SCM 303 Exam 3 - II
zero defect plans
"do it right the first time" is far more cost effective than making corrections after the fact
steps in procurement process
1. recognition of need 2. translation of that need into commercially equivalent description 3. search for potential suppliers 4. selection of a suitable source 5. agreement on order or contract details 6. delivery of products and/or services 7. payment of suppliers
what are the three major challenges facing supply executives when setting supply strategies and objectives?
1. what is the effective interpretation of corporate objectives and supply objectives? 2. what is the appropriate action plan or strategy to achieve the desired objectives? 3. how can supply issues be identified and integrated into organizational objectives and strategies?
in manufacturing organizations, the dollars spent with suppliers falls into what range as a percent of revenues?
50 to 80
raw material
a component of a food, feed, or packaging that has not undergone processing
effect on competitive position/customer satisfaction
a firm cannot be competitive unless it can deliver end products or services to its customers when they are wanted, of the quality desired, and at a price the customer feels is fair
outsourcing
a firm, company, or individual carrying out a process or activities on behalf of the site audited
consumer
a person who is a member of the public takes possession of food not functioning in the capacity of an operator of a food establishment or food processing plant does not offer food for resale
approved supplier
a supplier that has been evaluated to demonstrate conformance to specific requirements by the audited site
corporate risk management
all organizations are exposed to supply risk and other forms of risk in large organizations, a corporate risk management group headed by a risk manager or chief risk officer (CRO) assesses total risk exposure and seeks the best ways of managing all risk the chief purchasing officer works with CRO in the 3 areas of supply risks
purchasing/supply management/procurement
all used interchangeably
what is a strategy?
an action plan to achieve long term goals and objectives should concentrate on the key factors necessary for success and the major actions that should be taken now to ensure the future the process of determining the relationship of the organization to its environment, establishing long term objectives and achieving the desired relationships through efficient and effective allocation of resources
linking current and future needs with current and future markets is the primary focus of what?
an effective supply strategy
supplier
an entity from whom the audited site purchases raw materials, ingredients, products, and/or services
agent
an organization or individual that does not own but trades any type of food, feed, and/or packaging such activities exclude production, storage, and any physical handling of the product they can be performed under specific customer requirements or not
six major supply strategy areas
assurance of supply cost reduction supply chain support environmental change competitive edge risk management
supply strategies that are based on changes in demand and supply are known as what?
assurance of supply strategies
growth
can be expressed in a variety of ways could be size of organization in terms of number of employees or assets or number of operating units or number of countries in which the organization operates or in a market share
challenges facing supply
capturing opportunities in the supply chain establishing the appropriate set of measures to evaluate the contribution of supply and supply initiatives managing financial, operational, and reputational risks improving supply chain sustainability performance managing growth and influence in total spend, span of supply chain activities, meaningful involvement in supply related decisions, and involvement in strategic corporate activities integrating the use of technologies in supply processes, including e commerce, digitalization, and artificial intelligence providing effective contribution to organizational success
supply strategy questions: who
centralized or decentralized location of staff top management involvement
early 1900s of supply function
clerical and tactical focus on policies and procedures key challenges: availability of supply and cost management
supply strategies that are designed to exploit market opportunities and organizational strengths to give the buying organization an advantage in the marketplace are known as what?
competitive edge strategies
three levels of strategic planning
corporate business unit function
financial objectives
could include total size of budget surplus or profit total revenue return on investment return on assets share price earnings per share increases in each of these or any combinations
corporate level of strategic planning
decisions and plans that answer: what business are we in? how will we allocate resources among these businesses?
business unit level of strategic planning
decisions mold the plans of a particular business unit to contribute to corporate strategy
opportunities for indirect contribution of supply function
decreased total costs of ownership (income statement) improving ROA/reduction in inventory investment (balance sheet) information source effect on efficiency effect on competitive position effect on customer satisfaction effect on image risk management training ground management strategy and social policy
environmental change strategies
designed to anticipate and recognize shifts in the competitive environment (economic, people, organizational, legal, governmental regulations and controls, and technological) so that it can turn them to the long term advantages of the buying organization
assurance of supply strategies
designed to ensure that future supply needs are met with emphasis on quality and quantity must consider changes in both demand and supply
competitive edge strategies
designed to exploit market opportunities and organizational strengths to give the buying organization a significant competitive edfe in the public sector, competitive edge usually means strong performance in achieving program objectives
supply chain support strategies
designed to maximize the likelihood that the considerable knowledge and capabilities of supply chain members are available to the buying organization supply chain members need better relations for the communication needed to ensure higher quality and better design
cost reduction strategies
designed to reduce the laid down cost of what is acquired or the total cost of acquisition and use (life cycle cost) with changes in technology, alternatives may be available to reduce an organization's overall operating costs through changes in materials, sources, methods, and buyer supplier relationships
what does a zero defects quality strategy emphasize?
