PURCHASING AND SUPPLY MANAGEMENT TEST CH 1 –
7 WITH SOLUTIONS #18
A new competitive environment - correct answer - increasing #s of world class global
competitors
- sophisticated customer base (more performance at lower cost)
- widely available information sources
- balance of power between buyers and suppliers
- greater levels of outsourcing
Factors in driving SCM - correct answer - lower cost and wide availability of info (links
members of supply chain closer)
- higher levels off competition in domestic and international markets (requires greater
quickness, agility and flexibility)
- customer expectations and requirements (constantly changing and more demanding)
- ability of an organization's supply chain to identify and mitigatae risk (minimize
disruptions)
- competition is now between supply chains not just between companies
Why is purchasing important - correct answer - increasing value and savings
- building relationships and driving innovation
- improving quality and reputation
- reducing time to market
- managing supplier risk
- generating economic impact
- contributing to competitive advantage
Increasing value and savings - correct answer - suppliers have substantial impact on a
firm's total cost
- many product features originate from suppliers
- in manufacturing, purchased content is more than 55% of revenues
- avoiding cost through early involvement in product design stage
Building relationships and driving information - correct answer - traditional approach is
to bargain hard for price reductions
- newer approach is to conduct joint cost reduction with suppliers
- both buyer and supplier must benefit
- suppliers can contribute innovative ideas
Improving quality and reputation - correct answer - buyer focuses on core competencies
and outsources noncore activities and materials
- need for ability to track materials back up through supplier's supply chain
- supplier quality --> product quality (lapses in managing supplier quality can potentially
tarnish a buyer's reputation
,Reducing time - to - market - correct answer - include suppliers early product design
process to take advantage of their expertise
- early supplier involvement can lead to an average of 20% improvement on material
costs, material quality, and product development times
Managing supplier risk - correct answer - supplier risk is magnified by sourcing
strategies that emphasize global sourcing, single sourcing and JIT inventory
- need to develop business continuity plans to mitigate risks
Generating economic impact - correct answer - the monthly ISM Report on Business is
a closely followed national economic indicator (a chanage in index, manufacturing and
nonmanufacturing components)
- >50 means economy is expanding
- <50 means economy is contracting
Purchasing - correct answer typical activities include:
- supplier identification and selection
- buying
- negotiation
- contracting
- supply market research
- supplier measurement and improvement
- purchasing systems development
The five rights of purchasing - correct answer 1. Getting the "right" quality
2. In the "right" quantity
3. At the "right" time
4. For the "right" price
5. From the "right" source
Supply management - correct answer a strategic approach for planning for and
acquiring the organization's current and future needs through effectively managing the
supply base, utilizing a process orientation in conjunction with cross functional teams to
achieve the organizational mission
Supply management responsibilities - correct answer strategic responsibilites
- activities which have a major long term impact on firm performance
- aligned with the overall mission and strategies of the firm
Supply management- managing the supply base - correct answer managing the supply
base
- work directly with suppliers to provide world class performance
Supply management - process approach - correct answer process approach
- identifying, evaluating, selecting, managing, and developing suppliers to improve
performance
, - move across functional area boundaries
Supply management cross-functional - correct answer cross-functional
- sharing info
- suppliers as an extention of buying the company
The supply chain umbrella - correct answer core functions:
- purchasing
- inbound transportation
- quality control
- demand and supply planning
- receiving, materials handling, and storage
- material or inventory control
- order processing
- production planning, scheduling, and control
- shipping/warehousing/distribution
- outbound transportation
- customer service
Enablers of purchasing and SCM - correct answer - HR
- organizational design
- information technology
- measurement
(check out slides in ch 1)
Elements of the purchasing process - correct answer - identify user requirements
- evaluate user needs
- identify suppliers to meet that need
- develop agreements with suppliers
- develop ordering mechanism
- ensure payment occurs promptly
- evaluate whether need was effectively met
- drive continuous improvement
Purchasing objectives - correct answer 1. Supply assurance/continuity
2. Manage sourcing process
3. Supplier performance management
4. Develop aligned goals with internal stakeholders
5. Develop integrated supply strategies that support business goals and objectives
Supply continuity - correct answer - source product/services at right price
- source them from right source
- source them at right specification that meets users' needs
- source them in right quantity
- arrange for delivery/service performance at right time to right internal customer
