Sustainable supply chain should be about:

All are correct

- Risk management
- Resource efficiencies
- Environmental responsibility

Strategic sourcing as a process is far more broad & comprehensive than procurement.
The process starts with the info of:
Steering committee (ban chỉ đạo)

When a firm “source strategically”, it is:

working together with customers & suppliers in a creative, positive way
(Strategic Sourcing: Emphasizes long-term, value-driven partnerships with suppliers,
considering factors such as quality, innovation, risk management, and sustainability—not just
cost)

Which one is a unique aspect of strategic sourcing?

Meaningful supplier relationship based on value.

Tick all relevant key drivers for strategic sourcing?

All are correct
- Deliver more innovative products more frequently & cheaply than competitors
- Reduce high costs of globalization & materials; increase global competitors
- Increase the number of global competitors

Sourcing and assessing suppliers come under purchasing tasks.

False
(Sourcing and assessing suppliers are part of procurement, they are more aligned with
strategic sourcing and supplier management. Purchasing tasks usually focus on ordering
and transaction execution, whereas sourcing is a strategic function aimed at long-term
value creation.)

____ has allowed companies to connect to the world's “knowledge pools” to create BIZ
(Business) chances for collaboration in SC (Supply Chain).
Technology

Traditional sourcing tends to rely on the cheapest cost and economics of scale.
True
(Traditional Procurement: Primarily focuses on cost reduction, transactional relationships,
and short-term supplier interactions. The key goal is to get the lowest price for goods and
services)

Criticals - high value, high risk.

List the countries known as BRIC(S):

All are correct
- Brazil
- Russia
- India
- China
- South Africa

Which one is a unique aspect of strategic sourcing?

Meaningful supplier relationships & emphasis on value.

This course focuses on consumer purchasing.

False

Benchmarking (điểm chuẩn) of suppliers is a day-to-day task of the procurement

department
False
(Benchmarking is a strategic activity that involves comparing supplier performance, costs,
quality, and service levels against industry standards or competitors.
It is usually conducted periodically (e.g., quarterly, annually) rather than on a daily basis.
Day-to-day procurement tasks typically include order processing, negotiations, contract
management, and supplier communication rather than deep performance analysis.)
Primary (extractive) producers-agriculture, forestry, fishing, horticulture, mining are
examples of:
None of these -> Industrial/producer Organization
(Intermediate Buyers - Người mua trung gian → These are businesses that
purchase goods/services to modify or resell them. Primary producers supply raw
materials but are not themselves intermediate buyers.
Institutions - Tổ chức → Institutions include organizations like hospitals,
universities, and non-profits, which are not primary producers.
Government/Public Sector Organizations - Tổ chức chính phủ/khu vực công→ While
the government may regulate or purchase from primary producers, primary
industries themselves are not government entities.)

Public purchasing focuses on resales..-> government/public sector organizations

Public purchasing (Mua sắm công) is the process where government entities buy goods,
and services, and work to serve the public interest, not for resale.

How many rights are in Procurement Management

7 rights
1. Right Quality
Ensuring the goods or services meet the required specifications and standards.
Avoiding defects or subpar materials that can impact performance.
Poor quality can lead to customer dissatisfaction, increased returns, or operational failures.
Example: A glass product store must procure tempered glass for safety rather than standard
float glass if the order specifies it.
1. Right Materials
+ Ensuring the correct type, quality, and specification of materials are procured.
+ Avoids waste, production issues, and supply chain inefficiencies.

Example: When Apple sources raw materials for their devices, they ensure that the
aluminum used for the body of their iPhones is of a specific grade and quality. The
material must not only be durable but also lightweight to ensure ease of use and strength.

