What is the purpose and characteristics of a “supplier managed inventory” program?
Supplier manages buyer’s inventory levels, replenishment, and delivery schedules. Reduces buyer’s administrative burden and improves supply chain efficiency
What is the overall objective of supplier evaluation and selection?
To reduce sourcing risk and maximize value
Advantages and disadvantages of local suppliers vs. national/global suppliers?
- Advantages: Faster delivery, easier communication
- Disadvantages: Limited capabilities, less access to advanced technologies
Difference between single sourcing, sole sourcing, and multiple sourcing?
- Single Sourcing: Choosing one supplier
- Sole Sourcing: Only one supplier available
- Multiple Sourcing: Using several suppliers
Difference between certified and preferred supplier?
- Certified: Audited and proven to meet quality standards consistently
- Preferred: Consistently meets performance expectations and adapts to buyer needs
Definition and purpose of risk management?
Identifying and mitigating potential financial or operational disruptions
What is the difference between “financial
risk management” and “operational risk management”?
- Financial risk: Supplier’s financial instability
- Operational risk: Disruptions in delivery, quality, or capacity
Methods to gather additional supplier info after initial cut?
Supplier visits, third-party audits, RFIs/RFPs/RFQs, performance history, and internal evaluations
Characteristics of an effective supplier survey?
Comprehensive, objective, reliable, flexible, and easy to understand mathematically
What must total weights in a weighted average survey add up to?
100%
Difference between supplier performance problem and deficiency?
- Performance problem: Temporary issue affecting delivery or quality
- Deficiency: Systemic failure to meet standards or requirements
Why use process mapping during supplier evaluation?
To visualize supplier processes, identify inefficiencies, and align capabilities with buyer needs
Role of commodity teams in evaluation/selection?
Cross-functional teams that assess suppliers for specific product categories and make selection recommendations
Function of a data warehouse in evaluation/selection?
Central repository for supplier data used to analyze performance and support decision-making
Criteria for buying direct from manufacturer vs. distributor?
Depends on purchase size, service needs, storage capacity, and manufacturer’s direct sales policies
What are the 3 general criteria used to rate key suppliers?
Cost/price, quality, and delivery performance
What does TQM stand for?
Total Quality Management
What does DMAIC stand for?
Define, Measure, Analyze, Improve, Control
Difference between “quality” and “supplier quality”?
- Quality: Meeting customer expectations
- Supplier quality: Supplier’s ability to consistently meet buyer’s performance requirements
What are the 8 principles of TQM?
- Customer focus
- Leadership
- Involvement of people
- Process approach
- Systems approach
- Continual improvement
- Factual decision-making
- Mutually beneficial supplier relationships
Why does TQM focus on process instead of output?
Because controlling the process ensures consistent quality and prevents defects before they occur
Role of prevention in product quality
Prevents defects by reducing variation and reliance on inspection, improving consistency
Who was Dr. Edward Deming?
Quality pioneer who emphasized reducing variation, continuous improvement, and systemic thinking
What is the Honda BP process?
Honda’s Best Practices approach to eliminate waste and improve supplier efficiency