7 WITH SOLUTIONS #18
A new competitive environment - correct answer - increasing #s of world class global
competitors
- sophisticated customer base (more performance at lower cost)
- widely available information sources
- balance of power between buyers and suppliers
- greater levels of outsourcing
Factors in driving SCM - correct answer - lower cost and wide availability of info (links
members of supply chain closer)
- higher levels off competition in domestic and international markets (requires greater
quickness, agility and flexibility)
- customer expectations and requirements (constantly changing and more demanding)
- ability of an organization's supply chain to identify and mitigatae risk (minimize
disruptions)
- competition is now between supply chains not just between companies
Why is purchasing important - correct answer - increasing value and savings
- building relationships and driving innovation
- improving quality and reputation
- reducing time to market
- managing supplier risk
- generating economic impact
- contributing to competitive advantage
Increasing value and savings - correct answer - suppliers have substantial impact on a
firm's total cost
- many product features originate from suppliers
- in manufacturing, purchased content is more than 55% of revenues
- avoiding cost through early involvement in product design stage
Building relationships and driving information - correct answer - traditional approach is
to bargain hard for price reductions
- newer approach is to conduct joint cost reduction with suppliers
- both buyer and supplier must benefit
- suppliers can contribute innovative ideas
Improving quality and reputation - correct answer - buyer focuses on core competencies
and outsources noncore activities and materials
- need for ability to track materials back up through supplier's supply chain
- supplier quality --> product quality (lapses in managing supplier quality can potentially
tarnish a buyer's reputation
,Reducing time - to - market - correct answer - include suppliers early product design
process to take advantage of their expertise
- early supplier involvement can lead to an average of 20% improvement on material
costs, material quality, and product development times
Managing supplier risk - correct answer - supplier risk is magnified by sourcing
strategies that emphasize global sourcing, single sourcing and JIT inventory
- need to develop business continuity plans to mitigate risks
Generating economic impact - correct answer - the monthly ISM Report on Business is
a closely followed national economic indicator (a chanage in index, manufacturing and
nonmanufacturing components)
- >50 means economy is expanding
- <50 means economy is contracting
Purchasing - correct answer typical activities include:
- supplier identification and selection
- buying
- negotiation
- contracting
- supply market research
- supplier measurement and improvement
- purchasing systems development
The five rights of purchasing - correct answer 1. Getting the "right" quality
2. In the "right" quantity
3. At the "right" time
4. For the "right" price
5. From the "right" source
Supply management - correct answer a strategic approach for planning for and
acquiring the organization's current and future needs through effectively managing the
supply base, utilizing a process orientation in conjunction with cross functional teams to
achieve the organizational mission
Supply management responsibilities - correct answer strategic responsibilites
- activities which have a major long term impact on firm performance
- aligned with the overall mission and strategies of the firm
Supply management- managing the supply base - correct answer managing the supply
base
- work directly with suppliers to provide world class performance
Supply management - process approach - correct answer process approach
- identifying, evaluating, selecting, managing, and developing suppliers to improve
performance
, - move across functional area boundaries
Supply management cross-functional - correct answer cross-functional
- sharing info
- suppliers as an extention of buying the company
The supply chain umbrella - correct answer core functions:
- purchasing
- inbound transportation
- quality control
- demand and supply planning
- receiving, materials handling, and storage
- material or inventory control
- order processing
- production planning, scheduling, and control
- shipping/warehousing/distribution
- outbound transportation
- customer service
Enablers of purchasing and SCM - correct answer - HR
- organizational design
- information technology
- measurement
(check out slides in ch 1)
Elements of the purchasing process - correct answer - identify user requirements
- evaluate user needs
- identify suppliers to meet that need
- develop agreements with suppliers
- develop ordering mechanism
- ensure payment occurs promptly
- evaluate whether need was effectively met
- drive continuous improvement
Purchasing objectives - correct answer 1. Supply assurance/continuity
2. Manage sourcing process
3. Supplier performance management
4. Develop aligned goals with internal stakeholders
5. Develop integrated supply strategies that support business goals and objectives
Supply continuity - correct answer - source product/services at right price
- source them from right source
- source them at right specification that meets users' needs
- source them in right quantity
- arrange for delivery/service performance at right time to right internal customer