do it right the first time
when did interest in the supply function as a managerial activity begin?
during WWI and WWII because of global materials shortages
three challenges in setting supply objectives and strategies
effective interpretation of corporate objectives and supply objectives the choice of the appropriate action plan or strategy to achieve the desired objectives the identification and feedback of supply issues to be integrated into organizational objectives
indirect contribution to supply
enhances the performance of other departments or individuals in the organization puts supply on the management team of the organization come from supply's role as an information source, effect on efficiency, competitive position, risk, and company image, management training, developing management strategy and social policy benefits may outweigh benefits of direct, but difficult to measure since it involves many intangible contributions that are difficult to quantify
supply strategies that are designed to anticipate and recognize shifts in the economy, organization, people, legal, government regulations and controls, and technologies are what?
environmental change strategies
supply can influence risk management in which areas?
financial operational reputation
return on assets effect
financial experts interested in this as a measure of corporate performance
challenges in measurement
finding the set of measures most appropriate for a particular organization's circumstances
strategic sourcing
focuses on long term supplier relationships and commodity plans with the objectives of identifying opportunities in areas such as cost reductions, new technology advancements, and supply market trends
managing supply risk
identify and classify risks assess impact and probability of risk event develop a risk management strategy
what should the supply management team do when a supply related risk exists?
identify and classify risks assess possible impact develop a mitigation strategy inform the chief supply officer await instructions implement the directive
sustainability objectives
include both environmental and social considerations must comply with legal obligations and meet the values and standards of the organization's stakeholders, including employees, shareholders, and customers
competitive factors affecting supply
increased outsourcing places greater reliance on suppliers increased global competition requires best value from suppliers for price, quality, delivery, and sustainability performance development of new product technologies evolving information systems trend to single sourcing and strategic supplier relationships greater importance of supply chain environmental and social sustainability performance risk management supply chain orientation to managing relationships with suppliers and customers
what does evidence of the growth and influence of supply management in an organization include?
involvement in strategic planning and executive status of the chief supply officer
on average, the dollars spent with suppliers as a percent of revenues is what?
is greater in manufacturing organizations than in service organizations
supply strategy questions: how much
large vs small quantities (inventories)
supply strategy questions: where
local, regional, domestic, international large vs small multiple, single vs sole source current, new vs newly developed supplier high vs low supplier turnover supplier certification supplier ownership
supply strategy questions: what
make or buy insource or outsource standard vs special
lean purchasing
manufacturing context and the implementation of just in time tools and techniques to ensure every step in the supply process adds value, that inventories are kept at a minimum level, and that distances and delays between process steps are kept as short as possible
profit leverage effect
measured by the increased in profit obtained by a decrease in purchase spend
supply strategy questions: when
now vs later forward buy
supply strategy questions: why
objectives congruent operationally and strategically market conditions current and future internal reasons (outside/inside supply)
three categories of supply risk
operational financial reputational
what does supply management include?
operational AND strategic responsibilities receiving, inspection, warehousing, inventory control, materials handling, packaging, scheduling, in/outbound transportation, disposal
evaluation of the supply function's contribution to organizational goals and strategies can be viewed in the context of what?
operational and strategic direct and indirect
strategic contribution of supply
opportunistic future oriented searches for opportunities to provide competitive advantage focuses on new and better solutions to organizational and supply challenges
logistics management
part of SCM that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related info between point of origin and point of consumption in order to meet customers' requirements includes inbound, outbound, internal, and external movements not confined to manufacturing organizations relevant to service organizations and to both private and public sector firms
customer
person or organization that could or does receive a product or service that is intended for or required by this person or organization
function level of strategic planning
plans concern: how each functional area contributes to business strategy allocation of internal resources
supply strategy questions: what price
premium, standard, lower cost based vs market based lease, make, buy
the supply area is a good training ground for managers because it provides exposure to what?
