Exam One

What is a service triad? What unique challenges and opportunities does a service triad present for supply?

a buyer contracts with a supplier to deliver services directly to the buyer's customer - the buyer is dependent on the supplier for fulfillment of customer demands the buyer is excluded from the service encounter service supplier and customers are the coproducers of the service

Why might an organization decide to outsource? Can you give an example?

cut costs and free management time - a company whose employees clean the building may decide to hire a janitorial firm to provide this service

Why would an organization outsource its logistics? Engineering? Marketing?

firms focus on these industries specifically and sometimes it is more efficient and costs less rather than spending money on employees within

If you were the sole owner of your own company, would you favor making or buying? Why?

making, I would be in control of the quality and quantity produced if i could produce at a lower cost than buying

What is subcontracting? How does subcontracting differ from a typical purchase order (PO)?

prime contractors bidding out part of the work to other contractors - involves more definite actions to close out the job

In the public sector, what name is frequently used for outsourcing? What are some major advantages to outsourcing in the public sector?

privatization - improved process compliance and control, optimized working capital, and improved process efficiency

What is insourcing? How might one make the decision to insource an activity or not?

reversing a previous buy decision - by looking at current costs and analyzing whether or not the company would be better off producing in-house

what role is expected of supply once an outsourcing decision has been made?

supply is involved in providing a comprehensive/competitive process, identifying opportunities for insourcing or outsourcing, identifying potential relationships issues, developing/negotiating the contract, and ongoing monitoring/management of the relationship

Why is the make or buy decision considered strategic?

the make or buy decision can improve the quality, quantity, delivery, cost, service, lower risk, and enhance competition

What is the gray zone in make or buy? What are its implications?

the range between 100% make and 100% buy - useful for testing and learning both sides of supply without fully committing

Why should an organization switch from buying to making?

when it makes a company more competitive or increases productivity