SCMN 3730 EXAM 1 STUDY GUIDE
The Language of Business - Answers :-Accounting is the backbone of procurement
-Return on Capital (consists of the Income Statement and Balance Sheet)
-Balance Sheet shows the costs of materials
-Income Statement shows the sales of materials
Components of the transformational model of a business - Answers :-Owner's Capital
-Input (machines, labor, and materials)
-Transformation Process
-Output (finished goods)
Primary objective of a business - Answers :to make PROFIT for the OWNERS of the
business by minimizing the impact of constraints on the operating system that prevent it
from increased profitability AND achieving competitively superior performance from a
best-in-class transformation proces
Productivity - Answers :Output/Input
Procurement Organization - Answers :Effects the impact of a business' productivity by
selecting suppliers
Best-in-class - Answers :assessment of how well one is doing in process vs.
competitors
World class - Answers :regardless of industry, being the best at it (Amazon, McDonalds)
Downsize - Answers :Output remains the same and input is reduced; sometimes
necessary to increase profitability and cut costs
zero-based budgeting - Answers :offset cost reduction; method of budgeting in which all
expenses must be justified for each new period; starts from a "_____ _____" and every
function within an organization is analyzed for its needs and costs.
Operational Excellence Key Components - Answers :-Implement the right organizational
model
-Integrate the S/C business processes
-Invest in technology
-Achieve superior financials
-Be an effective communicator
20th century vs 21st century leadership change - Answers :-20th century = dogmatic
(opinionated, assertive, authoritarian
-21st century = inspirational (developmental, influential)
, Supply Chain - Answers :sequence of processes involved in the production and
distribution of a commodity; components: extractor, converter, manufacturer, assembler,
distributor, retailer, consumer; flows downward
nodes - Answers :value added to product
linkages - Answers :connectivity between nodes
vertical integration - Answers :one of the basic customer/supplier business relationships
within the supply chain; being integrated on supply chain leading from extraction; very
few today
joint venture - Answers :one of the basic customer/supplier business relationships within
the supply chain; rather than buying from supplier, ensures a continued supply by
merging; also declining in today's supply chains
Strategic partnership/relationship - Answers :one of the basic customer/supplier
business relationships within the supply chain; relationship whereby the relationship
between nodes is intended to be a long lasting relationship that mutually benefits one
another
Transactional Solution - Answers :one of the basic customer/supplier business
relationships within the supply chain; buying from different nodes
Procurement - Answers :Cross-functional processes used by organizations to acquire
goods and services
Purchasing - Answers :Activity of item buying (transaction); how goods and services are
ordered
Sourcing - Answers :Strategic approach to supplier selections, development, and
management implemented to achieve improved business results
Key events that have defined the supply chain operating environment - Answers :-
Complex security requirements resulting from 9/11 attack
-Increasing regulations from Enron debacle → Sarbanes-Oxley
-Advancing technology enabling supply chain integration
-Globalizing markets
Industry that places a greater strategic importance on the procurement process -
Answers :The Chemical Industry puts the biggest emphasis on procurement process,
because 2/3 of every dollar spent goes to purchase materials necessary for the
production of a product. After that industry is Manufacturing, Service, and public.
Primary responsibilities of procurement - Answers :-Identify and select suppliers,
negotiate contracts
The Language of Business - Answers :-Accounting is the backbone of procurement
-Return on Capital (consists of the Income Statement and Balance Sheet)
-Balance Sheet shows the costs of materials
-Income Statement shows the sales of materials
Components of the transformational model of a business - Answers :-Owner's Capital
-Input (machines, labor, and materials)
-Transformation Process
-Output (finished goods)
Primary objective of a business - Answers :to make PROFIT for the OWNERS of the
business by minimizing the impact of constraints on the operating system that prevent it
from increased profitability AND achieving competitively superior performance from a
best-in-class transformation proces
Productivity - Answers :Output/Input
Procurement Organization - Answers :Effects the impact of a business' productivity by
selecting suppliers
Best-in-class - Answers :assessment of how well one is doing in process vs.
competitors
World class - Answers :regardless of industry, being the best at it (Amazon, McDonalds)
Downsize - Answers :Output remains the same and input is reduced; sometimes
necessary to increase profitability and cut costs
zero-based budgeting - Answers :offset cost reduction; method of budgeting in which all
expenses must be justified for each new period; starts from a "_____ _____" and every
function within an organization is analyzed for its needs and costs.
Operational Excellence Key Components - Answers :-Implement the right organizational
model
-Integrate the S/C business processes
-Invest in technology
-Achieve superior financials
-Be an effective communicator
20th century vs 21st century leadership change - Answers :-20th century = dogmatic
(opinionated, assertive, authoritarian
-21st century = inspirational (developmental, influential)
, Supply Chain - Answers :sequence of processes involved in the production and
distribution of a commodity; components: extractor, converter, manufacturer, assembler,
distributor, retailer, consumer; flows downward
nodes - Answers :value added to product
linkages - Answers :connectivity between nodes
vertical integration - Answers :one of the basic customer/supplier business relationships
within the supply chain; being integrated on supply chain leading from extraction; very
few today
joint venture - Answers :one of the basic customer/supplier business relationships within
the supply chain; rather than buying from supplier, ensures a continued supply by
merging; also declining in today's supply chains
Strategic partnership/relationship - Answers :one of the basic customer/supplier
business relationships within the supply chain; relationship whereby the relationship
between nodes is intended to be a long lasting relationship that mutually benefits one
another
Transactional Solution - Answers :one of the basic customer/supplier business
relationships within the supply chain; buying from different nodes
Procurement - Answers :Cross-functional processes used by organizations to acquire
goods and services
Purchasing - Answers :Activity of item buying (transaction); how goods and services are
ordered
Sourcing - Answers :Strategic approach to supplier selections, development, and
management implemented to achieve improved business results
Key events that have defined the supply chain operating environment - Answers :-
Complex security requirements resulting from 9/11 attack
-Increasing regulations from Enron debacle → Sarbanes-Oxley
-Advancing technology enabling supply chain integration
-Globalizing markets
Industry that places a greater strategic importance on the procurement process -
Answers :The Chemical Industry puts the biggest emphasis on procurement process,
because 2/3 of every dollar spent goes to purchase materials necessary for the
production of a product. After that industry is Manufacturing, Service, and public.
Primary responsibilities of procurement - Answers :-Identify and select suppliers,
negotiate contracts
