11237949
Description
Flashcards by Josie Robinson, updated more than 1 year ago
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Created by Josie Robinson
over 6 years ago
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| Question | Answer |
| tactical / operational sourcing | lower level decision making required, low profit, low risk routine items |
| strategic sourcing | high level, long term decisions relating to high profit and high risk procurements |
| the sourcing process | 1. identify the need / requirement 2. create sourcing plan 3. market analysis 4. pre-qualification of suppliers 5. evaluate suppliers 6. evaluate suppliers 7. create contract and manage relationship |
| Pareto principle 80 / 20 rule | 80% of spend, risk or value residing in 20% of suppliers or supplies |
| procurement positioning matrix | the importance of the item being purchased vs. the complexity of the supply market |
| when should a supplier appraisal be used? | 1. for major, high-value purchases 2. for potential long-term partnerships 3. international sourcing & outsourcing 4. supplier development & quality management |
| four stage approach to assessing suppliers (supplier appraisal) | 1. plan & prepare 2. action & individual assessment 3. evaluate & report results 4. recommend & feedback |
| vendor performance management | 1. supplier management 2. incentives 3. vendor rating |
| what is sourcing? | how & where services or products are maintained |
| sources of information on potential suppliers | 1. buyer's current database of suppliers 2. formal RFI 3. marketing communications (advertising, brochures, catalogues) 3. internet search 4. published listings of suppliers 5.trade fairs / exhibitions 6. informal networking |
| EBI & ESI | Early buyer involvement & Early supplier involvement |
| supplier appraisal | used to describe the assessment of potential suppliers as part of supplier selection, prior to contract award and supplier approval |
| gathering and verifying supplier information | 1. self-appraisal questionnaires 2. financial appraisal 3. check supplier accreditations 4. references 5. work samples 6. audit |
| Incentive examples | - staged payments - specific KPIs - long-term business agreements - opportunities for innovations - profit share |
| three different ways to monitor the performance of your supplier | 1. periodic reviews 2. post-completion reviews 3. continous monitoring |
| top three things to rate a vendor on | 1. price 2. quality 3. delivery |
| types of sourcing | 1. single sourcing 2. dual sourcing 3. partnership sourcing |
| definition of partnering (partnership sourcing) | a commitment by both customers and suppliers, regardless of size, to a long term relationship based on clear, mutually agreed objectives |
| key characteristics of partnership sourcing | 1. cultural compatibility between partners 2. a high level of trust 3. relevant expertise, resources and competencies 4. a high degree of system integration 5. clear joint objectives and meaningful performance measures |
| tendering procedures | 1. open procedures: open to the entire market, widely advertised 2. selective or restricted procedures: add in a pre-qualification stage. Potential suppliers who respond are already pre-qualified**often the best option** 3. restricted open procedure: invite prospective suppliers to bid 4. negotiated procedures: select a small number of suppliers to enter into negotiation with |
| intra-company trading | refers to commercial relationships between entities which are part of the same organisation (Auckland Council & CCOs) negative: this may not always be genuinely competitive with external suppliers |
| outsourcing & subcontracting issues | 1. rigorous supplier selection 2. clear & agreed service levels, standards & KPIs 3. monitoring of service delivery & quality 4. ongoing contract & supplier management 5. contract review |
| advantages & disadvantages of outsouring | TBC |
| sources of information that could be used to appraise potential suppliers | 1. company's own database of existing and past suppliers 2. marketing & comms from potential suppliers 3. internet searches of business directories 4. online market exchanges 5. trade & industry press 6.trade fairs, exhibitions & conferences 7. networking |
| advantages of supplier partnering | 1. greater stability of supply & prices 2. sharing of risk & investment 3. better supplier motivation & responsiveness 4. cost savings from reduced supplier base 5. access to the suppliers technology & expertise |
| disadvantages of supplier partnering | 1. risk of complacency - affects cost, quality 2. less flexibility to change suppliers when needed 3. possible risk of confidentiality 4. getting locked into a relationship with an incompatible / inflexible supplier |
| how to check new suppliers have the technical capability | 1. whether the supplier produces the requirements 2. if the supplier has innovation capability 3. suppliers capability to respond quickly and flexibly 4. the type of equipment a supplier uses 5. the efficiency of the suppliers factory layout & processes 6. quality control systems |
