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Spring 24 > SCM FINAL PART 2 > Flashcards

SCM FINAL PART 2 Flashcards

1
Q

Why is Supply Chain Management critical?

A

Firms not only compete against global competitors, but against their competitors supply chains

if a company wants to compete globally, they have to source globally

Advances in information systems have been a catalyst for global sourcing efforts

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2
Q

What is the Formula for Profit Margin?

A

Net Income / Sales

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3
Q

What is the Formula for Return on Assets (ROA)?

A

Net Income / Total Assets

higher ROA preferred

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4
Q

What is the profit leverage effect?

A

the effect of $1 in cost savings increasing pretax profits by $1 and a $1 increase in sales increasing pretax profits only by $1 multiplied by the pretax profit margin

effort to reduce operating expenses by reducing purchasing costs instead of focusing on increasing sales profit

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5
Q

What are the Steps of the Sourcing Process?

A

Spend Analysis
Profile (internally and externally)
Develop Sourcing Strategy
Screen Suppliers and Make Selection Criteria
Conduct Selection
Negotiate/Implement Agreements

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6
Q

What is the Spend Analysis?

A

looking at the purchasing data in an effort to better understand spending patterns and identify opportunities for improvement

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7
Q

What is Profiling?

A

understanding everything about a sourcing category when it coulld ultimately have an impact on the sourcing strategy

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8
Q

In Profiling, what is Industry Analysis?

A

profiles the major forces and trends that are impacting an industry, including pricing, competition, regulatory forces, substitution, technology changes, supply/demand trends

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9
Q

What is the make or buy decision?

A

high level decision regarding which products or services will be provided internally and which will be provided by externally supply chain partners

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10
Q

What are the advantages of Insourcing?

A

High degree of control over operations

economies of scale

Allows for development of core competencies, which allows company to do something competitors will find difficult or impossible to copy

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11
Q

What are the disadvantages of Insourcing?

A

decreases a firm’s flexibility

long-term commitments

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12
Q

What are the advantages of Outsourcing?

A

Greater flexibility and alternate sources of supply

Less investment needed upfront

Obtain benefits from partner companies (access to new technologies, skills, and markets)

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13
Q

What are the disadvantages of Outsourcing?

A

Supplier communication issues

Supplier production issues

Control issues because buying firms need to constantly monitor the quality, availability, confidentiality, and performance of outsourced goods

risk of losing core competencies

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14
Q

What is total cost analysis?

A

process of identifying, qualifying, and assigning costs to a specific sourcing option

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15
Q

What does Dynamic mean in Total Cost Analysis?

A

long-run

analyze the total cost to insource (make) vs. The total cost to outsource (buy)

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16
Q

What does Static mean in Total Cost Analysis?

A

short-run

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17
Q

What are Direct Costs (variable costs)

A

costs that are easily attributable to the unit of production or service

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18
Q

What are Indirect Costs (fixed costs)

A

difficult to assign to a unit of production or service

19
Q

Whats a direct cost associated with Insourcing?

A

Direct material

Direct labor

Freight costs

Variable overhead

20
Q

Whats a direct cost associated with Outsourcing?

A

Price (from the invoice)

Freight (shipping costs)

21
Q

Whats a indirect cost associated with Insourcing?

A

Supervision

Administrative support

Supplies

Maintenance costs

Equipment depreciation

Building lease

Fixed overhead

22
Q

Whats a indirect cost associated with Outsourcing?

A

Purchasing

Receiving

Quality control

23
Q

What is the indifference point?

A

point where make and buy intersect is where the firm is indifferent about whether an item is made or bought

set equations equal and solve

24
Q

What is the formula for the Total Cost to Make Something?

A

fixed Costs + (Variable Costs * Quantity)

25
Q

What is the formula for the Total Cost to Buy Something?

A

Variable cost * quantity

26
Q

When making decisions in a static (Short-run) view, you must consider…

A

Cost of product

Supply chain activities

Other costs – customer duties, export fees, foreign currency exchange

Identify all costs relevant to making the make/buy decision

27
Q

What is single-sourcing?

A

purchasing firm depends on a single company for all of a particular item

28
Q

What is multiple sourcing?

A

sourcing strategy in which the purchasing firms shares its business across multiple suppliers

29
Q

In multiple sourcing, what is Cross Sourcing?

A

company uses a single supplier for one particular part and another supplier with same capabilities for a different part, so either can act as a backup

Provides backup suppliers

Provides competition

30
Q

What is Dual Sourcing?

A

two suppliers are used for the same purchased product or service, usually 70-30% split

31
Q

In conducting a supplier selection, what is the weighted point system?

A

user assigns weights to the performance measures and rates the performance of each supplier

32
Q

When negotiating, what is a request for quotation (RFQ)?

A

request for suppliers to prepare bids, based on the terms and conditions set by the buyer, may include description by market grade/industry standard/brand

33
Q

When are negotiations used?

A

used when there is no preferred supplier

34
Q

When are negotiations best?

A

Item is new /technologically complex

wide range of performance factors incontract

Buyer requires the supplier to participate in the development effort

Supplier cannot determine the risks and costs without additional input from the buyer

35
Q

What is a request for information (RFI)?

A

an inquiry to a potential supplier about that suppliers products or services for potential use in business

36
Q

What is a fixed-price contract?

A

most basic contract, stated price doesn’t change

If market prices for a purchase good/service rise below contract price, seller takes on financial loss

If market prices for a purchased good/serivce fall below contract price, buyer assumes risk of financial loss

37
Q

What is a cost-based contract?

A

price of service is tied to the cost of some input or some other economic factor

Used when good/services are expensive and complex, or there is a high uncertainty with labor and material costs

38
Q

What is a Procure to Pay Cycle?

A

identifying a need, assign a supplier, approve scope, acknowledge receipt and submit payment

39
Q

What is a Purchase Order (PO)?

A

document that authorizes a supplier to deliver a product, includes requirements

40
Q

What is follow up expediting?

A

times when buying firm has to expedite an order or work with a supplier to avoid shipment delays so someone must monitor the status of open purchase orders

41
Q

What is a statement of work (SOW)?

A

terms and conditions for product

42
Q

What is sustainable supply?

A

environmental friendliness is becoming an important criterion in selecting suppliers

Buyers want to ensure their suppliers are in compliance with environmental regulations

Suppliers want to reduce costs by reducing packaging

43
Q

What are the causes of Supply Chain Disruptions?

A

natural disasters or economic/political events

Cause a big threat to revenue streams and leads to increased risk due to outsourcing to global suppliers

44
Q

What is the formula used for make or buy decison? (break even quantity)

A

Quantity equals fixed costs over price minus variable costs

Spring 24 (14 decks)

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