3.4 - Explain the common IT systems that can be used by a procurement or supply chain function

Question 1

Name 5 things IT systems can be used for

Answer 1

1. P2P process
2. Inventory management
3. Enterprise resource planning (ERP)
4. To enhance communication
5. To support e-sourcing, e-tendering and e-auction

Question 2

Name 6 benefits if P2P systems

Answer 2

1. Reduced errors
2. Reduced waste
3. Reduced costs
4. Faster payments
5. Continuous improvement
6. Enhanced relationships

Question 3

Name the 3 principles of Womack and Jones’ lean approach

Answer 3

1. Purpose
2. Process
3. People

Question 4

Name 8 areas where there can be waste (TIMWOODS)

Answer 4

Transport
Inventory
Motion
Waiting
Over-production
Over-processing
Defects
Skills

Question 5

Name the 5 steps that define continuous improvement

Answer 5

1. Step 1 - map the process workflows and identify any opportunities for improvement
2. Step 2 - Plan how the existing processes can be modified for improvement
3. Step 3 - Action: allocate the required resources and implement the changes
4. Step 4 - Review the implemented changes
5. Step 5 - Identify and amend any relevant areas for improvement and return to step 1

Question 6

electronic data exchange

Answer 6

The exchange of data between companies in a computerised format

Question 7

Kanban

Answer 7

A scheduling system that supports lean and just in time manufacturing processes, used to signal when inventory is low, and trigger reordering of materials

Question 8

Name 3 systems for inventory management

Answer 8

1. Materials requirement planning (MRP)
2. Just in time (JIT)
3. Kanban

Question 9

Materials requirement planning

Answer 9

A system designed to manage the flow of raw materials and components through an organisational process. This should not be confused with a manufacturing resource planning (MRPII) system, which is used to manage the flow and throughput in a manufacturing system

Question 10

Name the 3 objectives of an MRP system

Answer 10

1. Ensure that the parts or materials needed for manufacturing and end products are available
2. establish when to place orders and schedule deliveries
3. Keep inventory value as low as possible

Question 11

Minimum order quatity

Answer 11

The smallest amount of a product a buyer can order from the supplier

Question 12

Batch quantity

Answer 12

Number of products produced at a time

Question 13

Buffer stock

Answer 13

Amount of stock held as inventory at any time in addition to immediate requirements

Question 14

Lead times

Answer 14

The amount of time from placing the order to the goods/services being delivered

Question 15

Cycle time

Answer 15

The amount of time it takes from receiving raw materials to creating a finished product

Question 16

Bill of materials (BOM)

Answer 16

A comprehensive list of component items, materials and parts to create a product, essentially a recipe for the production of an item

Question 17

Just in time

Answer 17

A system that contributes towards the reduction of waste in the supply chain

Question 18

Whats the aim of kanban

Answer 18

Ensure that an organisation never runs out of components needed to make products, yet does not hold surplus amounts which tie up the business’ cash unnecessarily and require valuable storage space

Question 19

Name 4 major advances in technology that have aided the development of these inventory control systems

Answer 19

1. The internet
2. Bespoke software
3. Barcodes, scanners and tag readers
4. AI

Question 20

Radio frequency identification (RFID)

Answer 20

A wireless method of communication that uses digital tags to identify and locate specific items to identify and track goods by means of tags that transmit a radio signal. the tags contain electronically stored information. Items of inventory can be tagged and tracked in this way

Question 21

Name 9 advantages of IT systems when managing inventory

Answer 21

1. Accurate data provided
2. Saves resources
3. Improves efficiency
4. Speeds up communication
5. Promotes consistent working methods
6. Traceability
7. Supplier visibility
8. Customer visibility
9. Allows remote working

Question 22

Name 6 disadvantages of IT systems when managing inventory

Answer 22

1. Reliant on accurate set up information
2. Time consuming to install
3. Large financial outlay to implement
4. Staff may resist change and be concerned for their job
5. Incorrect data input could cause major problems
6. Less direct contact with suppliers

