Purchasing Supply chain management chapter 6
Supplier scorecard
A communication device that serves two key roles for the supply manager: (1) it identifies the supplier performance metrics that are most critical to the supply manager organization, and (2) it enables the evaluation of suppliers against these key metrics.
portfolio analysis
A tool to structure and segment the supply base and is used as a means of classifying suppliers into one of four types. Objective is to categorize every purchase or family of purchases into one of 4 categories: Critical Routine Leverage Bottleneck
E-ra
A/An _____ is an online, real-time dynamic auction between a buying organization and a group of prequalified suppliers who compete against each other to win the business to supply goods or services that have clearly defined specifications for design, quantity, quality, delivery, and related terms and conditions. (p. 236)
Effective category strategy
Allocate resources Validate contribution to other company objectives Sustain the initiative through presentations to senior ex
Spend Analysis
Annual review of a firms entire set of purchases
Stages of supply management strategy evolution
Basic beginnings 1 Moderate development 2 Limited integration 3 Fully integrated supply chains 4
Strategic Sourcing Process
Build the team, market research, strategy development, contract negotiation, SRM
supply management goals
Cost reduction objective Technology/new product development objective Supply base reduction objective Supply assurance objective Quality objective
negotiation
Costly and interactive approach to final supplier selection. Ftf negotiation is best
Purchase categories
Critical Routine Leverage Bottleneck
Triangulate
Explore, compare, and contrast data from multiple sources before you can validate it.
Requests for Information (RFI)
Generally used before a specific requisition of an item is issued. A solicitation document that is used by organizations to obtain general information about services, products or suppliers.
Insourcing/Outsourcing
In _____, purchasing often analyzes whether a new or existing purchase requirement should be internally or externally sourced. (p. 176)
Porter's Five Forces
Model developed by strategy expert Michael Porter that identifies five competitive forces that influence planning strategies. Used widely for marketing, business and marketing strategy development. Higher levels of competition create more options for buyers and suppliers The threat of new entrants The threat of substitute products and services The power of buyers The power of suppliers
Total Cost of Ownership (TCO)
Process of identifying cost considerations beyond unit price transport and tooling
Category
Refers to a specific family of products or services that are used in delivering value to the end customer.
Establish Benchmarks through Industry Standards
Requires identifying the critical performance criteria that are being benchmarked and identifying relative competitive performance.
supply base optimization
The process of determining the appropriate number and mix of suppliers to maintain.
Integrative
The strategy is drafted by (or has significant input from) those responsible for implementation.
RFQ (Request for Quotation)
a formal request for the suppliers to prepare bids, based on the terms and conditions set by the buyer
Insourcing
a practice in which a company contracts with a specialist firm to handle all or part of its supply chain operations
competitive bidding
a selection process in which suppliers submit bids to win the buyer's business
preferred supplier
a supplier that has demonstrated its performance capabilities through previous purchase contracts and therefore receives preference during the supplier selection process
global sourcing
purchasing materials or labor from around the world wherever it is cheapest Major advantage is providing dramatic improvements in cost and quality
supplier research
required to identify the specific capabilities and financial health of key suppliers that are in the supply base or that may not currently be in the supply base Key elements to be documented and included in a comprehensive supplier analysis study should include: Cost structure Financial status Customer satisfaction levels Support capabilities Relative strength and weaknesses How buying company fits in their business How the company is viewed Core capabilities Strategy and future direction Culture
supply base optimization
the determination of the number of suppliers to use
Porter's Five Forces
threat of entry, threat of substitute, supplier power, buyer power, and competitive rivalry
Value Chain Analysis
used to help identify the cost savings opportunities that exist within the supply chain Goal is to understand identify and exploit cost savings opportunities that may have been overlooked by business unit managers or even by suppliers in bringing the products and services to the appropriate location.