Bus 370: Supply Management
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