and they say when the closing date for selling this product will be. Ebay is an _____.
Auction, Auction
A process control chart tells you what is happening in a process. It will tell you how off your process is on ___.
Average
ESI: If you involve your suppliers early in your product development process, this gives your suppliers a feeling of ownership over your product, and you have your suppliers share some of the ____ if something were to go wrong.
Blame
What is another word for standard terms and conditions?
Boilerplate
Service Capability Analysis: This would be like asking does a supplier provide prompt/quality services if one of our machines that we utilize goes down. You want to find and use suppliers that offer quick/quality services if we as a ___ might need them.
Buyer
The quick ratio is a standardized measure of liquidity in which only assets can be converted to ____ quickly (e.g. cash, accounts receivable, and marketable securities) are included in this calculation. ***
Cash
Evaluation Conference: For an extremely ___ purchase, a supplier evaluation conference is held at the supply manager's plant to discuss the purchase. From such a discussion, it is usually easy to differentiate among suppliers who understand the complexities of the purchase and these who do not. When those who do not are eliminated, the search for the right supplier is narrowed further.
Critical
Working Capital =? ***
Current Assets - Current Liabilities
Current Ratio = ? ***
Current Assets/ Current Liabilities
Financial Condition Analysis: Preliminary investigation into a supplier's financial condition often can prevent the expense of further study. A qualified supply manager or professional from the ___department often conducts these investigations. A review of financial statements and credit ratings can reveal whether a supplier is clearly incapable of performing satisfactorily. Financial stability is essential for suppliers to assure continuity of supply and reliability of product quality.
Finance
Supplier Base Reduction: John Deere cited that the increased leverage that they gained with suppliers by utilizing supplier base reduction resulted primarily from the increased volume of business with a supplier, which builds ___ and ____. ****
GoodWill, Trust
Gross PM = ? ***
Gross Margin/ Sales
I do not need to worry about "Green" Supply Management.
I do not need to worry about "Green" Supply Management.
Weighted Factor Analysis is really just determining various factors that you are going to judge potential suppliers on. After determining the various factors that you are going to judge potential suppliers on, then you develop weights for each of the factors. The weights that you develop should be weighed based on your company's interpretation of the ____ of a certain factor. After doing all this, you add up all of the scores for each supplier and determine which supplier had the highest total score.
Importance
70-30 Approach: When the "big supplier" fails to perform in a 70-30 approach, the "big suppliers volume may be reduced, and the smaller supplier is awarded an ____ in sales volume. ***
Increase
Third-Party Evaluators: ____ third-party firms can be hired to conduct many of the analyses listed in this section.
Independent
Trade Journals are really just like industry specific or job specific _____. For example, a supply manager in the aircraft industry would read Aviation Week. There are various advertisements in trade journals for potential suppliers.
Magazines
Filing of Mail Pieces is when supply managers save ____ advertisements and file them away. The ads kept by supply managers should be given a file number, dated, and indexed by name and the number of each publication.
Local, National, and International Sourcing: A ___ ___ is a source headquartered within the country and has facilities in multiple regions of the country. These sourcing have operations and facilities in multiple regions of the country that they are headquartered in. ____ ____ tend to be larger companies than _____ ____. ****
National Source, National Sources, Local Sources
UCL= ____
X(double bar) + [A*(subscript 2)(Rbar)]
LCL=
X(double bar) - [A*(subscript 2)(Rbar)]
The mean is symbolized by?
Xbar
What are the the 6 ways to Select suppliers? ****
1.) Bidding Versus Negotiation, 2.) Reverse Auctions, 3.) Two-Step Bidding/Negotiation, 4.) The Solicitation, 5.) Weighted-Factor Analysis, 6.) Responsibility for Source Selection
Bidding Vs. Negotiation: You need to adequately describe your products in your ____ when you are conducting competitive bidding.
