Case 3

OPMT 350-01 Supply Chain Management (Fall 2015)

Home Work 2 (Chapters 4 – 8) (Due Tuesday, October 27 5:00 pm)

Name: _____Yuhang Cui_______________________________

1. How can strategic procurement contribute to the quality of products produced by a manufacturing organization?

Procurement is critical to the quality requirements of every firm. The quality of finished goods and services is dependent upon the quality of the materials and components used. The most basic factor of increasing the importance of procurement is being able to recognize how much is spent for purchases of a certain organization and the amount of saving from a viable procurement strategy. Good quality components and materials need to be used in order for the final product to be higher in quality and meets the customer quality standards. So the quality of finished goods is depended on the procurement.

2. How does lowest TCO differ from lowest purchase price?

Purchase price is one of the major concerns of procurement so firms are always seeking the lowest price. At the same time, firms also looks for quantity discounts and associated logistical benefits out of the purchase price. Despite the standard services, there could be other value-added services that are offered by the sellers. The purchase price of a material is only a portion of the total cost of ownership for a firm. Even though the purchase price remains the most important component of cost, other cost factors like service costs and life cycle costs should also be evaluated.

3. Many people think of lean systems as being incompatible with mass customization and flexible manufacturing. Why is this conclusion incorrect?

Lean system is a method of reducing waste in production. As customers have increasingly demanded products that are more precisely tailored to individual desire, manufactures have struggled to adapt these processes to provide better individual customization of products while...