Chapter 1 The Progression to Professional Supply Management
Note to students, select the answer that is true or false “most of the time”, few situations in social sciences are simply black or white.
1. Purchasing is primarily a clerical activity.
2. Supply management is also known as procurement at many firms and government agencies. 3. Strategic sourcing starts with the analysis of the supply market. 4. Materials have always been vital in the history of industrial growth. 5. In the history of power source relationships, percentage wise, labor costs went down while materials costs went up. 6. Supply management plays a major role in improving the “bottom line” by driving sales up and costs down. 7. Generally speaking, firms with the fasted time to market with new products by using cross functional teams including suppliers, enjoy higher profits. 8. Some 75% of many manufacturer’s quality problems can be traced back to defects in purchased materials. 9. Of the factors that make up total cost of ownership (TCO), the big majority of this cost is in the acquisition cost. 10. “Lean thinking” is primarily concerned with conversion cost. 11. When supply savings and increased sales due to superior supply chain management are combined, it is not uncommon to increase ROI 50%. 12. The term “supply chain” means all the members are linked together in one master contract covering a long time period. 13. The term “value chain” includes both the upstream and downstream portion of the supply chain. 14. The extended enterprise means a group of firms collaborating as a supply alliance, i.e. a strategic network or virtual corporation. 15. The key role of a supply management professional is one of leadership. 16. The final step in the typical purchasing cycle for materials in to audit the invoice.
Supply management must be a core competency based on its impact on the bottom line.
SM requires change, driven by upper management.
Note: SM means Supply Management
World-class supply managers proactively improve supply processes.
When a group or network of firms collaborates in a partnership (alliance) fashion; the collaboration is sometimes referred to as a strategic network, virtual corporation, or extended enterprise.
When the group of firms view each other as partners and collaborate effectively for the good of the larger group, then they leave established an extended enterprise characterized by virtual integration.
Strategic sourcing is about understanding the markets you're purchasing from inside and out and learning from your own organization and your suppliers' organizational processes, working as a mediator between suppliers and your organization, and capturing information and using it to improve relationships.
Strategic sourcing requires two-way continuous improvement process work from each organization.
Maintenance is an issue that should be considered after equipment has been purchased.
Supply management does not have much of an impact on the bottom line.
SM does not require change driven by upper management.
World-class supply managers need not improve supply processes before the processes have been implemented.
When a group or network of firms collaborates in a partnership (alliance) fashion; the collaboration is sometimes referred to as a tactical network.
When the group of firms view each other as partners and collaborate effectively for the good of the larger group, then they leave established a transactional relationship.
Strategic sourcing is about dominating the markets you're purchasing from through force and intimidation, never letting the supplier forget that you are the “boss.”
Strategic sourcing requires one-way improvement efforts where the buying firm tells the supplying firm what is best.
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