Specifications
Managing Suppliers: If suppliers are unlikely to meet a firm's future requirements, the firm may do what three things? ****
1.) Assist with financing/technological assistance with their supplier, 2.) Develop new sources of supply , 3.) Be required to develop the capability (that used to be done by a supplier) internally
What are the seven advantages to local buying? ****
1.) Closer cooperations between the buyer and seller is possible (You can get your variable lead time to be smaller since your supplier is located in close proximity), 2.)Delivery Dates are more Certain (Since transportation is only a minor factory in delivery), 3.) Lower prices can result from consolidated transportation and insurance ( A local supplier in effect brings in many local buying firm's orders in the same shipment), 4.) Shorter Lead times reduce inventory (AKA: The seller is able to produce JIT since they are located locally), 5.) Rush Orders are filled faster (Since suppliers are closer, you can get your inventory faster), 6.) Disputes are more easily resolved, 7.) Implied social responsibilities to the community are fulfilled
What are the two measures of Long-Term Financial Strength? ****
1.) Debt to Equity Ratio, 2.) Times Interest Earned
What are the four steps to developing a Weighted Factor Analysis? ****
1.) Develop factors to serve as criteria, 2.) Develop sub-factors or performance factors, 3.) Develop a scoring factor (like will all scores be between 0-5 or 0-10), 4.) Score or evaluate the supplier
What are the five Strategic Sourcing Plan Stages? ***
1.) Discovery, 2.) Evaluation, 3.) Selection, 4.) Development, 5.) Management
Bidding Vs. Negotiation:What are the five prerequisites to competitive bidding? *** (ESSAY QUESTION)
1.) Dollar volume must be large (The dollar volume of a specific purchase must be large enough to justify the expense, to both the buying and selling firms, that accompanies this method of source section) , 2.) Specifications must be clear(The specifications must be extremely clear, so that there is no confusion regarding any aspect of the contract or the product to be produced), 3.) Market must consist of an adequate number of sellers (Ideally, a competitive bidding process will result in 3-8 potential suppliers, so in general there should be at least 3 potential suppliers to warrant a buying firm to participate in the competitive bidding process), 4.) Seller must be qualified and want the contract (A Supplier must be qualified to produce the product in a contract and actually want to produce the product in a contract), 5.) Time available must be sufficient ( The competitive bidding process requires a large amount of time because suppliers(for large contracts) need time to obtain and evaluate bids from their subcontractors before they can calculate their best price for a contract. Thirty days is not an uncommon amount of time for a price response from a large supplier on a large contract)
What are the four National Buying Advantages?****
1.) Economies of Scale(serve the general population and have a better economy of scale than local suppliers in some instances), 2.) Superior Technical Assistance (Better technology than local firms) , 3.) Better handling of fluctuating demand (National sources have multiple locations to deal/assist with demand fluctuations), 4.) Shortages are less likely
Manufacturer or Distributor: What are the seven potential benefits of a Distributor over buying direct from a Manufacturer? ***** (ESSAY QUESTION, Koufteros wants 7 reasons)
1.) Economy of Scale(Distributors are able to purchase materials(like steel) from manufacturers at lower prices than an individual buyer, because distributors purchase these commodities in mass quantities, while buyer usually only want smaller quantities. Therefore, if we purchase from a distributor, we will be able to experience their economies of scale and thus lower prices), 2.) Reduction of Orders (Since distributors sell a variety of products, a buyer can buy various products from one distributor instead of having to purchase multiple products from various manufacturers), 3.) Reduction of Paperwork (Dealing with one distributor encounters less paperwork than dealing with many manufacturers for a variety of needed products) , 4.) Special Services ( Sometimes a distributor will do some light assembly for a buyer while a manufacturer will not), 5.) Technical Advice (Distributors can sometimes offer technical advice over an array of products while manufacturers can only offer technical advice over one product), 6.) Credit (Distributors can offer credit for their products, so you do not have to pay for the product immediately as you would have to with most manufacturers) 7.) Availability (Distributors will tend to have more products available in a short amount of time than a manufacturer would)
