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46 Multiple choice questions

  1. -Purchasing was historically perceived as just a buying function for manufacturing, repair materials, and supplies

    -Purchasing agents tried to get the lowest price possible for the most acceptable quality

    -Transactional focus led to getting the best possible "deal" today
    Did not focus on future transactions
    No concept of supply chain
    Purchasing seldom looked beyond the first-tier supplier
    Purchasing simply responded to the demands of the production group
  2. 1.) Pretransaction components
    2.) Transaction components
    3.) Posttransaction components
  3. Volume consolidation
    Operational integration
    Value management
    Segmentation

    Importance and implications of supplier selection, supplier qualification, and supplier management
  4. Supplier audits
    Supplier development
    Monitoring performance
    Supplier certification
    E-commerce and procurement
    -Electronic data interchange (EDI)
    -Internet
  5. Procurement looks up and down the entire supply chain for impacts and opportunities
    Goods and service account for 55 cents of every sales dollar
  6. 1.) Line fallout
    2.)Defective finished goods rejected before sale
    3.)Field failures
    4.)Repair/replacement in field
    5.) Customer goodwill/reputation of firm
    6.)Cost of repair costs
    7.) Cost of maitnence and repairs
  7. prioritize resources for purchasing
    The most procurement effort goes to the most critical supplies/suppliers
  8. Identify critical products & services
    Identify critical suppliers
    Form a cross-functional team (usually lead by Procurement)
    Meet with top management of selected supplier(s)
    Identify key projects to drive performance improvements
    Develop and define details of a formal agreement
    Monitor status & modify strategies
  9. JIT delivery
    More frequent delivery of smaller quantities
    Close cooperation and communication
    JIT II
    Integration of suppliers into manufacturing processes

    Procurement of logistics services

    Performance-based logistics
  10. Extends beyond buyer-seller operations
    Value engineering
    Reducing complexity
    Involving the supplier early in product design
  11. -Building partnerships
    -Sharing information and knowledge
    -Identifying linked processes and shared opportunities for improvement
  12. Allow users in the organization to doing the routine buying of items considered to be too insignificant to warrant further consideration.
  13. - Refers to acquiring sources of supply
  14. Refers to acquiring customer's operations.
  15. 1.) Identifying need
    2.) Investigating sources
    3.)Qualifying sources
    4.) Adding supplier to internal systems
    5.) Educating
  16. Product & process technologies
    Willingness to share technologies and information
    Early supplier involvement (ESI)
    Concurrent engineering (CE)
    Quality
    Service
    Cost - Total cost of ownership or acquisition
    Reliability
    Order system & cycle time
    Capacity
    Communication capabilities
    Location
    Financial Stability
  17. Increasing procurement leverage by reducing the total number of suppliers while continuing to minimize risk
  18. identifies how much is being spent on each type of product or service across all locations in the firm
  19. items that involve a low percentage of the firms' total spend and involve very little supply risk.
  20. 1.) Price
    2.)Order placement/preparation
    3.)Delivery/transportation
    4.)Tariffs/duties
    5.)Billing/payment
    6.)Inspection
    7.)Return of parts
    8.)Folow-up correction
  21. Yes
  22. Bottleneck and Critical
  23. strategic items and services that involve a high level of expenditure and are vital to the firm's success.
  24. Routine and Leverage purchase
  25. Commodity items where many alternatives of supply exist and supply risk is low. Spend is high and there are potential procurement savings
  26. "An organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections."
    Institute for Supply Management
  27. Purchased goods and services are among the largest cost elements for most firms: 55 cents of every sales dollar
    The growing emphasis of outsourcing has expanded the supply base of organizations
    This added complexity requires more management attention on the organizational interfaces with suppliers
  28. Primary objective of operational integration is to cut waste, reduce cost, and develop a relationship that allows both buyer and seller to achieve mutual improvements

    Integration can take many forms
    -Buyer providing detailed sales information to supplier
    -Buyers and suppliers working together to redesign linked processes
    -Eliminating duplicated activities performed by both the buyer and supplier

    -Can provide incremental savings of 5% to 25% over the benefits of volume consolidation
  29. unique procurement problems. Supply risk is high and availability is low. Small number of alternative suppliers.
  30. User buy
    Volume consolidations
    Operational integration
    Value management
  31. What types of metrics might I use to rate my suppliers?
    What about metrics for transportation providers?
  32. An independent, non-governmental membership organization and the world's largest developer of voluntary International Standards. Made up of 162 member countries, with a Central Secretariat based in Geneva, Switzerland.
  33. several opportunities for making product information available while overcoming compatibility issues between computer systems

    Electronic catalogs allow rapid access to product info, specifications, pricing and ordering
    Buying exchanges allow sellers or buyers of specific goods or services to find each other on a common web site
  34. Critical and Leverage purchase
  35. A series of standards for environmental management measuring a firm's environmental impact.
    The benefits include reduced energy consumption, environmental liability, reduced waste & pollution, and improved community goodwill.
  36. Ensuring Continuous Supply
    Minimizing Inventory Investment
    Quality Improvement of Supply
    Supplier Development
    -Supplier selection
    -Building supplier relationships
    -Supplier continuous improvement
    Lowest Total Cost of Ownership
  37. ...
  38. A series of quality standards that provide basic definitions for quality assurance and quality management .
    Companies wanting to sell in the global market seek ISO 9000 certification.
  39. Routine and Bottle neck
  40. - commodity items where many alternatives of supply exist and supply risk is low. Spend is high and there are potential procurement savings.
  41. ensures the firm is positioned to implement its strategies with support from its supply base

    -Focuses on building relationships with suppliers (Tier 1 and beyond)
    -Involvement with outsourcing includes more than just purchasing raw materials and parts
    -Also includes finding alternate sources for manufactured products or services to help manage demand
  42. is the electronic transmission of data between a firm and its suppliers
    Shares information and knowledge such as order entry, planning/scheduling, tracking, delivery, billing and payment
  43. Buying materials and components from suppliers instead of making them in-house. The trend has moved toward outsourcing.
  44. Three Attributes:

    1.)Companies should recognize & celebrate the achievements of their best suppliers.
    2.)Award winners exemplify true partnerships continuous improvement, organizational commitment, & excellence.
    3.)Award-winning suppliers serve as role models for other suppliers.
  45. A process to identify the best & most reliable suppliers
    Sourcing decisions are made on facts and not on perception
    Frequent feedback can help avoid surprises & maintain good relationships.
    Suppliers should also be allowed to provide constructive feedback to (you) the customer
  46. a small percentage of items account for a large percentage of the dollars spent
    For example, "A" items in an ABC inventory classification system

    Purchasing processes should be tailored to the value and/or criticality of the materials needed