What is a Supply Chain?
A network of three or more organizations directly linked by upstream and downstream flows of products, services, finances, and information from source to customer
What are the minimum number of organizations that must be linked together to make up a supply chain?
3
What is the difference between a supply chain and a value chain?
A supply chain focuses on the flow of goods and services, while a value chain includes all activities that add value to a product, including supply chain functions.
What is a tier 1 supplier?
Provides goods or services directly to the buying organization
What does “upstream” and “downstream” refer to in a supply chain?
“Upstream” refers to suppliers and earlier stages; “downstream” refers to customers and later stages
What is the value to a company that has the best supply chain in its market?
Competitive advantage through lower costs, faster delivery, better quality, and higher customer satisfaction.
What are the 5 Rights of Purchasing?
Right Quality, Right Quantity, Right Time, Right Price, Right Source
What is the difference between direct materials, indirect materials, and MRO?
Direct materials: Become part of the final product.
Indirect materials: Support production but aren’t part of the final product.
MRO: Maintenance, Repair, and Operations items used to keep operations running.
What does “organizational design” refer to from a P/SM perspective?
The structure and formal systems of communication, authority, and responsibility within purchasing/supply management
What are the management activities covered by the supply chain “umbrella”?
Purchasing, transportation, inventory control, forecasting, sourcing, logistics, and supplier relationship management
What is the difference between purchasing and supply management?
Purchasing is transactional (buying goods/services); supply management is strategic (includes sourcing, negotiation, and supplier development)
What makes up the purchasing process?
Identify needs, evaluate suppliers, negotiate, issue orders, receive goods/services, and manage payment and performance
What is the difference between spend analysis, demand management, and cost management?
Spend analysis: Reviews past spending.
Demand management: Controls what and how much is purchased.
Cost management: Focuses on reducing total cost of ownership
Benefits of electronically creating and transmitting purchasing documents?
Faster processing, fewer errors, improved tracking, lower costs, and better data accuracy
Steps in the procure-to-pay (P2P) process?
- Identify need
- Create requisition
- Approve requisition
- Issue purchase order
- Receive goods/services
- Approve invoice
- Make payment
What is a spot buy?
A one-time purchase for an immediate need, often outside of contracts.
Difference between purchase requisition and purchase order?
Requisition: Internal request to buy.
Purchase order: Formal offer to supplier
Six required pieces of information on a standard purchase order?
Description, quantity, price, delivery date, supplier info, PO number
Difference between reorder point system and MRP system?
Reorder point: Triggers order when inventory hits a set level.
MRP: Plans orders based on production schedules and forecasts
What is “description by specification”?
Defining a product by detailed characteristics like size, material, and performance
Types of characteristics in description by specification?
Physical, chemical, performance, and dimensional traits
What is a preferred supplier?
A vetted supplier chosen for consistent performance and reliability
Difference between purchase order and blanket order?
PO: One-time transaction.
Blanket order: Covers multiple deliveries over time
Best time to use each type of order?
PO: For infrequent or unique purchases.
Blanket order: For recurring needs.