Minority-And Women-Owned Business Enterprises: Many forces motivate a buying firm to ensure that MWBE businesses receive a share of the firm's business, such as what seven things? ****
1.) Federal And State Legislation (EX: LM has to abide by federal laws/regulations), 2.) Set-aside quotas in government appropriations, 3.) Actions of Regulatory bodies (such as state public utilities commissions, and chambers of commerce), 4.) Firm's "corporate social consciousness" 5.) Customer base includes MWBE businesses and their employees, 6.) Bottom-line profitability, 7.) Good business sense (Sometimes companies buy from MWBE because they are the best business option for the company to utilize to source products)
ESI: What are the four reasons for utilizing ESI? ****
1.) Get supplier inputs before the deign is frozen, 2.) Capitalize on the latest technology, 3.) Save time since design cycles are getting shorter, 4.) Let the supplier know that they are part of your team
Considerations for Single Sourcing: What are the 11 considerations for using a single supplier over multiple suppliers? **** (ESSAY QUESTION) (only need to know eight for essay)
1.) Have lower total costs resulting from a higher volume (if you give your supplier more volume, then you can spread for FC over more units and it will drive costs down), 2.)Quality Considerations Dictate (May be be the only supplier who will meet the quality that you need), 3.) Buyer obtains more influence with supplier (More leverage as a buyer because you are important to the supplier (since you get so much of their business)), 4.) Lower costs to source, process, expedite, and inspect ( Everything comes from one supplier (one PO) and can conciliate the volume of units shipped and use FTL instead of LTL), 5.) Just-In-Time Requirements ( EX: Toyota, if you give them enough business, they'll locate near you--> use volume as a gravitational force), 6.) Significantly lower freight cots may result (consolidate shipping costs by using FTL instead of LTL), 7.) Special Tooling is required (Having to pay to create for special tooling for more than one supplier is not feasible, so you only pay for one supplier), 8.) Total system inventory will be reduced ( if inventory is stocked in a single location, then it is cheaper), 9.) Supplier will have an improved commitment(Large volume with one supplier will improve their commitment), 10.) Improved interdependency and risk sharing result (Since you use them as a single supplier, they are more willing to work with you and share some of your risks), and 11.) Time to market is critical (Since they are your only supplier, they will be more likely to help you expedite and reduce your time to market for your products rather than if you used multiple sources)
Conditions Demanding Negotiation: What are the four conditions that demand a company utilize negotiations instead of competitive bidding? (ESSAY QUESTION) ***
1.) Impossible to estimate costs with a high degree of certainty (These situations are common for high-technology requirements, with items that require a long time to develop and produce, and under conditions of economic uncertainty), 2.) Price is not the only important variable (For example if quality, schedule, and service are huge aspects that a buyer is looking for in a supplier, then it may be better for the buyer to employ negotiations), 3.) Purchasing firm anticipates a need to make changes in the specification(If a buyer is going to need to constantly change their specifications for a product, then it may be best for the buyer to employ negations), 4.) Special tooling of setup costs are major factors (If there are large setup costs involved with a contract , then the allocation and title of the special tooling that is required would best be done under negotiations instead of competitive bidding.)
