PurchasingMidterm study guide

5 measure effectiveness and ensure proper business

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just be involved in every service purchase. 5. Measure effectiveness and ensure proper business controls: develop the right tools to do routine audits that look at the key indicators and look into the real source of problems. Just like report cards in material purchasing. 6. Put the best people in the services supply management: Find trailblazers, visionaries as this is a new aspect of business and many of the steps are untrodden paths. Find good material buyers and have them apply their same skill set in service buying. Using personal from other companies that have already done these steps with service management is also, a good start. Identify the Need - Relationships (1/23/12), Chapter 4 (including the appendices) and McDonald’s Corporation Case, pp. 1-10 (CP) Summarize the characteristics of the different relationships described in the chapter.
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[See Pg. 66-67] Transactional Relationships- most common and basic type of relationship. Arms length. [See Pg 69] Collaborative Relationships- awareness of interdependence and necessity of cooperation. Continuous improvement is easier, which results in reduction in total costs. [See Pg70-71] Supply Alliances- institutional trust (the parties have access to each other’s strategic plans in the area(s) of interface. Relevant cost info and forecasts shared. Risks/rewards addressed openly. Informal agreements as good as written ones. “Transactional relationships are bad, and alliances are always good.” Right? [Pg 72-73] No, it depends on the kind of relationship that is needed for your specific needs Is it possible for a supplier and customer to become too involved in one another’s business? If so, how; and what are the possible problems? Companies must protect their core competencies, otherwise their supplier may start doing what they do. For a new firm that your company is working with, you do not want to jump straight into a supply alliance; that would be too involved with a firm that you do not know well enough. Evaluate the Quaker Oats alliance described in Appendix B [Pg 84] Alliance became a joint venture, and Quaker built an addition for a plastic bottle plant and Graham investing in the equipment and people required to operate the facility. Material cost was 40% of the bottle price. Supplier was not willing to reduce price it was charging Quaker for the bottle, even though Quaker demonstrated that profit was excessive. Quaker started looking for a new supplier and evaluated several. They began negotiating with Graham, who was willing to form a relationship with Quaker. They understood each others goals and objectives, and were very open on information. The contract went as follows: 1. Evergreen from one fixed period to another 2. Completely open book 3. Cancelable for failure to perform 4. Volume Sensitive: Quaker will compensate for volume shortfalls. The alliance has reduced cost, has produces more accurate forecasting, and has improved quality.
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