Chapter 2

Question 1

The integrated buying model

Answer 1

》multiple goals must be satisfied (I.e. right material as specified at an acceptable cost and quality level within reasonable lead time)

●supplier lead time
》firm/ fixed
》variable / uncertain

●Quality level
》competitive priorities supplier six sigma status

●Cost
》Cost per unit
》Quantity discount schedule
》price / Cost analysis

Question 2

Strategic sourcing

Answer 2

Top level and based on long term decision relating to high profit, high supply risk strategic items and low profit, high supply risk, bottleneck products and services

●issues to be considered in developing a strategic sourcing plan

》a complete understanding of corporate strategies and marketing plans in order to provide a well integrated purchasing system

》an extensive evaluation / study of current suppliers , how performance is measured, and the expectations of suppliers relative to the industry

》 study the degree of global purchasing opportunities

Question 3

Four phases of strategic sourcing plan

Answer 3

Phase 1: Sourcing Audit
》used as diagnostic that identifies opportunities for increased profitability. Audit reaffirms company objectives and how the current strategic strategy is performing and identify

Phase 2: Organisational and development
》include developing sourcing strategies and establishing sourcing control systems based of frequent analysis and systematic approach, making provision for training, outlining areas to cut cost and improve profitability formulating incentives programs

Phase 3 : Implementation and evaluation
》introducing sourcing strategies Implementation of new procedures, monitoring of sourcing activities, feedback mechanism, and refinement of sourcing process

Question 4

Sourcing strategy trends

Answer 4

●managing purchasing risk
●increases in global purchasing
●greening in purchasing
●development in electronic purchasing