Chapter 6 - Strategic Sourcing and Supply Chain Management

Flashcards covering key concepts from Chapter 6 on strategic sourcing and supply chain management.

Sourcing

Identifying companies providing needed goods/services.

Strategic Sourcing

A comprehensive approach for locating and sourcing key suppliers to leverage purchasing power for the best possible value.

Objectives of Strategic Sourcing

1. Improve long-term financial performance 2. Increase customer focus 3. Improve product quality 4. Reduce cost of materials 5. Reduce delivery lead times 6. Optimize number of global suppliers.

Single Sourcing

Buying from only one supplier despite multiple potential suppliers being available for a product/service.

Multi-Source

Purchasing a good/service from more than one supplier to create competition between them for better prices and quality.

Functional Products

Products with relatively stable demand and high competition, typically low-profit margin items.

Innovative Products

Characterized by short product life cycles, volatile demand, and high-profit margins, often sourced from a single supplier.

Spend Analysis

Categorizing and analyzing expenditure data to decrease costs, improve efficiency, and monitor compliance.

Supplier Base

The group of suppliers from which a company sources goods/services.

Supplier Selection Criteria

Cost, quality, capacity, service, location, reliability, communication capability, order system + cycle time.

Strategic Alliance

An agreement between buyer and supplier to pursue agreed-upon objectives while remaining independent.

Reverse Auctions

Pre-qualified suppliers submit bids to compete for a buyer's business, often aiming to underbid each other.

Vendor Managed Inventory (VMI)

Suppliers directly manage buyer inventories to reduce carrying costs and avoid stockouts.

Business Ethics

The application of ethical principles to business practices.

Sustainability

The ability to meet current supply chain needs without hindering future economic, social, and environmental challenges.

Going Green

Ensuring products/materials used meet environmental objectives like waste reduction, reuse, and recycling.

Co-Managed Inventory

An arrangement where specific item quantities are stored at a buyer's location, with items replaced by the supplier as used.