Learning unit 2 Flashcards
(21 cards)
What is Strategic Sourcing?
A proactive, long-term approach to selecting suppliers based on total value rather than just cost.
What are the key elements of Strategic Sourcing?
- Supplier Research & Market Analysis
- Total Cost Consideration
- Supplier Collaboration & Relationship Management
- Sustainability & Risk Management
What does it mean to ‘Make’ in sourcing decisions?
The company produces the goods/services in-house.
What does it mean to ‘Buy’ in sourcing decisions?
The company outsources production to external suppliers.
What are the key drivers for Buying (Outsourcing)?
- Cost Reduction
- Focus on Core Competencies
- Access to Specialized Expertise
- Flexibility & Scalability
- Risk Reduction
What are the key drivers for Making (In-House Production)?
- Greater Quality Control
- Protect Intellectual Property (IP)
- Better Lead Time Management
- Customization & Innovation
- Cost Savings in the Long Term
What are the key Supplier Selection Criteria?
- Quality
- Cost Efficiency
- Delivery Reliability
- Financial Stability
- Technological Capability
- Sustainability & Ethics
- Flexibility & Scalability
What is a supply base?
A supply base refers to the group of suppliers that a company uses to source raw materials, components, and services.
What are key aspects of a supply base?
- Includes local, national, and international suppliers.
- Managed through supplier evaluation, selection, and performance monitoring.
What are the advantages of single sourcing?
- Stronger supplier relationships.
- Better pricing through bulk orders.
- Higher quality control & consistency.
- More collaborative product innovation.
What are the risks of single sourcing?
- Higher risk of supply chain disruption.
- Limited negotiation power.
- Supplier dependency (if supplier fails, production stops).
- Risk of price increases from the supplier.
What are the advantages of multiple sourcing?
- Reduces supply chain risk.
- Increased negotiation power.
- More flexibility & capacity.
- Competitive pricing due to supplier competition.
What are the risks of multiple sourcing?
- More complex supplier management.
- Quality inconsistencies among suppliers.
- Higher administrative costs.
- Requires more supplier monitoring.
What is Strategic Sourcing?
Strategic Sourcing is a structured approach to supplier selection that focuses on long-term value instead of just cost savings.
What is the first step in the Strategic Sourcing Process?
Analyze Business Needs.
Define what products or services are required and identify cost, quality, and delivery expectations.
What is the second step in the Strategic Sourcing Process?
Assess the Supply Market.
Identify potential suppliers (local & global) and analyze market trends and risks.
What is the third step in the Strategic Sourcing Process?
Develop a Sourcing Strategy.
Decide between single vs. multiple suppliers and consider cost, quality, sustainability, and innovation.
What is the fourth step in the Strategic Sourcing Process?
Select Suppliers.
Evaluate suppliers based on cost, quality, reliability, and financial stability; conduct negotiations and risk assessments.
What is the fifth step in the Strategic Sourcing Process?
Negotiate & Contract.
Set pricing, delivery terms, and service levels; establish a formal contract with performance expectations.
What is the sixth step in the Strategic Sourcing Process?
Implement & Monitor Performance.
Ensure suppliers meet quality, cost, and delivery expectations; use KPIs (Key Performance Indicators) to track performance.
What is the seventh step in the Strategic Sourcing Process?
Continuously Improve & Optimize.
Review supplier performance and adjust contracts as needed; develop long-term supplier relationships for innovation and efficiency.
