- Not cheapest option - Finds Prod./Serv. @ affordable £££ + - Not compromise Qual. - E.g. Office furniture (chair) - Seek supplier offering balance bet. C & Qual. - Ensure it`s VfM + considerations in... - TCO + Price Iceberg, Whole LC & - Furniture longevity - 1 yr cheap chair vs 10yr lasting chair - For best price

L4M1 LO1 Part 1 Flashcards by Petrus Lemba

Q1C1

Full Q: What is Supply Chain Management (SCM)? Outline drivers, advantages & disadvantages of using this approach within the Procurement Department of an Organisation. (25 marks)

Note: Answer as an Intro of Essay & must only be SCM, nothing about Tiers inc.

Process arrangement
In Production & Distribution G/Serv. (Exp. each)
Origin point -> End-consumer
E.g. Potato (Exp. Farmer -> End consumer)
Relies on Close Relationships bet. parties in SC
AV to product @ each stage
SCM`s specific config. = TSC

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Q1C2

a) What is Supply Chain Management (SCM)?

Note: Answer as an Intro of Essay & only TSC

TSC = Tiered Supply Chain
Multiple LVLs Supp. & Sub-S
A buyer work with few Tier1 supp.
In turn works with their own suppliers
Many layers of Supp. in Tiered Sys.
Leads to same product creation
Essay explores Drivers + Adv. + Disad.
Of implementing complex SC
E.g. TSC Model

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Q1C3

Outline the drivers of using SCM approach

Main Drivers of using TSC
Pursuit Effi. + Cost Effectiveness + Flex.
By having supp. in distinct tiers
Org. can Streamline their mang. processes
This reduces complexity
Enhance overall SC performance

TSC is employed as response to:
- Global nature of modern business
- Accommodate the need to source materials
- From various regions
- Maintaining Mang. + responsive SNet

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Q1C4

Outline the Advantages of using SCM approach

TSC Adv. is streamlined management of (SMo) suppliers
In this model, fewer direct suppliers to oversee
Simplifies coordination and communication processes.
This increased efficiency and responsiveness
As Orgs deal with smaller + manageable pool of suppliers.
Having suppliers in a tiered system
cost savings
Improved collabs with a select group of trusted partners.

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Q1C5

Outline the Disadvantages of using SCM approach

Disad. = TSC`s complexity
Drawback = reduced visibility

-As SC <-> Across multiple tiers
- Orgs struggle view of entire process.

Lacking visibility challenges is tracking and responding to potential disruptions
Ethical risks emerge when companies have limited oversight over lower-tier suppliers.
Exposing Orgs to issues:
1. labour exploitation
2. Environ. concerns,
3. Ethical standards violations.

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Q1C6

Give conclusion on SCM approach

SCM evolved into a complex discipline
Due to globalization + consumer demands forces
For speed and Qual.
TSC model presents both Adv. + Disad.
Mang. fewer suppliers can enhance efficiency
But reduce visibility and increased ethical risks.
Orgs must evaluate their specific operation needs.
Weigh Benefits vs challenges on TSC adoption
For sustained success in the global marketplace
Must balance complexity + efficiency

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Q2C1

Give as a list FOUR differences between traditional Proc. & SCM, respective approach.

Each approach`s objective
5R`s vs AV
The approach
Reactive buying vs Proactive ordering
Way of Working (WoW)
Silo W vs Cross-Func. (C-F) W
Relationships with suppliers
Transactional vs Collab.

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Q2C2
Question 2: Describe the main differences between a traditional procurement approach + SCM approach to buying (25 marks)

Give Intro of Procurement (Proc.) and SCM

Reps. 2 distinct approaches +
Purch. practices evol.
To acquiring goods
Proc. = Straightforward purchase of goods
SCM is longer + more complex
Has globalized SCs.
Essay explores the main differences between these two approaches
Via their objectives, methods, WoW, and supplier relationships.

