SCM 421 EXAM 1 STUDY GUIDE
Procurement - Answer -Purchasing
as an activity, profession, and functional area
Todays competitive environment - Answer -Competition is increasing, markets are
increasing, new tech, more info make customers empowered, risks are higher
What happens as a raw material moves through the supply chain? - Answer -It
becomes a product which is more expensive the more it moves down the line towards
the customer
Profit Leverage Effect - Answer -The amount of extra sales dollars needed to have the
same impact of $1 saved by purchasing's cost cutting efforts.
$1 saved by purchasing is an additional $1 operating profit. An additional $1 increased
sales only increases profit by the operating percentage.
Supply chain Management - Answer -is the efficient and effective flow of products,
services, information, and financials from the supplier's suppliers through the various
intermediate organizations out to the customer's customers.
Product and service are easy to move
info and financials are harder to transfer
not all supply chains are effective and efficient
SCOR Model - Answer -Plan
Source
Make
Deliver
Return
Enable
(SCOR) Plan - Answer -Planning processes help you use resources to generate and fill
demand to meet your financial plan
(SCOR) Source - Answer -Sourcing processes help you build an effective sourcing
organization and select the "best" suppliers
(SCOR) Make - Answer -Production processes help you transform inputs into a finished
product that customers value.
, (SCOR) Deliver - Answer -Logistics processes help you manage inbound delivery of
materials—both inbound and outbound
(SCOR) Return - Answer -Return processes help you manage the return of products—
for any reason.
(SCOR) Enable - Answer -Enabling processes help you support plan-source-make-
deliver-return value creation activities.
Buyers role - Answer -- Study sales records and inventory levels of stock
- Identifying foreign and domestic suppliers
- Keep informed of changes affecting both the supply
of, and demand for, needed products and materials
-Determine/negotiate the best value
- Choose the appropriate suppliers
- Monitor and evaluate suppliers
- Award contracts that ensure that the correct amount
of the product or service is received at the appropriate time
Seven rights of purchasing - Answer -Right material, quantity, time, place, supplier,
service, price
Customer Value - Answer -What the customer gets/what it costs the customer
customer defines the value of your product
To increase value give customer more for a lower cost and vice versa
How is customer value created - Answer -Quality, flexibility, and speed/cost
Value Dynamics: Three truths - Answer -Supply chains are inherently interdependent
supply chains are inherently dynamic
value is cumulative
Why procurement is important to competitive advantage - Answer -Reduce total cost
for the firm and drive profitability
liberate cash
enhance operational performance
drive innovation and revenue
protect the company/ brand
Procurement - Answer -Purchasing
as an activity, profession, and functional area
Todays competitive environment - Answer -Competition is increasing, markets are
increasing, new tech, more info make customers empowered, risks are higher
What happens as a raw material moves through the supply chain? - Answer -It
becomes a product which is more expensive the more it moves down the line towards
the customer
Profit Leverage Effect - Answer -The amount of extra sales dollars needed to have the
same impact of $1 saved by purchasing's cost cutting efforts.
$1 saved by purchasing is an additional $1 operating profit. An additional $1 increased
sales only increases profit by the operating percentage.
Supply chain Management - Answer -is the efficient and effective flow of products,
services, information, and financials from the supplier's suppliers through the various
intermediate organizations out to the customer's customers.
Product and service are easy to move
info and financials are harder to transfer
not all supply chains are effective and efficient
SCOR Model - Answer -Plan
Source
Make
Deliver
Return
Enable
(SCOR) Plan - Answer -Planning processes help you use resources to generate and fill
demand to meet your financial plan
(SCOR) Source - Answer -Sourcing processes help you build an effective sourcing
organization and select the "best" suppliers
(SCOR) Make - Answer -Production processes help you transform inputs into a finished
product that customers value.
, (SCOR) Deliver - Answer -Logistics processes help you manage inbound delivery of
materials—both inbound and outbound
(SCOR) Return - Answer -Return processes help you manage the return of products—
for any reason.
(SCOR) Enable - Answer -Enabling processes help you support plan-source-make-
deliver-return value creation activities.
Buyers role - Answer -- Study sales records and inventory levels of stock
- Identifying foreign and domestic suppliers
- Keep informed of changes affecting both the supply
of, and demand for, needed products and materials
-Determine/negotiate the best value
- Choose the appropriate suppliers
- Monitor and evaluate suppliers
- Award contracts that ensure that the correct amount
of the product or service is received at the appropriate time
Seven rights of purchasing - Answer -Right material, quantity, time, place, supplier,
service, price
Customer Value - Answer -What the customer gets/what it costs the customer
customer defines the value of your product
To increase value give customer more for a lower cost and vice versa
How is customer value created - Answer -Quality, flexibility, and speed/cost
Value Dynamics: Three truths - Answer -Supply chains are inherently interdependent
supply chains are inherently dynamic
value is cumulative
Why procurement is important to competitive advantage - Answer -Reduce total cost
for the firm and drive profitability
liberate cash
enhance operational performance
drive innovation and revenue
protect the company/ brand
