SCM 371 ch3,4,5

Choose some of the benefits of e-procurement. Lowers transaction costs More effective collaboration Higher transaction fees Better sourcing decisions

- Lowers transaction costs -more effective collaboration -better sourcing decisions

Often, despite the benefits, firms hesitate to participate in purchasing consortia due to lower total costs for services. confidentiality. competitors. antitrust issues.

- confidentiality -competitors - antitrust issues

Supply, when taking a lead role for supplier selection can often help -set conditions for payment. -develop the engineering specifications. -establish supplier quality standards. -determine price.

- set conditions for payment -establish supplier quality standards -determine price

What are the ways information systems can benefit firms?

- speedier communication -monetary control -data accuracy -dedicated resources -efficiency gains -data accessibility

The three internal gates for requisition approval are for authorization,____, ____

clarity, and clearance.

Organizations use supply councils to manage buyer-supplier relationships and

encourage continuous improvement

Private marketplaces are accessible on the _____.

etranet

Increased outsourcing measures can be credited to focusing on core competencies. enhanced logistic technology. increased inventories. deregulations on transportation.

focusing on core competencies. enhanced logistic technology. deregulations on transportation.

Placing a(n) _____ order can give a firm price for goods agreed upon today for delivery at some time in the future

forward

ABC Freight's CPO reports directly to the executive vice president, a senior executive in the organization, ABC Freight places a

high degree of importance on supply functions.

True or false: At times decision making is more difficult to a lack of available data.

False, there is too much information or analysis paralysis

The regular tracking after a purchase order has been issued is known as?

Follow- up

______ can be caused by unnecessary follow-up or expediting.

Waste

Small-value orders can come with high processing costs known as ____ costs.

acquisition

When an organization moves towards supply centralization, a major concern is -that too many employees are overqualified within the organization. -the availability of information in regards to total corporate spend. -the research to be conducted on alternative materials. -the availability of qualified personnel.

-availability of information in regards to total corporate spend -availability of qualified personnel

Decentralized supply models often have the advantages of -business units understand their unique needs. -easier coordination with purchasing. -faster response time when requesting funding. -better communication with other business units.

-business units understand their unique needs -easier coordination with purchasing -faster response time when requesting funding

The supply policy and procedure manual details suppliers to be used. procedures. the duties of various personnel. data systems.

-data systems -procedures -duties of various personnel

The necessary items required on a purchase order are the date of issue. serial number. quantity and description of goods. the buyers organizational capability.

-date of issue. -serial number. -quantity and description of goods.

Indirect spend should be monitored because: decentralized nature of spend gives control to individual units. these products must be quality to be included in the end product. Rationale: Indirect spend does not go into the end product or service. it can increase cost pressure. there is a wide variety of goods and services sourcing.

-decentralized nature of spend gives control to individual units. -it can increase cost pressure. -there is a wide variety of goods and services sourcing.

Industry sector will influence supply responsibilities; industries can be divided into -resale industry. -discrete goods industry. -supplier industry. -process industry.

-discrete goods industry - firms that manufacture cars, electronics, apparel, and furniture -process industry - such as gas, chemicals, glass, and steel

Supplier council is an important forum and is useful for (watch out this is different from supply council) -encourage internal continuous improvement. -identifying problems with the supply base early. -agreeing on competitive delivery terms. -reducing administrative costs.

-identifying problems with the supply base early - agreeing on competitive delivery terms Supplier councils - manage supplier relationships, and improves communication with the supply base on supply policy issues Supply councils - are senior supply staff that shares info among decentralized units... they also encourage continuous improvements

Improving the P2P (procure to pay) process can -improve internal customer satisfaction. -decrease the price on goods purchased. -decrease administrative costs. -reduce cycle times.

-reduce cycle time -decreases administrative costs -improve internal customer satisfaction

Which of the following are supply chain decision objectives? -The right time. -The right materials. -The right price. -The right customers. -The right quantity. -The right retail locations.