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Q2C3

Describe difference between Proc. & SCM approach, in terms of:

Objective of each approach

Proc. Objective = Achieve “5 Rs”
Get right goods, in right V-Z(price)
Ensures Effi. process
SCM Objective is AV to entire SC
Involves close SuppRela.
Ensures Sust. + Org. goals alignment.
E.g. company using Proc. approach emphasize getting lowest price
But, SCM approach is working with suppliers
Enhancing product innovation or reduce Environ. impact.

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Q2C4

Describe difference between Proc. & SCM approach, in terms of:

The approach (reactive / proactive)

Proc. is reactive buying
Responds to immediate needs or demands
Buying as required, without long-term Strat.
SCM is proactive ordering
Via anticipate future needs and trends.
-E.g. A company using SCM might use demand forecasting
For better planning + Inv. Mang.
Proactive approach prevents stockouts
Red. Costs + ^ overall SC efficiency.

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Q2C5

Describe difference between Proc. & SCM approach, in terms of:

Ways of Working

Procurement = silo W
Diff. deps. operate independently
Proc. team not collaborate closely with other departments
-E.g. Production or Marketing
SCM = C-Func. W
Destroys deps. barriers
Encourages integrated approach
E.g. SCM team W closely with production
Ensure Mat. aligned with Manu. schedules
^ efficiency and ↓ disruptions.

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Q2C6

Describe difference between Proc. & SCM approach, in terms of:

Relationship with Suppliers

Proc. = Transactional
Focus: Exc. of Goods for £££
SCM promotes collab.
Emphasise long-term partnerships
Company with SCM work closely with suppliers
Improve processes + share info. +
Address issues jointly
E.g. SCM approach inc. collab. with suppliers
Implement just-in-time inv. systems,
Leads to Csave + ^ responsiveness.

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Q2C7

Conclusion for:

Question 2: Describe the main differences between a traditional procurement approach (app.) + SCM approach to buying (25 marks)

Diff.bet. Proc. & SCM are substantial and nuanced.
Proc. approach suits smaller Orgs
Means low-value and low-risk purchases -
Large Orgs. with complex SC -> SCM app.
Diff. allows companies to tailor their app.
Based on their unique circumstances
Shows importance of Flex. and Strat.
In alignment with Orgs.` goals
In this evolving buying + SCM landscape

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Q3C1

Question 3: Describe what is meant by the 5 Rights of Procurement (25 points)

Procurement is balance of acqui. G/Serv.
@ Right V - Z
Essay explains 5R`s of Proc. importance +
Assists Proc. to make smart choices
E.g. for G/Serv. purchases

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Q3C2

Describe Price

Not cheapest option
Finds Prod./Serv. @ affordable £££ +
Not compromise Qual.
E.g. Office furniture (chair)
Seek supplier offering balance bet. C & Qual. - Ensure it`s VfM + considerations in…
TCO + Price Iceberg, Whole LC &
Furniture longevity
1 yr cheap chair vs 10yr lasting chair
For best price

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Q3C3

Describe Quality

It looks @ Legal compliance (LC) + FitFP
For intended purpose + maintains satisfactory condition meET
Qual. adherence alignment
LC = SoG Act `79
FitFP = Specs.
Buyers uses QCon & QAss to meet demand Qual.
Ensures LC + Customer Satis.,+ Brand rep.
Fulfilling ethical sourcing policies.
E.g. Org buys washing machine
Conforms to ISO standard 97.060
2-year warrantee

Q3C4

Describe Quantity

Use Cake manufacturer as example

Strat.Cons. how much of an item to order.
Impact Inv. Mang. efficiency
Economic Order Quantity (EOQ)
It`s Proc. tool to order RQuan. of a product +
By Equil. bet. CofSholding + shun stockouts.

3 pivotal roles to find RQuan.

Market Conds. + Org. policies
SC dynamics (e.g. JIT / Lean manufacturing)
E.g. Eggs -> Cakes Manu.
Right no. of eggs to make cakes
Cons. inc. no. eggs needed to make cakes +
When eggs (can) expire / Shelf life or not really needed.
Use MRP system for determining Prod. Quan. to order.