| selection criteria to identify appropriate external suppliers | 1. financial capabilities & stability 2. technical capability 3. production capacity 4. system capabilities 5. quality & quality assurance 6. environmental & sustainability considerations |
| M E A T | Most |
| Kraljic matrix | the importance of the item vs the complexity of the supply market (page 6) outcomes: 1. non - critical / routine items 2. leverage items 3. bottleneck items 4. strategic items |
| reasons why buyers should appraise the financial position of potential suppliers | 1. to ensure the supplier can be relied upon to meet major contracts or maintain a continuous supply stream 2. a supplier with sufficient liquidity can pay is costs, e.g. staff and supply 3. |
| what are some of the sources of information for financial appraisals | 1. suppliers published financial statements 2. secondary data from markets & suppliers 3. published financial reports 4. credit rating companies 5. financial director presentation |
| what tools are used to analyse the supply market | 1. environmental analysis 2. industry analysis - looks at the key players (Porters 5 forces model is ideal for this analysis) 3. SWOT analysis 4. Competitor analysis 5. Krajlic or Pareto models |
| porters five forces model | considers the extent of the competition within the market. it identifies: 1. competitive rivalry within the market 2. the bargaining power of suppliers 3. the bargaining power of customers 4. threats from new entrants 5. threats from substitutes |
| ethical issues related to international sourcing | 1. not exploit supplier labour forces - ensure fair trade prices 2. support the raising of labour standards in developing countries 3. not degrade / pollute other environments or exhaust resources 4. protecting the brands reputation 5. supporting domestic businesses CSR |
| the purpose of Intercoms - international contract terms | the purpose of intercoms is to define areas of risk a& responsibility between the buyer & seller during the journey of the goods, clarifying their areas of risk at all stages of the journey |
| the main elements intercoms cover | 1. where delivery should be made by the seller 2. who insures the goods during the journey 3. what level of insurance is required 4. who raises which documents 5. where risk & responsibility for the goods passes from seller to buyer |
| four groups of intercoms | E terms: the seller's only duty is to make the goods available at its own premises F terms: the seller will bear pre-carriage duties and costs C terms: the seller arranges for carriage of the goods until dispatched D terms: the sellers obligation extends to delivery of the goods to the destination |
| information a supplier database may provide | 1. contact details 2. terms & conditions 3. approved or preferred status 4. average value / frequency of spend with each supplier 5. special capabilities 6. results & ratings of supplier appraisals 7. vendor performance history |
| how to assess a potential suppliers systems & procedures | 1. compatibility - time frames 2. willingness to comply - rules and system functionalities 3. quality management systems - the suppliers accreditation, quality practices & values 4. IT development - system integration |
| credit rating agency report | 1. business summary & org chart 2. payment history 3. financial statements 4. credit recommendations & ratings 5. industry comparisons 6. court judgements - bankruptcies |
| why is profitability an important criteria | 1. profits attest to a company's performance, meaning all it's costs are covered and it's not loosing money 2. profits provide owners with dividends as a return on their investment 3. security & continuity of supply |
| sources of secondary data - information already gathered for other purposes, general reference or publication. Accessed by desk research | 1. websites 2. published reports 3. financial / trade industry press - newspapers, magazines 4. Statistical surveys 5. credit referencing agencies 6. specialist libraries |
| potential legal and political constraints which might impact on the sourcing process | 1. anti-competitive conduct - monopolies 2. protecting the rights of minority groups - to provide equal opportunity & diversity in employment 3. protecting the rights of employee - workplace h&s, working hours & leave entitlement 4. enforcement of environmental standards 5. corruption - money laundering 6. international sourcing restrictions |
| types of stakeholders | 1. consumers 2. potential suppliers 3. colleagues 4. consulted experts 5. banks or internal finance department 6. quality management 7. governance boards / committees |
| how you might engage with stakeholders in the sourcing process | 1. during the design / scope 2. for approval 3. early buyer involvement - commercial input 4. early supplier involvement - development 5. a formal team approach 6. consultation 7. focus groups and / or surveys |
| elements that may be included in a sourcing plan | 1. how you are going to approach the market - sourcing options 2. confirm the organisations current situation & the organisations requirements 3. research of the supply market 4. supplier appraisal process - 10 C's 5. supplier performance measures 6. post-award activities |