Question 23

ERP

Answer 23

An IT system that coordinates and integrates business processes and automates back office procedures to enhance efficiency

Question 24

Name 6 features of ERP

Answer 24

1. Supply chain management
2. Manufacturing
3. HR
4. Project management
5. Finance / accounting
6. Customer relationship management

Question 25

Name 3 recent developments within ERP systems

Answer 25

1. Remote access 2. Cloud-based systems 3. Social media modules

Question 26

Name 8 ERP elements of supply chain management

Answer 26

1. Requisitions 2. PO creation and sending 3. Delivery of PO 4. Invoice payment 5. Contract management 6. Supplier relationship management 7. Supplier database 8. Supplier evaluation

Question 27

Name 7 elements that communication contributes towards

Answer 27

1. Agreeing specifications 2. SRM 3. Customer service 4. Conflict resolution 5. Expediting 6. Supplier performance management 7. Contract management

Question 28

Name 3 things communication have evolved to be

Answer 28

1. Machine to human 2. Human to machine 3. Machine to machine

Question 29

Name 3 ways procurement use machine to machine communication

Answer 29

1. Vending machines can send messages to MRP systems to generate orders 2. Warehouse locations can send messages to IT systems when inventory is getting low 3. Logistics can be tracked through messages sent from vehicles to machines

Question 30

Internet of things (IoT)

Answer 30

A system of linked technology including machines, animals, people or objects that can transfer data over the internet, mobile phone network or computer network with no human intervention

Question 31

Name 7 advantages of IT related communications

Answer 31

1. Speeds up processes 2. reduces errors 3. Increases control 4. Aids traceability 5. Not reliant on human input 6. No distortion in communication 7. Receipt of messages can be tracked

Question 32

Name 7 disadvantages of IT related communications

Answer 32

1. Relationships may suffer 2. Impersonal 3. Could result in job losses 4. Costly to implement 5. IT support for systems required 6. Power failures may cause systems to crash 7. E-mails may be open to interpretation

Question 33

Name 4 forms of electronic sourcing

Answer 33

1. E-requisitioning 2. E-catalogues 3. E-auctions 4. E-tenders

Question 34

Name 3 advantages of e-requisitioning

Answer 34

1. It is a faster process than using paper 2. It has full traceability 3. It saves time

Question 35

Name the 4 steps in the e-approval flow diagram

Answer 35

1. E-requisition is raised 2. Low level e-approval 3. High level e-approval 4. Procurement places the e-purchase order

Question 36

Name 4 advantages of e-catalogues

Answer 36

1. Accessible at the click of a button 2. Various perspectives 3. Live information 4. More detail

Question 37

name 2 e-auction formats

Answer 37

1. Standard auction (e-auction) 2. Reverse auction

Question 38

Standard e-auction

Answer 38

Where a supplier offers goods for sale on the internet and potential customers place bids against the items

Question 39

Reverse auction

Answer 39

Where the buyer states its requirements or need and the suppliers respond

Question 40

Name 5 advantages of using reverse e-auctions

Answer 40

1. reduction in manual process which saves time 2. No need for face to face negotiations 3. Enhanced savings for procurement due to suppliers constantly reducing bids 4. Opportunity to interact with larger volumes of suppliers 5. Opportunity for suppliers to gain information on their competition

Question 41

Name 5 disadvantages of using reverse e-auctions

Answer 41

1. Possibility of technical issues which could disadvantage potential suppliers 2. Impersonal 3. Supplier may end up bidding lower than is economically viable 4. Lack of relationship with suppliers 5. Suppliers may lose competitive edge

Question 42

Name 13 benefits of e-tendering

Answer 42

1. Process efficiencies 2. Consistency 3. Technological safeguarding 4. Free up time 5. Promotion of cross-functionality 6. Environmentally friendly 7. Screening of bids 8. Storage 9. Reduced risk 10. Assurance 11. auditing 12. Consistency of process 13. Transparency