Sourcing strategies, make-or-buy, supplier evaluation, contracts and total cost of ownership.
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- What is single sourcing?
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Purchasing a product from only one qualified supplier.- What is multiple sourcing?
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Splitting purchase volume among two or more suppliers for the same material.- When is sole sourcing appropriate?
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When only one supplier exists or possesses a proprietary product, technology, or capability.- What is strategic sourcing?
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A systematic approach to analyzing spend and making sourcing decisions to lower costs, reduce risk, and improve quality.- Name two advantages of global sourcing.
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Lower labor costs, access to specialized materials or expertise, economies of scale, competitive pricing.- Name two advantages of local or domestic sourcing.
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Shorter lead times, reduced transportation costs, easier communication, better quality control, support local economy.- What is just-in-time sourcing?
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Receiving materials just before they are needed in production to minimize inventory carrying costs.- What is a cost-plus pricing contract?
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Supplier is reimbursed for all documented costs plus an agreed-upon profit margin or fee.- What is a fixed price contract?
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Supplier agrees to provide goods or services for a set price regardless of actual costs incurred.- What is the primary purpose of make-or-buy analysis?
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To decide whether to manufacture a product in-house or purchase it from an external supplier.- What are core competencies in sourcing decisions?
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Unique capabilities and expertise that give an organization competitive advantage and should typically be performed in-house.- What is vertical integration?
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An organization owns or controls its suppliers or distributors to ensure supply security and reduce costs.- What is outsourcing?
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Contracting with external suppliers to perform functions or provide goods previously done in-house.- Name three criteria for supplier selection.
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Cost, quality, delivery performance, financial stability, technical capability, communication, location, certifications.- What is a supplier scorecard?
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A tool that tracks and grades supplier performance against key metrics like quality, delivery, cost, and responsiveness.
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