-right time -right materials(meeting quality requirements) -right price -right quantity Not listed, but would also be correct: -right services -right place - right source (good supplier)

Benefits of corporate supply councils include -streamlining of materials processes. -communicate strategies with key suppliers. -standardizing of purchasing processes. -standardization of goods and services across all sites.

-streamlining of materials processes -standardizing of purchasing processes -standardization of goods and services across all sites

The supply policy and procedure manual details suppliers to be used. the duties of various personnel. data systems. procedures.

-the duties of various personnel - data systems -procedures

Within hybrid supply models, many tasks are often handled at the corporate level to ensure business units are aligned, these can include -training of employees. -development of individual business unit supply strategies. -policy and procedure establishment. -common use item purchasing. -supply performance auditing.

-training of employees -policy and procedure establishment - common use item purchasing - supply performing auditing

What are the types of purchase requisitions commonly used in supply? Financial Traveling Standard Bill of materials

-traveling -standard -bill of materials

True or false: Closure requirements for all subcontracts are universal.

False, Each subcontract closure requirements will vary in complexity, but the performance summary should be included.

Unplanned-uncontrolled procurement done without consultation with the purchasing department is known as

Mavericks buying

Which decisions can the supply manager help provide insight? Negotiation of contract terms. What products or services should be outsourced. Which supplier should be selected. Monitoring the relationships with customers.

Negotiation of contract terms. What products or services should be outsourced. Which supplier should be selected.

Which decisions can the supply manager help provide insight? -Monitoring the relationships with customers. -Negotiation of contract terms. -Which supplier should be selected. -What products or services should be outsourced.

Negotiation of contract terms. Which supplier should be selected. What products or services should be outsourced.

A(n) _____ is an information request not binding on either party.

RFI (request for information)

____ uses radio waves to transmit a unique serial number as a form of ID for objects

RFID

Issued when there is a clear and definite description of a need, will include a list of potential suppliers.

RFQ (request for quote)

When items are not covered by a contract, the buyer has 4 options for communicating with potential suppliers. _____ (1) - issued to gather information about potential suppliers products and services. Not solicitation and looking for information only (2) - issued when there is a clear description of need. Price comparison tool for commonly use commodities sold in an open and free market. (3) - used for more complex requirements in which price is only one of several key decision factors. Used when the buyer is planning to negotiate price and terms.

RFx, RFI request for information, RFQ request for quote, RFP, request for proposal

Requirements for internal controls, standardization, processes, and consistency have greater importance due to the

Sarbanes-Oxley Act

A die shop has three options during production they are to make the part from a blank, buy a finished piece, or machine a partial piece from a forging. If the production manager chooses to machine an incomplete part from the purchased forging, this is known as the _____ zone.

gray

The range between 100% insourcing and 100% outsourcing. that is useful for testing and learning both sides of supply without fully committing is known as

gray zone

Where authority and responsibility are shared between a central supply organization and business units, divisions, or operating plants. Lean more heavily toward centralized or decentralized depending on how decision making authority is divided. "Center-led" organization in which strategic direction is centralized and execution is decentralized

hybrid supply structure

The three primary reasons to outsource logistics are increased focus on core activities improved services reduced costs decreased customer service

increased focus on core activities improved services reduced costs

Direct spend is likely to be _______ , while indirect spend is normally _____.

insourced, outsourced

As an organization is developing their supply processes they must focus on the ___ and ___ goals and strategies

long and short

A company that needs to protect intellectual property, even with a confidentiality agreement, may choose to _________ over_____.

make , buy

private intranent that is extended to authorized users outside of the company, such as suppliers. Improves information sharing with key business partners

marketplaces (extranet)

If a company wants to eliminate receiving inspections, the supplier must

meet all quality standards consistently prior to shipping product.