pressure of decision making under certainty and various levels and functions in the organization
reduction in inventory investment
prime responsibility of supply to manage the supply process with the lowest reasonable levels of inventory attainable
what does a successful supply chain management strategy integrate?
processes and systems within and across organizations
what does supply have the potential to contribute to?
profitability competitive position sustainability performance
supply strategy questions: quality
quality vs cost supplier involvement
challenges in supply chain management
reduce inventories shorten lead times and distances plan operations better remove uncertainties squeeze waste out of the supply chain
what is the impact of supply management actions on the balance sheet measured by?
return on assets effect
operational supply risk
risk of interruption of the flow of goods or services catastrophic events (earthquakes, tornadoes, war, fire, strikes)
reputational supply risk
risk that the organization's reputation will be harmed by a supply decision
financial supply risk
risk that the price of the goods or services acquired will change significantly
single or multiple sites
single sites are simplest supply situation becomes more complex as number of sites increase
today's supply function
strategic orientation global supply chains executive level leadership key challenges: sustainability, total cost of ownership, security, globalization, risk management
the question "how can supply and the supply chain contribute effectively to organizational objectives and strategy?" is a key question in what?
strategic supply management
training ground
supply area is an excellent training ground for new managers where needs of the organization may be quickly grasped
what is the design and management of seamless, value added processes across organizational boundaries to meet the needs of the end customer called?
supply chain management
strategies designed to make available the knowledge and capabilities of supply chain members to others in the buying organization are called what?
supply chain support strategies
effect on organizational risk
supply disruptions in terms of energy, service, or direct and indirect requirements can impact the ability of the organization to operate as planned and as expected by its customers, creating operational risk
direct contribution to supply
supply savings profit leverage effect return on assets effect appealing because both inventory reduction and purchasing savings are measurable and tangible evidence of supply contribution
mission, vision, and strategy of the organization
supply strategy must be congruent with organizational strategy mission, vision, and strategy of organization are key drivers for how the supply function will be managed and how supply decisions are made and executed
normally, most organizational objectives can be summarized as what?
survival, growth, financial, and sustainability
supply strategy questions: how
systems and procedures e commerce negotiations competitive bids fixed bids blanket order/open orders systems contracting group buying MRP
what must decisions be made about when developing strategies related to "how to buy"?
systems and processes
public institution
tend to be service providers subject to strict regulatory requirements regarding acquisition processes and policies includes all levels of government
private organizations
tend to have fewer constraints on need definition, specification, and supplier selection include companies with publicly traded stocks
effect on image
the actions of supply personnel influence directly the public relations and image of a company
information source
the contacts of the supply function in the marketplace provide a useful source of information for various functions within the organization information about prices, availability of goods, new sources of supply, new products, new technology
effect on efficiency
the efficiency with which supply processes are performed will show up in other operating results
what does the ROA effect quantify and measure?
the impact of supply actions on inventory and the balance sheet
supply management
the integration of related functions to provide effective and efficient materials and services to the organization
size of the organization
the larger the organization, the greater the absolute amount of spend with suppliers the larger the amount of spend, the greater the time and care that can and should be allocated to acquisition
service providers
the largest portion of needs is generated by capital, services, and other requirements in retailing, the largest spend is focused on resale requirements
manufacturers
the largest portion of needs is generated by customer needs the largest portion of spend with suppliers will be on direct requirements which comprise products sold to customers
the use of concepts of purchasing, procurement, supply, and supply chain management will vary from organization to organization depending on:
the organization's stage of development and/or sophistication the industry in which they operate and the organization's competitive position
process quality control programs
these use statistical control charts to monitor various production processes to isolate developing problems and make needed adjustments before bad product is produced
what is company image directly influenced by?
treating suppliers in a fair and equitable manner complying with regulatory requirements sustainability practices of suppliers
operational contribution of supply
trouble avoidance most familiar transactional, day to day operations traditionally associated with purchasing can be streamlined and organized in ways designed to routinize and automate many of the transactions, thus freeing up time for the supply manager to focus on the strategic contribution focus on executing current tasks as designed
value chain
used to trace a product through its various moves and transformations, identifying the costs added at each successive stage
what must the supply manager determine when developing supply strategies?
what to make or buy when to buy how much to buy how it should be ordered