Supplier Base Reduction: What are two benefits of supply base reduction that were cited by John Deere? ****
1.) Increased leverage with suppliers, 2.) Better focus on and supplier integration in product development
What are the four profitability ratios? ***
1.) Profit Margin, 2.) Gross Profit Margin, 3.) Return on Assets, 4.) Return on Equity
Considerations for using Multiple Sources over a Single Source: What are the considerations for using multiple sources over a single source? ***(ESSAY Question, need to only know six of the factors)
1.) Protect the buyer during bad times (protect buyer during times of shortages, strikes, and other emergencies), 2.)Maintain Competition (Sometimes if there is one supplier, they may become competent, so competition keeps supplier's on their toes on trying to please you), 3.) Provide a back-up source( if something happens to one supplier, then you have another supplier to rely upon with multiple suppliers instead of a single supplier), 4.) Meet local content requirements for international manufacturing locations ( EX: To be called a Chinese phone, 50% of the phone's parts must come from China), 5.) Meet Customer's Volume Requirements (one or two suppliers alone can't meet a large company's demand on their own), 6.) When a customer is a small player in the market for a specific item (These means that the buyer doesn't have any leverage with a single supplier, so they engage with multiple suppliers to try and find the best deal/value for their company), 7.) Avoid complacency on the part of the supplier ( Don't let your supplier think that they are your only options, EX: Honda makes some certain parts themselves and maintains some capabilities, so suppliers know that they are not Honda's only option. This causes suppliers to stay on their toes and continuously try to please Honda), 8.) When the technology path is uncertain ( You don't want to put all of your eggs in one basket in the hopes that one supplier will take you the furthest in new technology; you should bet on multiple suppliers), 9.) Supplier's tend to "leapfrog" in technology (Leapfrog - skips generation and are more innovative technology, this means that some suppliers may not have the most up to date tech, but some suppliers will due to their more recent leapfrog. Buyers want to have multiple sources over a single source so that they can get the latest technology from their suppliers)
What are the six funds management ratios? ***
1.) Receivable to Sales, 2.) Average collection period, 3.) Average accounts payable period, 4.) Inventory turnover, 5.) Average days in Inventory, 6.) Fixed Assets Turnover
What are the six reasons not to engage in Reciprocity? *****
1.) Reciprocity doesn't follow sound principles of buying and selling, 2.) Companies may relax their competitive efforts as a result of reduced competition, 3.) Sales departments may develop a false sense of security, 4.) New customers may be hard to find because pre-established relationships with competitors, 5.) Company reputations may be impaired because of bad publicity, 6.) Conspiracy and restraint-of-trade situations can develop, with their attendant legal dangers (very few reciprocity cases are brought to court)
What are the two steps of Two-Step Bidding/Negotiations? ***
1.) Technical Proposals (IFBs for Step 2 are sent only to those sellers who submitted acceptable technical proposals. 2.) Price Bidding
Even if all of the prerequisites for competitive bidding are met. What are two additional arguments that favor negotiations over competitive bidding? ***
1.) The negotiation process is far more likely to lead to a complete understanding of all issues of the procurement, 2.) Competitive bidding tends to result in sacrifices in product quality, development efforts, and other vital services due to the pressure that is put on suppliers to offer the lowest cost for the RFP.
What are the 3 liquidity measures? **
1.) Working Capital, 2.) Current Ratio, 3.) Quick Ratio
Share of Supplier's Capacity: Many firms try not to exceed more than ___ to ___ of any one suppliers capacity. This issue became all too real in the early 2000s. Many companies cancelled orders that had ____ supplier lead times, which resulted in suppliers being caught with, in some cases, hundreds of millions of dollars of work-in-process. ****
15,25, Long
Local, National, and International Sourcing: The lines between local, national, and international sourcing have become blurred in the last ___ years. ****
30
Average Days in Inventory = ? ***
365/Inventory Turnover
Minority-And Women-Owned Business Enterprises: In Texas, government contractors do not have to use MWBE businesses unless their contract is over ______ dollars, and private businesses do not have to use them, however sometimes they do as a courtesy.
5,000
Bidding Vs. Negotiation: About ___/10 suppliers actually respond to a buyer's RFI or RFP to engage in the competitive bidding process.
6
There are at least ___ aspects of quality.
8
Concluding Remarks: The increase in long-term collaborative relationships is highlighting the need to develop strategic sourcing plans. The plan aids in source selection by detailing how suppliers will be discovered, evaluated, selected, developed, and managed. The plan should be developed in a ___ environment that includes all relevant functional area representatives and supply chain members. ****
Collaborative
Developing Suppliers: Development of suppliers one of the greatest untapped frontiers in supply chain management. Even suppliers recognized as the "best of the best" require investment on the part of the buying firm to realize the full benefit of the ____ effort. ***
Collaborative
Reverse auctions are typically used for ____ products, and Reverse auctions are very impersonal because they are done over the ____.
