Bus 370: Supply Management

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Weighted Point Evaluation System

a common type of multicriteria decision model in which the user (buying firm) assigns weights to performance measures (such as cost, quality and delivery) then rates the supplier in regards to how well they perform against those criteria.

low value and high complexity

bottleneck

cons of single

can have dick suppliers at the start increased supply risk buyer can become attached to a shitty supplier

pros of multiple sourcing

competition spread risk

5th step in sourcing process

conduct supplier selection

3rd step in sourcing process

develop the sourcing strategy

direct costs of insourcing

direct materials direct labor freight costs variable overhead

routine quadrant

easy to get and cheap goal is to simplify acquisition process

Factors affecting the outsource/insource decision

enviornmental uncertainty competiton in the supplier market ability to monitor suppliers performance relationship of product/service to buying core compenticies

pros of insourcing

high degree of control can oversee program economies of scale

pros of outsourcing

high flexibiltiy low risk improved cash flow access to quality products

Portfolio analysis

is a structured approach used by decision makers to develop a sourcing strategy for a product or service, based on the value potential and the relative complexity or risk represented by a sourcing opportunity.

high potential and low complexity

leverage

pro of single

more leverage lower transport costs reduces quality gaps

6th step in sourcing process

negotiate & implement agreements

direct costs of outsourcing

price frieght costs

4 qualitative criteria that company's use to eval suppliers

process and design capabilites management capability financial condition and cost structure long-term relationship potential

second step in sourcing process

profile internally and externally

indirect costs of outsourcing

purchasing receiving quality control

cons of insourcing

reduced flexibilty costly potential suppliers r better

cons of multiple sourcing

reduces loyalty can increase risk in the event of a shortage may have big gaps in quality

screening suppliers and creating selection criteria means what?

requesting for information on potential suppliers

low value potential and low complexity

routine

4th step in sourcing process

screen suppliers and create selection criteria

step four of sourcing process

screen suppliers and create selection criteria

Bottleneck quadrant

specific specifications few quality options goal is to ensure constant supply

Leverage quadrant

standardized and readily available large portion of budget goal is to leverage firms spending level to get the most favorable terms possible

indirect costs of insourcing

supervision admin support supplies maintenance equipment depreciation utilities building lease fixed overhead

what are the 3 parts of developing the sourcing strategy

the make or buy decision total cost analysis portfolio analysis

p2p

the set of activities required to first identify a need, assign a supplier to meet that need, approve the specification or scope, acknowledge receipt, and submit payment to the supplier. Five main steps are:Ordering Follow-up and expediting Receipt and inspection Settlement and payment Records maintenance

Fixed Price Contract

- A type of purchasing contract in which the stated price does not change, regardless of fluctuations in general overall economic conditions, industry competition, levels of supply, market prices, or other environmental changes

dual sourcing

Two suppliers are used for the same purchased product or service by splitting the business (example - 70% to Supplier A and 30% to Supplier B

category profile

Understanding all aspects of a particular sourcing category that could ultimately have an impact on the sourcing strategy.

make or buy decision

A high-level, often strategic, decision regarding which products or services will be provided internally and which will be provided by external supply chain partners

total cost analysis

A process by which a firm seeks to identify and quantify all of the major costs associated with various sourcing options

Cost Based Contract

A type of purchasing contract in which the price of a good or service is tied to the cost of some key input(s) - such as labor or materials (for example, steel) or other economic factors, such as interest rates

First step in strategic sourcing process

Asses opportunities

negotiating and implement agreements

Buying firm must reach formal agreement with one or more suppliers regarding issues such as: terms and conditions, price, volume levels, quality and delivery

cross sourcing

Company uses a single supplier for one particular part or service and another supplier with the same capabilities for a different part or service, with the understanding that each supplier can act as a backup for the other supplier

high value and high complexity

Critical

Industry analysis

Profiling the major forces and trends that are impacting an industry, including pricing, competition, regulatory forces, substitution, technology changes, and supply/demand trends.

Supply Management

The broad set of activities carried out by organizations to analyze sourcing opportunities, develop sourcing strategies, select suppliers, and carry out the activities required to procure goods and services.

cons of outsourcing

they could be lying/shitty deeks communication issues

Profile internally and externally means what?

understanding where and how you spend your money and conducting an industry analysis

Assess opportunities means doing what?

use info to understand spending data

conducting supplier selection

using weighted average point systems to determine which of the shortlist suppliers is the best

Critical quadrant

v important for profit few quality options large portion of budget very detailed heavily negotiate and form good relationship with partners


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