MGSC 487 SEAN HANDLEY EXAM 1 QUESTIONS AND
ANSWERS | LATEST UPDATE
Describe the evolution of supply management including characteristics of modern
procurement and sourcing organizations. - Answers - - Supply management first came
people’s attention during the first and second world wars to carry out such large
operations
- JIT purchasing techniques in the 1980's on inventory control and supplier quality
- 1990's brought supply mkt globalization with the rise of China and India economies
- E commerce changed from paper to online based
Evolution of SC Management - Answers - •More strategic
•Expanded reach
•Priorities beyond cost reduction (still a primary concern)
-Quality and service
-Innovation
-Risk management
-Sustainability and CSR
Characteristics of Modern Procurement - Answers - - Innovation in company's s-chains
thru supplier relationship and performance management programs (SRM/SPM)
- availability to real time data
- CPO reports directly to CEO and CFO (executives)
What are the key objectives of supply management organizations? - Answers - -
Manage the purchasing process
- Manage the supply base
- Supply Risk Management
- Ensure Supply continuity
- Maintain strategic alignment with business stakeholders
- Sustainability and CSR
Centralized Authority - Answers - Corporate headquarters has authority for the majority
of purchase expenditures (moderate trend toward more centralization)
Decentralized Authority - Answers - Authority for majority of purchase expenditures
resides at the divisional, business unit, or site level
Hybrid Authority - Answers - Combines a centralized approach for items common to
several business units and a decentralized approach for unique purchase requirements
(common approach)
, Discuss the tradeoffs (pros/cons) of centralized versus decentralized procurement. -
Answers - Advantages of Centralization (standardized):
- Developing Expertise
- Ability to coordinate plans, strategies, and technology platforms
- Reduced Duplication of Purchasing Effort
- Consolidate Purchase Volumes
Advantages of Decentralization:
- Ownership
- Product development support
- Understanding unique operational requirements
- Speed and responsiveness
Describe the purpose of the procure-to-pay (P2P) process. What is included in the P2P
process? - Answers - Connects the procurement and entire supply chain processes
within a company through the goods receipt process, and finally to the payment issued
to the vendor.
What's Included (elements):
- Sourcing
- Contracts
- Purchasing
- Goods receipt
- Invoicing
Strategic Sourcing - Answers - the development and management of supplier
relationships to acquire goods and services in a way that aids in achieving the
immediate needs of the business
Stages of the Strategic Sourcing Process - Answers - 1) Spend and Demand Analysis
2) Supply Market Analysis
3) Sourcing Strategy development
4) Suppliers Selection & Negotiation
5) Supplier Performance & Relationship Management
Supplier Selection and Negotiation - Answers - •Single vs. multiple sources of supply?
•Short vs. long-term contracts?
•Does supplier need technical / design capability?
Level and Drivers of cost reduction - Answers -
High Level Sourcing Metrics - Answers - 1) Spend Under Management
2) Consolidation of Spend
3) Percentage of E-invoicing
ANSWERS | LATEST UPDATE
Describe the evolution of supply management including characteristics of modern
procurement and sourcing organizations. - Answers - - Supply management first came
people’s attention during the first and second world wars to carry out such large
operations
- JIT purchasing techniques in the 1980's on inventory control and supplier quality
- 1990's brought supply mkt globalization with the rise of China and India economies
- E commerce changed from paper to online based
Evolution of SC Management - Answers - •More strategic
•Expanded reach
•Priorities beyond cost reduction (still a primary concern)
-Quality and service
-Innovation
-Risk management
-Sustainability and CSR
Characteristics of Modern Procurement - Answers - - Innovation in company's s-chains
thru supplier relationship and performance management programs (SRM/SPM)
- availability to real time data
- CPO reports directly to CEO and CFO (executives)
What are the key objectives of supply management organizations? - Answers - -
Manage the purchasing process
- Manage the supply base
- Supply Risk Management
- Ensure Supply continuity
- Maintain strategic alignment with business stakeholders
- Sustainability and CSR
Centralized Authority - Answers - Corporate headquarters has authority for the majority
of purchase expenditures (moderate trend toward more centralization)
Decentralized Authority - Answers - Authority for majority of purchase expenditures
resides at the divisional, business unit, or site level
Hybrid Authority - Answers - Combines a centralized approach for items common to
several business units and a decentralized approach for unique purchase requirements
(common approach)
, Discuss the tradeoffs (pros/cons) of centralized versus decentralized procurement. -
Answers - Advantages of Centralization (standardized):
- Developing Expertise
- Ability to coordinate plans, strategies, and technology platforms
- Reduced Duplication of Purchasing Effort
- Consolidate Purchase Volumes
Advantages of Decentralization:
- Ownership
- Product development support
- Understanding unique operational requirements
- Speed and responsiveness
Describe the purpose of the procure-to-pay (P2P) process. What is included in the P2P
process? - Answers - Connects the procurement and entire supply chain processes
within a company through the goods receipt process, and finally to the payment issued
to the vendor.
What's Included (elements):
- Sourcing
- Contracts
- Purchasing
- Goods receipt
- Invoicing
Strategic Sourcing - Answers - the development and management of supplier
relationships to acquire goods and services in a way that aids in achieving the
immediate needs of the business
Stages of the Strategic Sourcing Process - Answers - 1) Spend and Demand Analysis
2) Supply Market Analysis
3) Sourcing Strategy development
4) Suppliers Selection & Negotiation
5) Supplier Performance & Relationship Management
Supplier Selection and Negotiation - Answers - •Single vs. multiple sources of supply?
•Short vs. long-term contracts?
•Does supplier need technical / design capability?
Level and Drivers of cost reduction - Answers -
High Level Sourcing Metrics - Answers - 1) Spend Under Management
2) Consolidation of Spend
3) Percentage of E-invoicing