Commodity, Internet
Bidding Vs. Negotiation: The more standardized a product that you are going that you are going to be buying, then you should use ___ ____. If you are going to be buying a new, unique product , then you should use _____.
Competitive Bidding, Negotiations
Two -Step Bidding/Negotiation is seen in very ____ situations.
Complex
Ethical Considerations: A ____ ___ ___ exists when supply managers must divide their loyalty between the firm which employs them and another firm. Such conflicts always should be avoided in all source section decisions. Companies can help to maintain an ethical work environment by having an ______ _____ with checks and balances. ***
Conflict of Interest, Ethical Infrastructure
Information Technology Capability Analysis: This would be like asking the question is this suppliers technology platform able to "connect" with our technology platform. If a supplier's technology platform cannot connect with a buyer's technology platform, then usually that suppler usually will not even be ____ to be used a supplier for the buyer.
Considered
In contrast to competitive bidding, reverse auctions produce "real-time" interaction. Though effective ____ _____ come from reverse auctions, reverse auctions are not appropriate for all situations. Reverse bid processes can have an ____ effect on long-term relationships. ***
Cost Savings, Adverse
Inventory Turnover = ? ****
Cost of goods sold/ Average Inventory
Process Capability ratio is symbolized by?
Cp
ESI: For a new product, the most ____ suppliers are the most critical to involve as soon as possible.
Critical
Reciprocity: Reciprocity exists when supply managers give preference to suppliers that are also _____. This practice can be illegal, and the line between legal and illegal reciprocal practices frequently is very thin. It is entirely legal to buy from one's customers at fair market prices, without economic threatened without the intent of restricting completion. Reciprocity can become illegal when the activity restricts ____ and ____. *****
Customers, Competition, Trade
If your suppliers take on a ton of debt, your company will be taking these ____ on as well.
Debts
Capacity Capability Analysis: You need to know your suppliers true capacities. You need to know if they are able to support your ____. You should not just takes a supplier's word that they have the capacity to meet your ___, you need to verify that they do have an acceptable capacity.
Demand, Demand
Right after visiting a supplier facility, you need to ____ your experience before you forget anything.
Document
What are some examples of additional strategic issues that buyers encounter when selecting sources of supply? *** (Do not memorize this entire list)
Early Supplier Involvement, Supply Base Reduction, Single Versus Multiple Sourcing, Share of Supplier's Capacity, Local, National, and International Sourcing, Manufacturer or Distributor, "Green" Supply Management, Minority-And Women-Owned Businesses, Ethical Considerations, Reciprocity
Facility Visits: By visiting a supplier's facility, a sourcing team can obtain firsthand information about the adequacy of a firm's technological capabilities, its manufacturing or distribution capabilities, and its management's. technical know-how and orientation. Depending on the importance of the visit, the company may send representatives form only supply management and ____ , or it may include some combination of representation from those functions and finance, operations, quality assurance, marketing, and industrial relations.
Engineering
UCL and LCL are created based on the history of your processes. These are developed though an ____ that you use, and they are not just a random guess.
Equation
Bidding Vs. Negotiation: Suppliers must be qualified and want the contract in order to be able to engage in a buyer's competitive bidding process. You don't have to invite ____ supplier in an industry for your competitive bidding process. If you have a super small volume, then a company may not even want to even bid on your contract for a small volume of products. It may not be worth it to engage in a contract with you for such a small volume(it could cost more to create the contract for the supplier than for the actual profits that the suppliers may realize from producing the product.)
Every
ROP=?
Expected demand during LT + SS ( Sufficient to satisfy demand of LT)
Supplier Information Files would be like a company's ____ database on supplier. These files would include the name of a supplier, a list of materials that a supplier offers, a supplier's delivery history, a supplier's quality record, a supplier's overall desirability, and general information about a supplier's plant and management. This information tends to be kept on past and present suppliers that a company either has used or is currently using.