The right materials and services, in the right quantity, for delivery at the right time and right place, from the right source, with the right service, and at the right price in the short and long term. The seven rights are ....

objectives of supply management

Process compliance can be affected by

organizational culture and structure

A car manufacturer has ______ the installing of windows in all their models to a third party vendor.

outsourced

Hiring another organization to perform service to save costs, gain expertise, free up management time, and refocus on core competencies is known as _____

outsourcing

Requirements of the Sarbanes - Oxley Act add greater importance to internal controls, standardized processes, and consistent use

policy and procedure manual

A prime purpose of proper receiving practices is to ensure products ordered are delivered in the amount and quality indicated on the ___ ____

purchase order

ABC automotive does not currently have the necessary technology and expertise to manufacture a mandatory component required for their exhaust systems, the cost of purchasing the machinery, tooling, training, and employees is very costly. ABC automotive should

purchase the part from a third party vendor.

Online, real time, dynamic, declining price auction for goods and services between one buying organization and a group of prequalified suppliers. It is an alternative sourcing method to RFPs/RFQs.

reverse auctions

Small or medium-sized businesses that have limited personnel and supply responsibilities are often

secondary obligations

In which a buyer contracts with a supplier to deliver services directly to the buyers customer. A direct supplier - customer interaction like a call center.

service triads

Supply function decisions are made while balancing the ___________objectives simultaneously to meet all organizational goals.

seven

Discrete goods from industries face challenges within the supply chain from consumer preferences, innovation, and -long product life cycles. -retail sales purchases. -short product life cycles. -purchases for resale.

short product life style

In ___, supply responsibilities are shared by a variety of individuals who have no supply expertise and purchase their own requirements from local retailers or wholesalers. As the business unit increases, specialization increases

small and medium sized organizations

The three types of procurement outsourcing contracts are procure-to-pay source-to-contract invoice-to-pay source-to-pay

source-to-pay procure-to-pay source-to-contract

Moving towards a centralized supply organization requires employees with ____ experience in areas.

specialized

EDI requires the use of _____ message format.

standard

A _____ is used to complete work that has been bid out by prime contractors

subcontractor

General Motors and Boeing, use this to manage supplier relationships. Consists of 10 to 15 senior executives form the company's supplier base, and 6 to 8 of firms top management. They deal with supply policy issues at the buying firm with the objectives of developing relationships and communication with the supply base

supplier council (identifies problems)

Late materials can affect an organization's profits, production times, and customer satisfaction. These are also affected by ________ and .________

supplies and services

Responsibility for clearing invoices can be assigned to

supply and accounting

Lack of goal alignment between the ____ department and the ______department can lead to conflicting behaviors.

supply and finance

Supply decisions involve a balance to meet objectives and make trade-offs from both a -human and machine perspective. -situational and big picture perspective. -tactical and strategic perspective. -order and delivery perspective.

tactical and strategic perspective

Who authorizes personnel to requisition goods or services internally?

the supply department

A buyer who contracts with a supplier to deliver services directly to the buyer's customer is viewed as a service _____

triad

The goals and strategies of the organization must be aligned _____ and _____.

vertically and horizontally

Strategic spend describes goods or services that are:

vital to the mission

The set of activities from issuance of a purchase order to submitting payment to the supplier is known as

procure to pay

For companies who have legacy software layered with new software applications they have the advantages of

flexibility and cost-effectiveness.

The three primary reasons to outsource logistics are decreased customer service improved services increased focus on core activities reduced costs

improved services increased focus on core activities reduced costs

Purchased goods and services that are not a direct part of products or services delivered to customers is known as

indirect spend

there are ___ basic flows for supply information

4

Hybrid models seek to operate under a model that is _____ centralized or decentralized.

neither.... hybrid model is where the firm's supply function is partially centralized at the corporate or head office and partially decentralized to the business units

Consortium Case Study

-Enterprise wide measures -Consortiums can be effective but need to balance ALL competing priorities -There is more decisions to consider beyond just the data

Which of the following are reasons that previously make or buy decisions can be reversed? Organizational circumstances Environmental circumstances Customer service ratings Market circumstances