Q3C5

Describe Time

Use Cake manufacturer as example

Get things when we need them.
Egg delivery timing to Manu. pivotal to cakes made on time
It`s ToEssence
Other Cons. Δ market forces and customer demand.
Use forecasting for product demand peaks
E.g. toys @ Christmas.
Orgs. must consider Lead + delivery time
Especially for making/placing orders
To avoid bottlenecks and production

Q3C6

Describe Place

Use Cake manufacturer as example

Get things to R.loc. + to achieve it…
While ↓Environ. impact +↓ Transit risks
Inc. optimising warehousing practices
Crucial for perishable + SSCond. items.
E.g. food + Chems (Specific storage Cond.) - Achieved via logistics, good planning
Inc.↓ Environ.impact via transport +
Safety Cons.

Q3C7

Give Conclusion for:

Question 3: Describe what is meant by the 5 Rights of Procurement (25 points)

Prior to concluding the 5Rs, should admit:

-Addl Rs are ackledged
- From evolving models
- E.g. Right Rela.withSupp

5Rs Prov. StructFram.
Optimises Org sourcing practices.
This ensures OpsEffi.
All Rs + RelaBet. Rs
Are important +
Forms a foundation.
Aids Sust. + EthiCon`ct
Throughout Proc. process
Gives L-term success
In this global dynamic marketplace.

Q4C1

List 4 ways the Procurement Department can add value for their organisation

Improving + Updating Specs
Streamlining processes
Mang. Supp. Rela.
Improve Qual. & Innov.

Q4C2

Question 4a) Explain what is meant by added value (AV) (5 points).

Relate to Question 4b) Describe 4 ways the Procurement Department can add value for their organisation (20 points)

Proc. AV is P/Serv. enhancement or improvement
It`s in Econ. worth, Qual., or utility
It`s before being offered to customers or end-users
Goal is > Obtain G/Serv. @ lowest C£
AV to Org. via various means
Essay explores AV +
4 ways Proc. Deps. (PD) can contribute to Org. improvement

Q4C3

Question 4b) Describe 4 ways the Procurement Department can add value for their organisation (20 points)

Give 1st Way (Imp. Spec.)

Improving Specifications

Ensure all critical items are procured against a Spec.
Which`s regularly improved + updated
E.g. PD procuring office light-bulbs
Have effective Spec. for this purchase
E.g. bulbs must meet X safety Stand. +
Y environmental Stand.
For Org. ↓ in crazy buying +
Procure better-Qual. product.
Regular Spec. update ensures u-t-d with current safety Stand. + Regs.
E.g. Use of low-energy / High Effi. lightbulbs
Crucial for future purchases
No Spec. update = ↑ risk of item bought
Not meet the correct standards
AV here is removing risks
Of procuring wrong item

Q4C5

Question 4b) Describe 4 ways the Procurement Department can add value for their organisation (20 points)

Give 2nd Way (S-Lining P)

Stream-lining Processes

AV via stream-lining processes
E.g.1. Requisitions + POs
↓ time to procure an item + Csave
E.g. Routine Stationary items
E.g.2. Buying items via re-order process
Already have buying experience….so…
Automated order when stock levels reach a certain level.
E.g. Org. staff must wear certain PPE
AutoReQ. made once there are only 50 face masks left.

Q4C5 Question 4b) Describe 4 ways the Procurement Department can add value for their organisation (20 points) Give 3rd Way Managing Supplier relationships (Mang. Supp. Rela.)

Managing Supplier Relationships (Supp.Rela.) - AV source: Strong +ve Supp. relationships - Means Supp. values you as a buyer - Help in adversely affecting business situs. - E.g. Manu. puts incorrect order (300 items) - Strong Rela. = Supp. allow order amended - Poor rela. = Supp. not as flexible. - SC Flex. is AV source

Q4C6 Question 4b) Describe 4 ways the Procurement Department can add value for their organisation (20 points) Give 4th Way - Improving Qual./Innov.

