Module 4 - Section E: Suppliers & Purchasing Flashcards
(33 cards)
Supplier segmentation
-involves developing categories of suppliers so that each category can have a different strategy and tactics
-key tool to move an organization toward having a responsive supply chain
-increases responsiveness without significantly increasing costs b/c it helps orgs with complex networks of suppliers manage their risks and responses
forms:
1) ideal relationship type - involves analyzing what a supplier would bring to some form of strategic parternship if one were to be pursued
2) supplier capabilities - helps orgs that compete on a focus or differentiation basis by segmenting suppliers based on their ability to deliver on key business objectives at core of these strategies
3) customization vs. standardization - some suppliers will specialize in being responsive and able to provide custom solutions, while other will specialize in providing standardized solutions at economies of scale
4) level of innovation - some suppliers are better partners when working to develop innovation in a product’s design
5) lead times - grouping suppliers by similar lead times might helps orgs when scheduling orders for goods, possibly by allowing certain shipments to be grouped together
Customer-supplier relationship
-a long-term relationship between a buyer and a supplier characterized by teamwork and mutual confidence
-supplier is considered an extension of the buyer’s organization
-partnership is based on several commitments
-buyer provides long-terms contracts and uses fewer suppliers
-suppliers implements quality assurance processes so that incoming inspection can be minimized
-supplier also helps buyer reduce costs and improe product/process designs
Strategic Sourcing
comprehensive approach for locating and sourcing key materials suppliers, which often includes busines process of analyzing total-spend-for-material spend categories
-includes focus on development of long-term relationships w/ trading partners who can help the purchaser meet profitability and customer satisfaction goals
Tactial Buying
purchasing process focused on transactions and nonstrategic material buying
-closely aligned with the ordering portion of executing the purchasing transaction process
-its characteristics include stable, limited fluctuations, defined standard specifications noncritical to production, no delivery issues, and high reliability concerning quality-standard material with very little concern for rejects
Strategic Alliance
-relationship formed by two or more organizations that share information (proprietary), participate in joints investments, and develop linked and common processes to increase the performance of both companies
-many orgs form strategic alliances to increase the performance of their common supply chain
Virtual Organization
-short-term alliances between independent orgs in a potentially long-term relationship to design, produce, and distribute a product
-orgs cooperate based on mutual values and act as a single entity to 3rd parties
Strategic Partnership
-alliance with top supplier and buyer performers to enhance a firm’s performance
Joint Venture
agreement between 2 or more firms to risk equity capital to attempt a specific business objective
generally result of this agreement is a 3rd organization that is owned jointly by the two or more investors
example: NBC and Disney ABC created a joint venture in 2008 called Hulu for video streaming with commercials
Concurent Engineering or Participative Design/Engineering
-simultaneous participation of all functional areas of the firm in the product design activity
-suppliers and customers are also often included
-intent is to enhance the design with the inputs of all the key stakeholders
-such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs
Cross-docking
-concept of packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination
-items are carried from the incoming vehicle docking point to the outgoing vehicle docking point without being stored in inventory at the warehouse
-reduces inventory investment and storage space requirements
Third-party logistics (3PL)
-arrangement in which a buyer and a supplier team with a third party that provides product delivery services
Critical characteristics
-attributes of a product that must function properly to avoid failure of the product
Critical-to-quality characteristics (CTQ)
-important and measurable traits of a product or process whose performance targets must be met to satisfy the customer
-they adjust improvement efforts to meet consumer requirements
-CTQs represent customer expectations for a product
First pass yield
-ratio of products that conform to specifications without rework or modification to total input
First-article inspection
-a quality check on the first component run after a new setup has been completed
Supplier Audit
-auditing supplier processes as part of a supplier development system
Supplier certification
-certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer’s requirements
-requirements can include cost, quality, delivery, flexibility, maintenance, safety, and ISO quality and environmental standards
Lean Metric
-metric that permits a balanced evaluation and response - quality without sacrificing quantity objectives
-these types of metrics are financial, behavioral, and core-process performance
Terms and Conditions
-all the provisions and agreements of a contract
Purchase Requisition
-authorization to purchasing department to purchase specified materials in specified quantities within a specified time
Purchase Order
-purchaser’s authorization used to formalize a purchase transaction with a supplier
-PO when given to a supplier, should contain statements of the name, part number, quantity, description, and price of the goods or services ordered
-agree-to terms as to payment, discounts, date of performance, and transportation
-all other agreements pertinent to the purchase and its execution by the supplier
-considered an open order until end of purchasing cycle
Reverse Auction
-an internet auction in which suppliers attempt to underbid their competitors
-company identities are known only by the buyer
-way to find suppliers when price is the primary criteron (e.g. for comodities)
Order Processing
-on supplier side this starts once customer’s order is received
-activity required to administratively process a customer’s order and make it ready for shipment or production
Vendor-Managed Inventory (VMI)
-means of optimizing supply chain performance in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer
-accomplished by a process in which resupply is performed by the vendor through regularly scheduled reviews of the on-site inventory
-the on-site inventory is counted, damaged, or outdated goods are removed, and the restocked to predefined levels
-vendor obtains a receipt for the restocked inventory and accoridngly invoices the customer
-can be used with or without consignment