-Organizational circumstances -Environmental circumstances -Market circumstances

How many items are generally included on a purchase requisition for those regularly stocked?

one more than one is fo speciality items and should be secured from the same supplier

The supply personnel send information back to the supplier regarding their proposal, this is considered

outward information flow from supply to either internal or external sources

When converting to an ERP system _______ is the leading cause of failure.

poor preparation

A ___ is a series of actions or steps, with inputs and outputs, completed in an orderly fashion to achieve a particular end

process

Form of collaborative purchasing that is used by both public and private sector organizations for delivering services at a lower total cost. 2 organizations join together to combine their individual requirements for goods, works or services to gain better prices, design, supply compared to goods or services alone.

purchasing consortia

Materials that do not arrive on time can impact -revenues. -production times. -cost of raw materials. -customer satisfaction.

revenues production times customer satisfaction

A _____ auction uses competing suppliers who bid down the price at which they are willing to sell until the buyer accepts a bid.

reverse

The subcontract cost, schedule, technical control, and configuration control are managed by the

subcontract administrator.

A ____ is used to complete work that has been bid out by prime contractors.

subcontractor

Supplier selection involves -assessing the supplier's ability to deliver satisfactory goods on time. -developing the policy on the buyer's share of supplier's capacity. -managing the supplier relationship. -identifying the supplier.

Supplier selection requires -identification and -assessment to ensure the appropriate choice of the supplier that supports the needs of the buying organization. -assessing the supplier's ability to deliver satisfactory goods on time. -identifying the supplier.

True or false: Firms only need to make insourcing and outsourcing decisions during the initial setup phase.

False Rationale: Insourcing and outsourcing decisions must be addressed on an ongoing basis.

Comprised of senior supply staff and facilitate coordination among the business units, divisions, or plants. Use this as means of sharing information among decentralized units, or coordinating activities focused on a specific problem. Goal is to manage buyer supplier relationships focusing on CONTINUOUS IMPROVEMENT. Formulates business plans and objectives for purchasing

Supply Councils (improves)

Travis works in the purchasing department for a large manufacturing company, he is not involved with sourcing or contracting new suppliers and only ensures that purchase orders are paid on time. Travis is a _________ oriented person.

functionally, only considers the steps for which their department is responsible.

A master service agreement is a contract reached between parties, in which the parties agree to most of the terms that will govern ______ transactions.

future

Separate the following into centralized, hybrid, and decentralized -Business units have the ability to purchase up to a certain amount and then the authority is transferred to corporate -Business units or branches have the ability to purchase -Corporate HQ (CPO) has the authority over all purchasing

Centralized - Corporate HQ Hybrid- Business units have the ability to purchase up to a certain amount and then the authority is transferred to corporate Decentralized - Business units or branches have the ability to purchase

The senior executive who has formal authority and responsibility to manage purchasing, buying or sourcing functions for the procurement of goods and services from external suppliers is known as the

Chief Purchasing Officer

What is a communications standard for sharing business documents between two firms?

Electronic data interchange (EDI)

___ applies demand on a supplier to meet the initial delivery agreement or speed up a back ordered item.

Expediting

True or false: Purchasers must pay the invoice when received regardless of when the goods are shipped.

FALSE Suppliers can offer incentives for clearing invoices before receipt of goods, but legally the title cannot pass to the buyer until acceptance of the products.

Which of the following is not a good time to use a reverse auction?

The buyer is not prepared to switch suppliers.

What is a reason a company may choose insourcing?

To keep core competencies in-house.

