ECU OMGT 3123 Test 2 Study Guide | Business Decision Modeling Review, Forecasting &
Practice Questions
Supply Management Defined - ANS ✔✔Sourcing decisions and purchasing activities (collectively
Supply Management) serve to link a company with its upstream supply chain partners
Supply Management is..... - ANS ✔✔...the broad set of activities carried out by organizations to:
- analyze sourcing opportunities
- develop sourcing strategies
- select suppliers
- analyze and negotiate price and cost
- carry out all the activities required to procure goods and services
Why is Supply management is critical for global - ANS ✔✔to compete globally for advances in
information systems and changes in environment. "______-______"-ask Kirchoff
Why is Supply management is critical financial impact for the average manufacturer because -
ANS ✔✔nearly 60% of the product value comes from material, on average
Over 60% of firms total COGS is controlled by - ANS ✔✔Purchasing
Supply management represents a major opportunity - ANS ✔✔to increase profitability
Pretax earnings increased - ANS ✔✔% increase = (COGS X %) / pretax earnings
Pretax profit old - ANS ✔✔= Pretax earnings / Sales (how much you make on every $1 of sales)
,To increase profit through sales requires: - ANS ✔✔(COGS X %) / Pretax profit old = ## increases
( from old Sales to (sales + ##)
Why Supply Management is critical for performance impact - ANS ✔✔Quality
Delivery
Technology
Responsiveness
Similar management goals
Problem solving
Study Performance impact chart chapter 7 slide 12 - ANS ✔✔
The Supply Management (SM) process - ANS ✔✔1. Assess Opportunities
2. Profile internally/ externally
3. Develop the Sourcing Strategy
4. Screen Suppliers and create selection criteria
5. Conduct Supplier Selection
-Negotiate
-Ordering *procure to pay cycle*
-Follow up and expediting *pay cycle*
-Receipt and inspection *pay cycle*
-settlement & payments *pay cycle*
, -Records maintenance *pay cycle*
THE SM PROCESS :
Assess Opportunities, Profile internally / Externally, Develop the sourcing Strategy and Screen
Suppliers and create Selection Criteria - ANS ✔✔Typically, more strategic and difficult to
accomplish
THE SM PROCESS:
Ordering, Follow up and expediting, receipt and inspection, Settlement & Payments, and
Records maintenance - ANS ✔✔Typically, more tactical and easier to accomplish
1. Assess Opportunities - ANS ✔✔Spending analysis on the company bulk spending and
suppliers highest spending
1. Assess Opportunities firms purchasing needs - ANS ✔✔New Projects and Existing Projects
2. Profile Internally / Externally - Sourcing decisions are high-level, often strategic decisions: -
ANS ✔✔Which product will use resources within the firm and products will be provided by
external supply chain?
2. Profile Internally / Externally have - ANS ✔✔Insourcing and Outsourcing
Insourcing - ANS ✔✔The use of resources within the firm
to provide products or services
Outsourcing - ANS ✔✔The use of supply chain partners
to provide products or services
Practice Questions
Supply Management Defined - ANS ✔✔Sourcing decisions and purchasing activities (collectively
Supply Management) serve to link a company with its upstream supply chain partners
Supply Management is..... - ANS ✔✔...the broad set of activities carried out by organizations to:
- analyze sourcing opportunities
- develop sourcing strategies
- select suppliers
- analyze and negotiate price and cost
- carry out all the activities required to procure goods and services
Why is Supply management is critical for global - ANS ✔✔to compete globally for advances in
information systems and changes in environment. "______-______"-ask Kirchoff
Why is Supply management is critical financial impact for the average manufacturer because -
ANS ✔✔nearly 60% of the product value comes from material, on average
Over 60% of firms total COGS is controlled by - ANS ✔✔Purchasing
Supply management represents a major opportunity - ANS ✔✔to increase profitability
Pretax earnings increased - ANS ✔✔% increase = (COGS X %) / pretax earnings
Pretax profit old - ANS ✔✔= Pretax earnings / Sales (how much you make on every $1 of sales)
,To increase profit through sales requires: - ANS ✔✔(COGS X %) / Pretax profit old = ## increases
( from old Sales to (sales + ##)
Why Supply Management is critical for performance impact - ANS ✔✔Quality
Delivery
Technology
Responsiveness
Similar management goals
Problem solving
Study Performance impact chart chapter 7 slide 12 - ANS ✔✔
The Supply Management (SM) process - ANS ✔✔1. Assess Opportunities
2. Profile internally/ externally
3. Develop the Sourcing Strategy
4. Screen Suppliers and create selection criteria
5. Conduct Supplier Selection
-Negotiate
-Ordering *procure to pay cycle*
-Follow up and expediting *pay cycle*
-Receipt and inspection *pay cycle*
-settlement & payments *pay cycle*
, -Records maintenance *pay cycle*
THE SM PROCESS :
Assess Opportunities, Profile internally / Externally, Develop the sourcing Strategy and Screen
Suppliers and create Selection Criteria - ANS ✔✔Typically, more strategic and difficult to
accomplish
THE SM PROCESS:
Ordering, Follow up and expediting, receipt and inspection, Settlement & Payments, and
Records maintenance - ANS ✔✔Typically, more tactical and easier to accomplish
1. Assess Opportunities - ANS ✔✔Spending analysis on the company bulk spending and
suppliers highest spending
1. Assess Opportunities firms purchasing needs - ANS ✔✔New Projects and Existing Projects
2. Profile Internally / Externally - Sourcing decisions are high-level, often strategic decisions: -
ANS ✔✔Which product will use resources within the firm and products will be provided by
external supply chain?
2. Profile Internally / Externally have - ANS ✔✔Insourcing and Outsourcing
Insourcing - ANS ✔✔The use of resources within the firm
to provide products or services
Outsourcing - ANS ✔✔The use of supply chain partners
to provide products or services