Internal.
Local, National, and International Sourcing: An ____ _____ is a source that is headquartered outside of a buying firm's country, but this does not define the location of the firm's operations. For example, the firm can be headquartered in Singapore, but they could have no operations in Singapore. ****
International Source
The Solicitation: Once it has been decided whether to use competitive bidding or negotiation as the means of selecting the source, an ___ ___ ___(IFB) or a ___ ____ ___ (RFP) is prepared. The IFB or RFP normally consists of a purchase description of the time or service required, information on quantities, required delivery schedules, special terms and conditions. ***
Invitation for Bids, Request for Proposal
Why is the analysis of a potential supplier's financial conditions so important? *** (ESSAY QUESTION)
It is important to perform an analysis of a potential supplier's financial conditions because investigations into a potential supplier's financial condition often can prevent the expense of further study. A review of a firm's financial statements and credit ratings can reveal whether a supplier is clearly incapable of performing satisfactorily. These analysis can often prevent the difficulties of getting a 1.) Financially weak supplier to maintain quality, 2.) a supplier who does not have sufficient working capital to settle an expensive claim, or 3.) a financially unsound supplier incapable of working overtime to meet a promised delivery date.
When developing the factors and weights that you will use to judge potential suppliers in a Weighted Factor Analysis you need to remember the acronym ____, which means ___ ___ __ ___. You don't need to make this process any more complicated than it needs to be.
KISS, Keep It Simple Stupid
You may want to hire a third-party evaluator to help translate ____ with your suppliers.
Languages
Bidding Vs. Negotiation: Dollar volume must be ___ to conduct competitive bidding. You do not want to use competitive bidding on cheap products.
Large
Quality Capability Analysis: A potential supplier's quality capability is a critical factor to examine. If a prospective supplier's process capability is ____ than the buying firm's incoming quality requirements, the supplier typically does not merit further investigation. An obvious exception occurs when no supplier possesses the required process capability. In this case, the two firms will have to work together to improve the supplier's process capability.
Less
In general, the higher the current ratio, the more protection a company has against _____ problems. ****
Liquidity
Liquidity Measures: ___ refers to a company's ability to pay its bills when they are due and provide for unanticipated cash requirements. In general, poor liquidity measures imply short-run credit problems. From a supply management perspective, short-run credit problems could signal possible decreases in quality or difficulties in meeting scheduled deliveries. **
Liquidity
Phone Directories can be useful in helping a supply manager to identify ___ suppliers. Phone Directories tend to be a cumbersome process and should only really be used if other supplier information sources have proved fruitless or if local sources are desired.
Local
Local, National, and International Sourcing: A ___ __ would be a source whose firm's headquarters and all facilities are located in the city or region where the materials or services will be used. EX: Local baker in Bryan with a sister bakery, these two bakeries supply buns to over 2000 local McDonalds a day. ****
Local Source
Managing Suppliers: Managers must ensure the suppliers perform as required. Suppliers must meet the firm's ____-term needs. ***
Long
Bidding Vs. Negotiation: Competitive bidding requires having ___ lead times to create bids than with Negotiations.
Longer
The times-interest-earned ratio measures the extent to which a company's operating profits cover it's interest payments. A _____ times-interest earned ratio may signal difficulties in meeting long-term financial obligations. ******
Low
Reverse auction would be like you being GE and you wanting to buy a standardized part. You would use an internet website to describe your need and suppliers would respond based on your need. Suppliers would submit bids and the supplier with the ___bid would receive the offer. Reverse auctions are used for very standardized products and they are not really used for unique products. Reverse auctions are also only used for ___ time transactions, they are not used for long contracts with companies.