Product design is driven by ____ requirements with design, ability to manufacture, and the ability to procure materials taken into consideration.

customer

A _______ spend includes those goods that go into the end product or service.

direct indirect - comprised of the goods and services that are needed to run the organization

___ ___ includes any goods that go into the end product or service __ ____ is comprised of the goods and services that are needed to run the organization

direct spend, indirect spend (nontraditional purchases) <- purchases such as professional services, advertising, promotion, IT. This cost is mostly done by internal users

For all business function, computing power and ___ ____ is leading to more oversight more awareness of all aspects of the business in terms on establishing " internal controls" and monitoring the "integrated framework" What are the four basics of this involving supply:

information flow 1. Inward flow (outside to supply) - information from within the org, is sent to supply 2. Inward flow - info from external sources is sent to supply 3. Outward flows (supply to outside) - information from within supply is sent to others within the organization. 4. Info such as request for quotes is sent from supply to external sources such as suppliers

A subcontract performance summary is beneficial for inventory of all services or goods. information for subsequent claims. information for renegotiation. evaluation fore future selection.

information for subsequent claims. information for renegotiation. evaluation fore future selection.

The decision to reverse functions, processes or projects that were being supported with external resources is known as

insourcing

______ customers must provide clear and concise needs to supply to produce products that must meet the requirements of ______ customers.

internal, external

Supply professionals provide ______ and ______ skills to source, evaluate, and select suppliers.

investigative and analytical

Given the importance of insourcing and outsourcing decisions, the supply manager should be _____ .

involved

What are some primary reasons an organization requires robust supply processes? -The consequences of noncompliance are substantial. -The organization faces strict audit requirements for their industry. -There is a small amount of dollar value on items purchased. -There is a large quantity of items purchased.

- The consequences of noncompliance are substantial. - The organization faces strict audit requirements for their industry. - There is a large quantity of items purchased.

What are some ERP challenges? Slower time for making purchasing decisions. Changes in business processes required. Need to train vast numbers of employees. Highly complex implementation.

-Changes in business processes required. -Need to train vast numbers of employees. -Highly complex implementation.

Choose the reasons a firm should purchase goods or services over making them. -The supplier can provide the benefit of economies of scale for components that are non-vital to the organization's operations. -The company can make use of excess capacity by creating a material instead of letting the capacity sit idle. -The firm has strict on-time delivery deadlines and requires a multi-sourcing strategy using an external supplier in addition to an internal source. -The firm wishes to take advantage of a supplier's brand image.

-The supplier can provide the benefit of economies of scale for components that are non-vital to the organization's operations. -The firm has strict on time delivery deadlines and requires a multi-sourcing strategy using an external supplier in addition to an internal source. -The firm wishes to take advantage of a supplier's brand image.

E-commerce is ever changing, questions that must be evaluated prior to choosing this path is. Should we lead or follow? What form of payment should be used? What tools should be used for acquisition? Who should be the service provider? What should be acquired?

-What tools should be used for acquisition? -Who should be the service provider? -What should be acquired?

Early supply involvement when purchasing goods or services can lead to -increased costs on goods and services. -a shorter length of time it takes from a product being conceived until its being available for sale. -a negotiation for better pricing for the firm. -a competitive advantage.

-a shorter length of time it takes from a product being conceived until its being available for sale. -a negotiation for better pricing for the firm. -a competitive advantage.

what are the 3 different types of online auctions.

1. Open offer auction - supplier selects items 2. Private offer auctions - buyer offers a target price 3. Posted price auctions - buyer posts the acceptable price

Place the supply process steps in order.

1. Recognition and description of need 2. Identification and selection of supplier including terms 3. Preparation and placement of purchase order 4. Follow up and expedite the order 5. Upon receipt, inspection and payment to clear the invoice 6. Maintenance of records and relationships

what are the three supply teams that work cross functionally and their roles:

1. Sourcing Team - focuses on the strategic initiatives and developing cost reduction strategies 2. New product/ service development team - focuses on shortening development cycle times, improving quality, and reducing development cost with supplier involvement in the beginning 3. Commodity Management Team - develops and implements commodity strategies

Describe the 4 categories of supply management involvement - Supply is excluded completely. -Requires supply function to act as recorder, sender of PO or a receiver of bids, but important supply decision are made outside of supply. -Implies that supply professionals have the opportunity to exercise their expertise in important acquisition process stages. -Means that parties outside of supply group are willing and able to take supply considerations into account in managing their own areas of responsibility.