Improving Quality / Innovation - It`s AV from customer’s perspective - E.g. purchase phone with longer battery life - PD should complete Value Engineering - Or procure higher Qual. Comps./Mat. - @ same £P to achieve Add`l feature.

Q4C7 Question 4b) Describe 4 ways the Procurement Department can add value for their organisation (20 points) Give Conclusion

- PD is essential to Org. success by AV - Via improved Specs., S-Lined processes - Strong Supp.Rela.+Improv. Qual. and Innov. - These ↑Effi. + ↓risks + - ↑ customer satisfaction - It shows Proc. + PD`s - Contibution + Diff.`ce - On Org Success

Q5C2 Question 5: Bob is a procurement manager at ABC Ltd. He has been asked to ensure all future purchases achieve ‘value for money’ for the organisation. What is meant by ‘value for money’? (5 points). Describe 4 techniques that Bob could use to achieve this (20 points) *Don`t forget to inc. Bob in answer

- VFM: concept to obtain best RoI - Or benefits relative to Cincurred. - Assess G/S/Activities provided - On whether optimal balance offered - Bet. £C + Qual. + benefits - Or outcomes they deliver. - VFM is not cheapest option - It considers Overall Effi + effectiveness - Inc. L-term value from expenditure - In essay, show four key techs - For Bob to achieve this for all future purchases.

Q5C1 4 techniques to achieve VFM

- Value Engineering (Val.Eng.) - Consolidate demand (ConDem) - International Sourcing (InterSource) - Whole Life costing methodology (WLCMet)

Q5C4 Give 2nd technique to achieve VFM ConDem

Consolidate demand (ConDem) - Bob can achieve VFM by ConDem @ ABC. - Is Group, not independent buying - Bob creates centralised process - For bulk ordering items + Deps. to share. - E.g. Each deps. require stationary ordered - Bob can ConDem + create 1 big order - Per Quarter + results ABC Csave - As supp. offer discounts for large orders - ConDem allows time savings - Ensure 1 person does work than 20

Q5C4 Give 1st technique to achieve VFM Val.Eng

Value Engineering - Look @ Prod. Mat. +Comps. - Evaluate + Assess each value - If no AV -> Eliminate - If Better avail. = Replace - Find Prod. parts to be omitted -> Csave - Or replace with higher Qual. Comps. - @ same £P + AV to customer - E.g. Bob completes Val.Eng. on new phone - To release next year - Finds way to provide a higher Qual. Cam - @ no Add`l £C - Or finds no AV components to omit

Q5C5 Give 3rd technique (Tech.) to achieve VFM International sourcing (InterSource)

International sourcing - Bob finds VFM in Δsuppliers + - Looking @ InterSource - Other countries can offer same Prod. - @ low £C - E.g. Bob looks @ Manu. G/ from China - Csave by looking at InterSC - Bob must ensure this Tech. doesn`t ↓Qual.

Q5C6 Give 4th technique (Tech.) to achieve VFM Whole Life Costing methodology (WLCMet.)

Whole Life Costing methodology - Tech. Bob can use to procure CAPEX items - Looks @ item`s lifecycle £C - Not only InitPurch. £P - E.g. Bob procures new delivery truck - Consider not only £P-truck - Must inc. £C- truck insurance + £C-disposal - Also £C-replacing parts - Considering these factors ensures... - He buys truck that is VFM L-term.

Give Conclusion to: Question 5: Bob is a procurement manager at ABC Ltd. He has been asked to ensure all future purchases achieve ‘value for money’ for the organisation. What is meant by ‘value for money’? (5 points). Describe 4 techniques that Bob could use to achieve this (20 points) *Don`t forget to inc. Bob in answer

- Bob must ensure he uses four Techs. - For all future items he + his team procures - Ensures ABC achieves + maximises VFM - To remain competitive in marketplace.