Lowest, one
Two-Step Bidding/Negotiations are used in situations where inadequate ____ preclude the initial use of traditional competitive bidding. ****
Specifications
Two-Step Bidding/Negotiations is like how the U.S is flying 5th generation fighter jets. The Airforce is inviting suppliers to bid. They don't ask suppliers to submit bids, they ask them to submit proposals. The military will look at the technical aspects of the proposal in the first stage. This is where the Airforce will list out their performance specifications for their potential suppliers. The Airforce really doesn't know exactly what they want in their sixth generation fighter jet yet. This is really just where the Airforce just lists out their desired performance specifications. Both Boeing and LM would compete to see who can meet the specifications, one can win the proposal for design, but the other can win the proposal for manufacturing it. This would be just really evaluating the designed proposal by both parties. This process involves heavy ______ since their really isn't even a completed product yet.
Negotiations
ROE= ? ****
Net Income/ Average Stockholder's equity
ROA= ?****
Net Income/ Average Total Assets
PM=?***
Net Income/Sales
Bidding Vs Negotiation: Few topics generate more passionate discussions than bidding versus negation. The selection of biding or negotiation should be decided using ___ criteria, a ____ cost perspective, and sound supply management logic. *****
Objective, Total
Trade Shows are like when manufacturers, distributors, or trade organizations sponsor trade shows about their products. Trade Shows are an excellent way for supply managers to learn about possible sources of supply. Trade shows also provide an excellent opportunity for supply managers to see various new products and modifications of ___ products.
Old
Bidding Vs. Negotiation: You must have an adequate number of sellers to engage in competitive bidding. If there is only ___ supplier, the you can't engage in competitive bidding.
One
If UCL and LCL is bigger than UT and LT, then your Process Capability Ratio will be less than ___.
One
If UCL and LCL is smaller than UT and LT, then your Process Capability Ratio will be greater than ___. This is the desirable situation for suppliers. The higher your Process Capability Ratio, then the ____ chance that your company will not produce a defective part.
One, Greater
Times Interest Earned=?****
Operating Profit Before Interest/Interest on long-term debts
ESI: ___-___-___ approach is used when supply management doesn't involve other departments and has no communication with other departments in ______ development.
Over-the-Wall, Product
Management Capacity Analysis: Evaluating an organization's management site and compatibility usually requires several visits to the potential supplier's facilities. A quick way to draw conclusions that often hold true is to evaluate the management capability fo the firm by evaluating the sales representative, the facility ground, and even the ____ lot. A properly trained sales representative knows his or her product throughly, understands the firms buying requirements, gives useful suggestions to the supply manager and appropriate members of the buying team, commits the company to specific delivery promises, and follows through on all orders. The presence of this type of sales representative indicates that the supplier's firm is directed and managed by responsible and enterprising executives.
Parking
PPM stands for?
Parts Per Million Defective
The average accounts payable period is used to assess how well a firm manages its _____. If the average days payable is increasing or is large in relation to the credit terms offered by the company's suppliers, it may signal that trade credit is being used as a source of funds. ***
Payables
Competitive bidding is very impersonal, while on the other hadn't, negotiations is more ____.
Personal
Cp= ___
Specifications width/ Process Width
Early Supplier Involvement: Early Supplier Involvement(ESI) is an approach in supply management to bring the expertise and collaborative synergy of suppliers in the design process. ESI is used to find "win-win"opportunities in developing alternatives, and improvements to materials, services, technology, specifications and tolerances, standards, order quantities and lead time, processes, packaging, transportation, redesigns, assembly changes, design cycle time, and inventory reductions. Today, ESI is an accepted way of life at many _____ firms and a requirement for WCSM. ****
Proactive
A ___ ___ ___ has a mean, a range, a p-chart, a c-chart, an UCL(Upper Control Limit), and a LCL (Lower Control Limit).
Process Control Chart
Supplier Surveys: These are normally surveys given to potential suppliers which are used on a series of ____ which cover the following areas: principal officers and titles, bank references, credit references, annual history of sales and profit for the last five years, a. referral list of customers, number of employees, space currently occupied, expansion plans(including sources of funds), an indications of the use of Design of Experiments(DOE), current production defect rate for similar products, number of inspectors used, and quality methods adopted.
