SCM 303 Lecture Notes - Lecture 22: Performance Measurement, Opportunism, Shelf-Stable Food
9 Dec 2016
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Portfolio model: provides a framework for making these strategic management decisions. Supply risk: the extent to which the item is difficult to source due to a lack of qualified sources, raw material scarcity, lack of substitutions, logistics cost or complexity, and monopoly or oligopoly conditions. Portfolio impact: may result from either the sheer volume of spend for that particular item or the unique additional value from the item. Routine items: low value, purchased in small volumes, through individual transactions; does not require a high level of purchasing expertise. Least likely to find collaborative relationships: profit impact: low, supply risk: low, strategy: simplify and automate, example: negotiate office supply rates once and allow employees to make needed purchases using company cards. Leverage items: has the potential to affect profit, typically because such items are associated with a high level of expenditure; has many qualified.
