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LSM 600 SC Governance > Ch. 2-Purchasing > Flashcards

Ch. 2-Purchasing Flashcards

(56 cards)

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1
Q

Merchant

A

Firms that buy goods in large quantities for resale purposes. Purchase their merch in volume to take advantage of quantity discounts and other incentives such as transportation economy and storage efficiency Exs: Wholesalers and retailers

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2
Q

Industrial Buyers

A

purchase raw materials for conversion purposes. Also purchase services, capital equipment, and MRO supplies. Ex: manufacturers, restaurants, landscapers, and florists

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3
Q

Purchasing

A

acquisition of required materials, services, and equipment

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4
Q

Contracting

A

acquisition of services

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5
Q

supply mgmt

A

expanded set of responsibilities of purchasing professionals: identification, acquistion, access, positioning, management of resources and related capabilities the org needs or potentially needs in the attainment of its strategic objectives

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6
Q

Procurement

A

development, value analysis, negotiation, expediting, contract administration, supplier quality control, and logistics activities

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7
Q

Goals of purchasing

A
  • uninterrupted flows of raw materials at the lowest total cost
  • improve quality of finished goods produced
  • maximize customer satisfaction
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8
Q

Profit leverage effect

A

calculates the impact of a change in purchase spend o a firm’s profit before taxes, assuming gross sales and other expenses remain unchanged

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9
Q

ROA (return on assets)

A

ratio of firm’s net income to total assets: net income/total assets

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10
Q

Inventory turnover

A

of times inventory is used & replaced over an accounting period: cost of goods sold/ avg inventory

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11
Q

Material requisition

A

internal document used to request materials from the warehouse or purchasing dept

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12
Q

Purchase requisition

A

internal doc used to request the purchasing dept to buy specific goods or services

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13
Q

Traveling requistion

A

materials & standard parts that are requested on a recurring basis.

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14
Q

Follow-Up

A

proactive act to contact the supplier to ensure online delivery of the goods ordered

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15
Q

expediting

A

contacting a supplier to speed up an overdue shipment

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16
Q

UCC (Uniform Commercial Code)

A

Legislation that governs the purchase and sale of goods in every state except Louisiana

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17
Q

E- Procurement Steps

A
  1. Material user enters a purchase request (relevant info such as quantity and date needed)
  2. Purchase requisition approved & transmitted electronically to buyer
  3. Buyer reviews requisition, assigns qualified suppliers to bid (If over $50,000)
  4. Buyer reviews closed bids & selects suppliers
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18
Q

Advantages to E-procurement

A
  1. Time Savings
  2. Cost savings
  3. accuracy
  4. real time use
  5. mobility
  6. trackability
  7. mgmt benefits
  8. suppliers benefits
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19
Q

Small-value purchases

A

minimized so buyers are not overburdened with trivial purchases that may prevent them from focusing on more crucial purchases

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20
Q

Outsourcing

A

buying materials or components from suppliers instead of making them in-house

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21
Q

Reasons to buy or outsource

A
  • cost advantage
  • insufficient capacity
  • lack of expertise
  • quality
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22
Q

Reasons to make

A
  • protect proprietary technology
  • no competent supplier
  • better quality control
  • use existing idle capacity
  • control of lead time, transportation, and warehousing costs
  • lower cost
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23
Q

Break-even analysis

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A

computes cost effectiveness of sourcing decisions when cost is the most important criterion

24
Q

Supply Base

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A

list of suppliers that a firm uses to acquire its materials, services, supplies, and equipment

25
Factors to consider while selecting supplies
- Process and product technologies - Willingness to share technologies and info - quality - cost - reliability - order system & cycle time - capacity - communication capability - location - service
26
OEM (original equipment manufacturers)
Companies that make the final products
27
Tier-1
Company's direct suppliers: provides parts or services directly to the OEM
28
Tier-2
suppliers' suppliers of a company. provides outputs to tier 1 suppliers
29
Tier-3
suppliers' suppliers suppliers of a company that sells their outputs to tier 2 suppliers
30
Sole sourcing
when the supplier is the only available source
31
Single sourcing
deliberate practice of concentrating purchases of an item with one source from a pool of viable suppliers
32
Reasons for a single supplier
- establish a good relationship - less quality variability - lower cost - transportation economies - proprietary product or process purchases - volume too small to split
33
Reasons for multiple suppliers
- need capacity - spread the risk of supply interruption - create competition - info - dealing w/ special kinds of businesses
34
Centralized purchasing
single purchasing dept makes all the purchasing decisions
35
Decentralized purchasing
individual, local purchasing depts (such as plant level) make their own purchasing decisions
36
Advantages of centralization
- concentrated volume - avoid duplication - specialization - lower transportation costs - no competition between units - common supply base
37
Advantages of decentralization
- better knowledge of unit requirements - local sourcing - less bureaucracy
38
Global sourcing
int'l purchasing
39
Import broker
Sales agent who performs transactions for a fee
40
import merchant
buys and takes title to the goods then resells them to the buyer
41
tariff
list or schedule showing the duties, taxes, or customs imposed by the host country on imports or exports
42
Non-tariff barriers
import quotas,licensing agreements, embargoes, laws, and other regulations imposed on imports and exports
43
World Trade Org
largest and most visible intl trade org dealing with the global rules of trade between nations: ensures that intl trade flows smoothly, predictably, and freely among member countries
44
NAFTA
remove trade and investment barriers among the U.S., Canada, and Mexico
45
EU
Consists of Belgium, France, Luxembourg, Italy, Netherlands, and Germany: create a single market without internal borders for goods and services, allowing member countries to better compete with markets like the U.S.
46
Barter
complete exchange of goods or services of equal value without exchange or currency
47
Offset
exchange agreement for industrial goods or services as a condition of military related export
48
Direct offset
joint venture and exchange of related goods
49
Indirect offset
exchange of goods or services unrelated to the initial purchase
50
counterpurchase
original exporter agrees to sell goods to a foreign importer and simultaneously agrees to buy specific goods or services from the foreign importer
51
Public procurement
(public purchasing) mgmt of purchasing and supply mgmt function in he govmt and nonprofit sectors such as educational institutions, hospitals, and fed, state, and local govmts
52
FAR (Federal Acquisition Regulation)
All fed govmt purchases must comply with this
53
GSA (General Services Administration)
responsible for most federal purchases
54
(FASA) Federal Acquision Streamlining Act
removes many restrictions on govmt purchases below $100,000
55
Buy American Act
mandates the U.S. govmt purchases and third party purchases that utilize federal funds to buy domestic produced goods, if the the price differential between the domestic and foreign products don't exceed a certain % amount
56
green purchasing
environmental and health considerations while making purchasing decisions

LSM 600 SC Governance (1 decks)

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