Questions
Quick Ratio = ****
Quick Assets/ Current Liabilities
Reciprocity is not legal in the U.S. and not too many cases are brought to court; like ____ ____ _____ ( means a favor or advantage granted or expected in return for something). Reciprocity is only illegal in the U.S if the agreement is meant to restrain trade or competition.
Quid Pro Quo
___ ____ is when a supplier big steps in updating their technology by leapfrogging instead of using incremental innovation.
Radical Innovation
ESI: Supplier knows about all technology with some products (ex: engines of planes), but if you don't have a supplier involved, you may design something not ____ (don't have the technology or the materials to make it)
Realistic
The average collection period is used to assess the quality of a company's ____. The average collection period may be assessed in relation to the company's own credit terms or the typical credit terms of firms in its industry. ***
Receivables
ROP stands for?
Reorder Point
RFP means to solicit more information on product development/design while RFQ( ___ ____ ____ ) is meant to solicit more pricing information.
Request for Quotation
____ ___ is when you want to buy a standardized part, you describe the need, select suppliers and they submit their bids and the supplier with the lowest bid gets the job.
Reverse Auctions
___ ___ ___ means that you will get different tariff rates depending on which country your product comes/originates from).
Rules of Origin
What is the safety stock equation when demand is variable?
Safety Stock =[z*(Sqrt(LT))*omega*d]
The fixed asset turnover ratio provides a crude measure of how well a firm's investment in plant and equipment is managed relative to the ____ volume it supports. *****
Sales
Fixed Asset Turnover = ? ***
Sales/ Average Fixed Assets
70-30 Approach: A common approach to multiple sourcing that can yield many of the benefits of single sourcing is the "70-30" approach. This approach is where 70 percent of a buyer's sales volume is awarded to a ___ supplier, and 30 percent to a second supplier. Economies of scale are obtained from the "__ supplier", while the "___ supplier" provides competition. ***
Single, Big, Little
Describe the competitive bidding process? **** (ESSAY QUESTION)
The competitive bidding processes involves a firm sending out requests for bids to various potential suppliers. Requests for bids ask suppliers to quote the price at which they will perform in accordance with the terms and conditions of the retailing contract if they were to become a successful bidder. Under competitive bidding, the buying firm will generally pick the lowest bidder however sometimes that is not always the case. For example, many oil companies when participating in the competitive bidding process look at the safety record of a supplier along with their bid. So, if a potential bidder has a bad safety record, but submitted the lowest bid, then an oil and gas company would most likely not award the contract to that specific supplier due to their lack of emphasis on safety.
Trade Registers & Directories would be like _____. Trade Registers & Directories contain information on the addresses, the number of branches, and affiliations of all leading manufacturers. Financial standings of firms are frequently given. The registers are indexed by commodity, manufacturer, and trade name or trademark description of an item.
ThomasNet
Debt to Equity Ratio=?****
Total Liabilities/ Stockholder's Equity
Cp= ___
UT-LT/(6*omega)
Supply Base Reduction: One of the interesting transitions taking place in supply management is the shift from enlarging a firm's supply base to downsizing that base. Reduction of the supply base usually is achieved through both reducing the _____ of items procured and _____ items previously procured from different suppliers into one supplier. ****
Variety, Consolidating
Before conducting facility visits, you need to narrow down your list of potential suppliers, so that you will not have to ___ that many supplier facilities.
Visit
Flexibility Capability Analysis: Suppliers need to have the ability to adapt to demand volume change(up or down) (____ _____); Suppliers need to be able to adapt to changes in plan or product mix (___ ____ ___); Supplier ned to have the ability to introduce new products and parts( _____ ____ ____)
Volume Flexibility, Product Mix Flexibility, Product Development Flexibility
Bidding Vs. Negotiation: Are we going to use bidding or negations when deciding how to select our suppliers? The ___ of product and the ____ of a product determine if a buyer is going to use either competitive bidding or negotiations.
Volume, Standardization