Exam 3

Question 1

How do you determine your sourcing method for each item?

Answer 1

Use the portfolio approach

Question 2

Portfolio approach step one

Answer 2

Assess each items supply risk and profit impact

Question 3

Supply risk

Answer 3

The extent to which an item is difficult to source

Question 4

Causes of supply risks

Answer 4

Lack of qualified sources, raw material scarcity, lack of substitutes, complex high logisitical costs, existence of a monopoly or oligpoly

Question 5

Profit impact of step one

Answer 5

A result of the sheet volume of spend or the items unique added value

Question 6

Portfoilo approach step two

Answer 6

Plot each item on the portfolio model

Question 7

Portfolio approach step three

Answer 7

Execute plan of action based on category

Question 8

Routine items

Answer 8

Low value, small volume, individual transactios

Question 9

Routine items action

Answer 9

Simplify and automate

Question 10

Routine items example

Answer 10

Negotiate office supply rate oce and allow employees to make needed purchases using company cards

Question 11

Leverage items

Answer 11

High spend, many qualified suppliers

Question 12

Leverage items action

Answer 12

Max your position by volume discounts and promotong competitive bidding

Question 13

Leverage items example

Answer 13

Heinz ketchup purchase of tomatoes using reverse action

Question 14

Bottleneck items

Answer 14

Few alternate suppliers, complex or new specifications or tecnologies

Question 15

Bottleneck items action

Answer 15

Ensure supply continutity while finding new suppliers

Question 16

Bottleneck items example

Answer 16

Hospital supply manager working with internal customers to change cast colors

Question 17

Critical iteams

Answer 17

High spend, quaility and design of upmost importance. Few qualified suppliers

Question 18

Critical items action

Answer 18

Form and alliance with suppliers and create a contingency plan if supply should fail

Question 19

Critical iteam example

Answer 19

McD creates in depth relationshops with critical suppliers

Question 20

Lowering prices

Answer 20

A simplistic attempt at finding a lower cost for an item

Question 21

Strategic cost management

Answer 21

Focuses on the total cost structures of a product

Question 22

Strategic cost management attempts

Answer 22

To understand causes of costs for an item

Question 23

Strategic cost management allows managers

Answer 23

To focus on reducing spend, price, cost, and total cost of ownership

Question 24

4 tools of strategic cost management

Answer 24

Spend analysis, price analysis, cost analysis, total cost of ownership analysis

Question 25

Spend analysis

Answer 25

What did we spend our money on and who did we spend it with?

Question 26

Three caregories of spend

Answer 26

Direct spend, indirect spend, capital spend

Question 27

A good spend analysis helps understand

Answer 27

Whether we recieved the correct amount for what we paid, who our biggest suppliers are and if their pricing is consistsent across divisions, opportunities available to combine our spending

Question 28

Price analysis

Answer 28

The process of comparing suppliers prices against each other or an external benchmark

Question 29

Price analysis critical

Answer 29

Make sure you are comparing items with the same specifications quaility levels lead times and warranties

Question 30

Cost analysis

Answer 30

Analyzing each individual cost element that makes up the final price.

Question 31

Cost analysis necessary when

Answer 31

Price analysis cannot be done due to low number of suppliers

Question 32

Total cost of ownership analysis

Answer 32

Combination of all cost involved in a product not just the purchase price

Question 33

Three types of costs

Answer 33

Acquisition costs, ownership costs, post ownership costs

Question 34

Fundamental logistics trade offs

Answer 34

Every decision about one aspect of logistics affects the others

Question 35

Three fundamental logistic trade offs

Answer 35

Cost to cost, modalities, cost to service

Question 36

Cost to cost

Answer 36

Trading off speed of delivery with saving fuel

Question 37

Modal trade offs

Answer 37

Trade off between and within the various modes of transporation

Question 38

Cost to service trade off

Answer 38

Cost of improving service and service levels. Relationship is non linear

Question 39

Landed costs

Answer 39

Integrated all trade offs in a landed cost analysis

Question 40

5 modes of transportation

Answer 40

Maritime shipping, rail, trucks and cargo vans, air, pipelines

Question 41

Maritime shipping

Answer 41

Used globally for large shipping

Question 42

Rail

Answer 42

Limited where it can go, in us carries the most weight in tons

Question 43

Trucks and cargo vans

Answer 43

Commonly used to ship door to door

Question 44

Air

Answer 44

Most expensive way to ship, usually carries lightweight small expensive items

Question 45

Pipelines

Answer 45

Used for petroleum or water, most cost effective mode of transportation

Question 46

Consolidation

Answer 46

Taking small shipments and combining them into more econlarger shipments

Question 47

Cross docking

Answer 47

A warehouse approach whereby large shipments come in and are broken into smaller shipments to several locations

Question 48

Break bulk

Answer 48

Break bulk facilites are needed when large shipments need to be split apart

Question 49

Hub and spoke

Answer 49

A method used to reduce the number or trucks or other carries needed for shipping when networks of cities are involved in delivery