Quizlet Ch 4 2a626y

CHAPTER 4 STRATEGIC SOURCING FOR SUCCESFUL SUPPLY CHAIN MANAGEMENT Study online at quizlet.com/_uz8ax 1.

Alliance development: An extension of supplier development refers to increasing a key or strategic supplier's capabilities.

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Benchmarking: Comparing what you do to other businesses that do it best and implementing changes Normally looking at statistics (TAT, cost, productivity measures

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Benefit of VMI (buyers prospective): 1. Supplier tracks inventories 2. Determines delivery schedules and order quantities 3. Buyer can take ownership at stocking location.

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Benefit of VMI (supplier's perspective): 1. Avoids ill-advised customer orders 2. Supplier decides inventory set up & shipments 3. Opportunity for supplier to educate customers about other products.

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Early Supplier Involvement: its a highly effective supply chain integrative technique. - Key suppliers become more involved in the internal operations of the firm, particularly with respect to new product & process design, concurrent engineering & design for manufacturability techniques.

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Ethical sourcing: Can be defined as "That which attempts to take into the public consequences of organizational buying or bring about positive social change through organizational buying behavior."5 Ethical sourcing practices include promoting diversity by intentionally buying from small firms, ethnic minority businesses, and women-owned enterprises; discontinuing purchases from firms that use child labor or other unacceptable labor practices Ethical sourcing policies should include: • Determining where all purchased goods comes from and how they are made; • Knowing if suppliers promote basic workplace principles (such as the right to equal opportunity and to earn a decent wage, the prohibition of bonded, prison or child labor, and the right to a union); • Use of ethical ratings for suppliers alongside the other standard performance criteria; • Use of independent verification of vendor compliance; • Reporting of supplier compliance performance to shareholders; • Providing detailed ethical sourcing expectations to vendors

Green purchasing: A practice aimed at ensuring that purchased products or materials meet environmental objectives of the organization such as waste reduction, hazardous material elimination, and recycling, remanufacturing and material reuse

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Outsourcing Benefits: 1. Concentrate on core capabilities 2. Reduce staffing levels 3. Accelerate reengineering efforts 4. Reduce management problems 5. Improve manufacturing flexibility.

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Outsourcing Risks: 1. Loss of control 2. Increased need for supplier management 3. Increased reliance on the supplier

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Punishment to Suppliers: A negative reward may be to reduce future business; or a bill-back amount equal to the incremental costs resulting from a late delivery or poor quality

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Rewarding Supplier Performance: An incentive to suppliers for suring performance goals

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Strategic Alliance and Supplier Certification Programs: These programs are one way to identify strategic alliance candidates. Firms often develop their own formal certification programs, & most require ISO 9000 or similar certifications as one part of the certification process. A site audit using a cross-functional team to identify a supplier's process capabilities, materials and methods monitors base-line management practices.

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Strategic supplier agreements can reward suppliers by allowing:: 1. A share of the cost reductions 2. More business and/or longer contracts 3. Access to in-house training seminars & other resources 4. Company & public recognition

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Successful Sourcing Strategies: 1. Functional products Are maintenance, repair, and operating (MRO) materials and other commonly purchased items and supplies. These items are characterized by low profit margins, relatively stable demands, and high levels of competition 2. Innovative products They are characterized by short product life cycles, volatile demand, high profit margins, and relatively less competition.

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Supplier alliances: Results in better market penetration access to new technologies & knowledge, & higher return on investment. Alliance development eventually extends to a firm's second-tier suppliers, as the firm's key suppliers begin to form their own alliances

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Supply Base Reduction Programs (Rationalizing Program): It results in

Evaluating & Selecting Key Suppliers: purchase cost becomes relatively less important. Its conducted by a cross functional team selection approach wherein purchasing staff, primary s, product designers, and manufacturing personnel participate.

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Fair trade products: A product manufactured or grown by a disadvantaged producer in a developing country that receives a fair price for their goods.

1. Reduced purchase prices 2. Fewer supplier management problems 3. Closer and more frequent interaction between buyer and supplier 4. Greater levels of quality and delivery reliability.

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Supply Chain Strategy Framework: 1. Classify purchased items and their suppliers ( functional or Innovative) 2. Define supply chain goals 3. Identify capabilities and improvement opportunities. 4. Develop work plans 5. Execute plans 6. Monitor Progress

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Sustainability or Sustainable Sourcing: As applied to supply chains, is a broad term that includes green purchasing as well as some aspects of social responsibility and financial performance. It can be defined as "the ability to meet the needs of current supply chain without hindering the ability to meet the needs of future generations in of economic, environmental and social challenges

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Value engineering: Activities help the firm to reduce cost, improve quality & reduce new product development time

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Vendor Managed Inventories (VMI): Suppliers manage buyer inventories to reduce inventory carrying costs & avoid stock-outs for buyer.