| types of ratios used to determine whether potential suppliers have sufficient liquidity | 1. current ratio 2. quick ratio 3. gearing ration |
| current ratio | calculated by dividing current assets (stock, cash) divided by the current liabilities (creditors, short-term loans). this ratio should ideally be 2:1 indicating that the supplier has current assets that are greater than current liabilities |
| quick ratio | similar to the 'current ratio' but excludes stock from the calculation because stock may be difficult to realise - should also be greater than 1:1 |
| gearing ratio | calculated by dividing long term loans by net worth and multiplied by 100. This ratio is an indicator of the supplier's long term liquidity in terms of financial commitments in servicing long term loans |
| tendering procedures a public sector organisation should consider using | 1. open tender 2. restricted procedure 3. negotiated procedure 4. competitive dialogue |
| open tendering procedure | the primary procedure for the public sector where any potential supplier may participate. its advantage is that it has a wider supplier base and maintains maximum transparency and open competition, with the potential to achieve competitive value solutions. The main disadvantage is the lack of pre-qualified suppliers and the higher volume of bids |
| restricted tender procedure | the initial advertisement is for pre-qualification, the bidders are required to respond to a pre-qual questionnaire. a shortlist of suitable suppliers (normally between 5 - 10) is then invited to bid. the advantage of prequalifying and shortlisting suppliers, prior to the bidding process, is that is minimises administrative burden on procurement staff & suppliers |
| under negotiation tendering procedure | the tender may be conducted without an advertisement in strictly defined circumstances, e.g urgency, sole supply, security. if an advertisement is used, a minimum of three parties must be selected to participate in negotiations. Extreme caution is required when using this procedure to ensure that competition & best value objectives are achieved. |
| competitive dialogue tendering procedure | this procedure is designed for large, complex projects. In these projects, the requirements & pricing cannot be predetermined clearly as specifications may change during the collaboration with suppliers. The requirement must be advertised & the buyer opens a dialogue with pre-qualified suppliers. after negotiations, suppliers are invited to submit final tenders. |
| methods of checking a suppliers performance | 1. turnover (total revenue) over a three year period 2. profitability 3. liquidity ratios 4. gearing ratios 5. dependency on a small number of major customers |
| liquidity vs profitability liquidity is a measure of the suppliers ability to meet its liabilities or debts - therefore impacting on stability of business | being profitable does not necessarily mean a potential supplier has sufficient cash resources to meet financial obligations - it could go into liquidation if faced with a large payment to be made. profits may have been used to purchase non-liquid assets (e.g. buildings) which cannot easily be converted into cash. the suppliers profits may have been committed to shareholders a supplier must have sufficient cash or 'liquid assets' to meet short-term debts & expenses - demonstrating cash flow management. |
| further disadvantages of open / competitive tendering process | 1. overemphasis on lowest price may not represent the best long-term value 2. not suitable for one-off bespoke contracts 3. not appropriate when only one supplier is available 4. wide competition may discourage some potentially suitable suppliers |
| topics that be be included in the de-briefing process to unsuccessful suppliers | 1. personnel or management may not operate in a compatible way 2. reliance on subcontractors 3. price 4. CSR 5. schedules & lead times 6. design quality 7. insufficient experience 8. inadequate quality management |
| define 'letter of credit' | a letter of credit is issued by a bank to another bank (advising), usually in a different country, to serve as a guarantee for payments to be made to the specified person / supplier. |
| letters of credit are widely used in international trade and intend to achieve... | 1. the seller aims to ensure they will get paid without the need for litigation (costly and time consuming) 2. the buyer aims to ensure the payment is not made until the goods have been safely transferred to their ownership |
| two types of letters of credit | 1. irrevocable 2. confirmed |
| advantages and disadvantages of multiple sourcing | TBC |
| advantages and disadvantages of single sourcing | TBC |
| FACE to FACE model | Fixed Assets, Ability to deliver, Cost, Efficiency VS Financial stability, Ability to work with the buyer, Commitment to quality, Environmental / Ethics factors |
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