Business Management supply integration
Involves professionally managing suppliers and developing close working relationships with different internal groups
integration
the process of incorporating or bringing together different groups, functions, or organizations, either formally or informally, physically or by information technology, to work jointly and often concurrently on a common business-related assignment or purpose
relationship management skills
the ability to act ethically, listen effectively, communicate, and use creative problem solving
collaboration
the process by which two or more parties adopt a high level of purposeful cooperation to maintain a trading relationship over time to achieve specified goals
trust
refers to the belief in the character, ability, strength, and truthfulness of another party
cross-functional sourcing team
consists of personnel from different functions and, increasingly, suppliers, brought together to achieve supply management or supply chain-related tasks
process loss
occurs when a team does not complete its task in the best or most efficient manner, or members are not motivated to employ their resources to create a successful outcome
groupthink
the tendency of a rational group or team to arrive at a bad decision when other information is available
meaningful task
requires members to use a variety of higher-level skills, supports giving members regular feedback about performance, results in an outcome with a significant effect on the organization and others outside the team, and provides members autonomy for deciding how they will do their work
black box design
suppliers are provided with functional specifications and are asked to complete all technical specifications, including materials to be used, blueprints, and so on
white box design
the supplier is given blueprints and told to make the product from them
grey box design
the supplier’s engineers work cooperatively with the buying company’s engineers to jointly design the product
guest engineer program
the buyer invites key suppliers to place an engineer in the buying company’s facility for a short period of time in the very early stages of product development
technology roadmap
refers to the set of performance criteria and products and processes an organization intends to develop or manufacture
supplier-managed inventory
to have the on-site supplier representative assist in managing the inventory of materials or services, provide technical support, and in some cases even aid in assembling and producing the product or service
organizational design
refers to the process of assessing and selecting the structure and formal system of communication, division of labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives
centralized structure
when the chief purchasing officer at corporate headquarters has the authority for the majority of the organization’s purchase expenditures
decentralized structure
when the authority for the majority of purchase expenditures is at the divisional, business unit, or suite level
center-led structure
the organizational structure which combines a centralized approach for purchased items common to several business units and decentralized approach to unique requirements
ownership
refers to the assumption that local personnel understand and support the objectives of the business unit or divisions and feel a personal commitment to a particular operation
lead division buying
a group of operating units buy common items, typically because they produce common products
purchasing council
comprised of a group of buyers who purchase similar items at various facilities
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consortium
a voluntary group where buyers are in the same industry and conduct business with many of the same suppliers
coordination
a process that defines how a firm communicates and integrates decision making across the groups comprising the organization
sourcing, negotiating, and contract management
involves identifying company spend and matching it to the best potential suppliers, negotiating with the selected suppliers, and finally managing the contract
market intelligence and research
Involves a systematic monitoring of the supply environment to assure a continual economic supply of goods and services
operational support and follow-up
includes the activities supporting the day-to-day operations of the purchasing or materials function
administration and data management
Responsible for developing the policies and procedures that purchasing personnel follow, administering and maintaining the purchasing information system and database, determining required staffing levels, developing department plans, organizing training and seminars for buyers, and developing measurement systems to evaluate purchasing performance
buying
a broad term describing the purchase of raw materials, components, finished goods, or services from suppliers
expediting
the process of personally or electronically contacting suppliers to determine the status of past-due or near-past-due shipments
inventory control
monitors the day-to-day management of purchased and in-process inventory at each using location
insourcing/outsourcing
purchasing often analyses whether a new or existing purchase requirement should be internally or externally sourced
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value analysis
the organized study of an item’s function as it relates to value and cost
team
a group of two or more organizational members who are mutually accountable for achieving a common goal
vertical focus
where work and information are managed up and down within functional groups
horizontal focus
where work and information are managed across groups and between organizations
process focus
where work is organized around higher level end items or subassemblies versus purchasing parts and components
co-location
purchasing personnel are located with internal customers to provide lowered costs and improved services to internal customers
open information channel
makes information widely available across the supply chain via the internet, intranets, and information technologysystems
category
refers to a specific family of products or services that are used in delivering value to the end customer
corporate strategy
concerned with (1) the definition of business in which the corporation wishes to participate and (2) the acquisition and allocation of resources to these business units
business unit strategy
concerned with (1) the scope or boundaries of each business and the links with corporate strategy and (2) the basis on which the business units will achieve and maintain a competitive advantage within an industry
supply management strategy
specifies how supply management will (1) support the desired competitive business-level strategy and (2) compliment other functional strategies
integrative
a strategy development process that means that the strategy is drafted by those people responsible for implementation
spend analysis
an annual review of a firm’s entire set of purchases
category strategy
a decision process used to identify which suppliers should provide a group of products or services, the form of the contract, the performance measures used to measure suppliers performance, and the appropriate level of price, quality, and delivery arrangements that should be negotiated
project charter
a clear statement of the goals and objectives of the sourcing project
triangulate
means to explore, compare, and contrast data from multiple sources before it can be calidated
five forces
created to describe competitive forces in a market economy
benchmarking
requires identifying the critical performance criteria of interest and identifying relative competitive performance
industry benchmarking
involves comparison of performance with firms in the same industr
external benchmarking
involves comparison of best practices and performance levels achieved by firms that are not within the same industry
RFI (request for information)
a solicitation document that is used by organizations to obtain general information about services, products, or suppliers
value chain analysis
used to help identify the cost savings opportunities that exist within the supply chain
supplier research
required to identify the specific capabilities and financial health of key suppliers that are in the supply base or that may not currently be in the supply base
portfolio analysis
a tool to structure and segment the supply base and is used as a means of classifying suppliers into one of four types
evaluation scorecard
a decision support tool in which the buying firm assigns a weight to different evaluation categories and develop a numerical score for each supplier in each category, thereby developing a final performance score
preferred supplier
one who has demonstrated its performance capabilities through previous purchase contracts and, therefore, receives performance during the supplier selection process
supply base optimization
also known as rightsizing, is the process of determining the appropriate number and mix of suppliers to maintain
low-cost country sourcing
an approach that requires supply management to view the entire world as a potential source for components, services, and finished goods
longer-term supplier relationship
involves the selection of, and continuous involvement with, suppliers viewed as critical over an extended period of time
early supplier design involvement
requires key suppliers to participate at the concept or predesign stage of new-product development
supplier development
means working directly with a supplier to facilitate improvement in a designated functional or activity area
total cost of ownership
the process of identifying cost considerations beyond unit price, transport, and tooling
e-RA (E-Reverse Auctions)
an online, real-time dynamic auction between a buying organization and a group of prequalified suppliers who compete against each other to win the business to supply goods or services that have clearly defined specifications for design, quantity, delivery, and related terms and conditions
