Purchasing and Supply Management
Test 1 : Ch 1 – 7 Exam 2025 (100%
Correct.)
A new competitive environment - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERStypical activities include:
- supplier identification and selection
- buying
- negotiation
- contracting
- supply market research
- supplier measurement and improvement
- purchasing systems development
the five rights of purchasing - ANSWERS1. 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 - ANSWERSa 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 - ANSWERSstrategic 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 - ANSWERSmanaging the supply base
- work directly with suppliers to provide world class performance
, supply management - process approach - ANSWERSprocess approach
- identifying, evaluating, selecting, managing, and developing suppliers to improve
performance
- move across functional area boundaries
Supply management cross-functional - ANSWERScross-functional
- sharing info
- suppliers as an extention of buying the company
the supply chain umbrella - ANSWERScore 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 - ANSWERS- HR
- organizational design
- information technology
- measurement
(check out slides in ch 1)
elements of the purchasing process - ANSWERS- 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 - ANSWERS1. 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 - ANSWERS- source product/services at right price
- source them from right source
Test 1 : Ch 1 – 7 Exam 2025 (100%
Correct.)
A new competitive environment - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERS- 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 - ANSWERStypical activities include:
- supplier identification and selection
- buying
- negotiation
- contracting
- supply market research
- supplier measurement and improvement
- purchasing systems development
the five rights of purchasing - ANSWERS1. 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 - ANSWERSa 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 - ANSWERSstrategic 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 - ANSWERSmanaging the supply base
- work directly with suppliers to provide world class performance
, supply management - process approach - ANSWERSprocess approach
- identifying, evaluating, selecting, managing, and developing suppliers to improve
performance
- move across functional area boundaries
Supply management cross-functional - ANSWERScross-functional
- sharing info
- suppliers as an extention of buying the company
the supply chain umbrella - ANSWERScore 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 - ANSWERS- HR
- organizational design
- information technology
- measurement
(check out slides in ch 1)
elements of the purchasing process - ANSWERS- 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 - ANSWERS1. 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 - ANSWERS- source product/services at right price
- source them from right source