1. no involvement 2. documentary 3. professional 4. meaningful

What is a factor that is the key to a business's success that competitors can't easily copy?

Core competency

Which of the following are reasons that a company may choose to make over buy? The ability to produce the material or product at a lower cost and avoid paying a 3rd party's profit margin. No existing supplier in the market and not enough time to spend developing one before the product is required. The firm is at or near capacity and subcontracting from a supplier may make better sense. To have more control of the quality of the material/product than a supplier.

The ability to produce the material or product at a lower cost and avoid paying a 3rd party's profit margin. No existing supplier in the market and not enough time to spend developing one before the product is required. To have more control of the quality of the material/product than a supplier.

If the production manager needs to order all the materials, parts, allowance for scrap to build a bicycle, he should submit which type of purchase requisition?

The bill of materials typically includes part names, part numbers, part revisions and the quantities required to build an assembly.

Which of the following are challenges or questions that must be addressed when an organization decides to insource? The company must hire a lot of new employees to produce the insourced product. The company must focus on how they will discontinue relationships with current suppliers. The company must be able to provide raw materials and parts for production. The company must ensure a smooth transition to avoid producion interruptions.

The company must focus on how they will discontinue relationships with current suppliers. The company must be able to provide raw materials and parts for production. The company must ensure a smooth transition to avoid production interruptions.

Choose the reasons a firm should purchase goods or services over making them. The firm wishes to take advantage of a supplier's brand image. The company can make use of excess capacity by creating a material instead of letting the capacity sit idle. The supplier can provide the benefit of economies of scale for components that are non-vital to the organization's operations. The firm has strict on time delivery deadlines and requires a multi-sourcing strategy using an external supplier in addition to an internal source.

The firm wishes to take advantage of a supplier's brand image. The supplier can provide the benefit of economies of scale for components that are non-vital to the organization's operations. The firm has strict on time delivery deadlines and requires a multi-sourcing strategy using an external supplier in addition to an internal source.

Blank check purchase orders, Corporate purchasing cards, Petty cash, and Open-end purchase orders are all possible alternatives to dealing with small value purchases such as those for office supplies.

True

True or false: Supply teams can encompass a wide variety that include teams with suppliers, customers, supplier councils, and consortia.

True

True or false: An open-end PO allows for the addition of items, changes, or extensions of time.

True , an open end order may remain in effect for a year or until changes are made

Supply manager contribute to the organization's competitive position by ensuring decisions contribute to employee satisfaction. asset management. cost reduction. revenue enhancement.

asset management cost reduction revenue enhancement

Dependent upon organizational structure, the functions for procurement may be divided among managers, but the _________ over purchasing should be well defined.

authority

A ______ PO contains multiple items and delivery dates scheduled over a period of time, used for recurring needs for expendable goods.

blanket

The optimal supply organization set up and structure is based on the ____ ______including available resources and the threat of the bottom line. This drives the SCM objectives

business need

A request for proposal is used when the ______ is planning to negotiate price and terms.

buyer

The _____ should state when goods will be paid for, either a term after the invoice date or receipt date.

buyer

______ - where the authority and responsibility for most supply related functions are assigned to a central organization. Strategic focus, greater buying specialization, consolidation of requirements ___ - where the authority and responsibility for supply related functions are dispersed throughout the organization. Easier communication within department, speed of response, broad job definition

centralization vs decentralization

A key factor for ensuring the success of supply processes is ensuring good _____ with all stakeholders.

communication

Using an electronic data interchange system, orders and recording are

completed automatically

Insourcing and outsourcing decisions should be evaluated

continuously

A credit card issued to authorized employees to purchase goods, usually small value purchases, directly from suppliers without the need to go through the purchasing department.

corporate purchasing cards (P-cards)

a supply ____ can help organizations standardize good, services, and processes across multiple sites in decentralized organizations

council