2. Right Quantity
 + Procuring the correct amount needed to avoid shortages, stockouts, lost sales, or
excess inventory.
+ Balancing demand forecasting with cost efficiency.
Example: A pharmaceutical store must stock enough cold-chain medicines but avoid
overstocking perishable drugs to prevent wastage.
3. Right Place
+ Ensuring delivery at the correct location to minimize logistical issues.
+ Misdeliveries can cause delays, increased transportation costs, and inefficiencies.
Example: If a Yakult production facility in Vietnam mistakenly receives packaging materials
at its warehouse instead of the production site, it could disrupt bottling operations.
4. Right Time
+ Just-in-time (JIT) inventory strategies help minimize holding costs.
+ Ensuring goods/services arrive when needed.
+ Preventing disruptions, missed sales opportunities, and storage issues in operations
due to early or late deliveries, and production.
Example: A glass product store must ensure glass panels for a construction project arrive
before installation deadlines.
5. Right Source (Supplier)
+ Selecting reliable and ethical suppliers who can meet contractual obligations.
+ Considering factors like sustainability, compliance, and reputation.
+ Selecting the wrong suppliers or logistics providers can lead to delays, quality issues,
or reputational damage.
Example: If a pharmaceutical retailer sources medicines from unverified suppliers, it risks
counterfeit products, legal issues, and loss of trust.
6. Right Price
+ Procuring at a competitive cost that balances affordability with quality.
+ Avoiding overpaying while ensuring fair pricing for suppliers.
+ The cost isn't just about the purchase price—it includes shipping, maintenance,
storage, and disposal costs.
+ Focusing solely on the lowest price can result in hidden costs like poor quality,
increased defects, or high maintenance expenses.
Example: A company importing high-end cosmetics should assess whether it's more cost-
effective to buy directly from the manufacturer rather than through an exclusive distributor.
7. Right Service
 + The supplier must offer technical assistance, warranties, installation support, and
after-sales services.
+ Lack of support can lead to operational inefficiencies and higher maintenance costs.
Example: If an e-commerce company like Lazada invests in automated warehousing, it needs
support contracts to ensure continuous system operation.

Negotiation comes under purchasing

True
(Negotiation in purchasing involves discussing terms such as price, quality, delivery
timelines, payment terms, and contract conditions with suppliers.)

Purchasing is:
A functional (&operatinal) activity
Key Functions of Purchasing:
1. Identifying Needs – Understanding what needs to be bought.
2. Supplier Selection – Choosing vendors based on cost, quality, and reliability.
3. Negotiation – Agreeing on prices, terms, and conditions.
4. Order Placement – Issuing purchase orders (POs).
5. Receiving Goods/Services – Ensuring delivery and inspecting quality.
6. Invoice Processing & Payment – Managing supplier payments.
7. Record Keeping – Maintaining documentation for audit and compliance.

___concerned with the right quality only

Quality control (QC) and Quality assurance (QA)
Quality Control (QC) ensures that products meet the required specifications and standards
before they are accepted or used.
Quality Assurance (QA) focuses on preventing defects by improving processes and setting
quality standards.

A formal entity on an organizational chart refers to an officially recognized department,

role, or position within a company’s structure. These entities represent the hierarchical
arrangement of authority, responsibilities, and reporting relationships.
Types of Formal Entities in an Organizational Chart:
- Departments/Divisions
Example: Finance, HR, Marketing, Procurement, Operations.
- Job Positions/Roles
Example: CEO, Manager, Supervisor, Specialist.
- Business Units
Example: Product Lines, Regional Offices, Subsidiaries.
- Teams/Functional Groups
Example: Project Teams, Task Forces, Committees.

Supply Management means

A process approach to manage supply base.

____ should be aligned with the overall mission and strategies of the organization
Strategic responsibilities
Tactical responsibilities: Medium-term activities that implement strategic goals.
Operational responsibilities: Day-to-day tasks ensuring smooth business functions.

In Value Chain (5 activities) model purchasing is a:

Secondary activity

Top knowledge areas for purchases of the future are:

All are correct
- Purchasing strategies
- Competitive market analysis
- Supplier relationship management

Aspect Classic Procurement Modern Procurement

Objective Ensure the right quality, Efficient procurement, supporting departments,

quantity, and timely delivery managing suppliers, and contributing to the
at the right price. company's strategy.

Perspective Focuses on the basic Focuses on supply chain management and

 procurement process. contribution to corporate strategy.

Scope Primarily involves Involves collaboration between

purchasing materials for departments and optimizing the
production. procurement process.

Distinctive (High risk, low value)

These items are typically harder to procure due to their specialized nature, and the risk
involves factors like long lead times or dependency on specialized suppliers.
Example: Engineered items, assembly table, methyl ethyl ketone (MEK)
Criticals (High risk, high value)
These items are essential for the final product's success. Since they are vital, procurement
teams focus on ensuring that these items are sourced reliably and efficiently.
Example: Unique items, cyclohexane: chất làm connector, tension testing machine: máy đo
độ bền kéo/nén/xé
Generics (Low risk, low value)
These items are easy to procure and generally require less attention during the procurement
process. They have minimal impact on the overall operations, making them easier to manage.
Example: Office supplies, MRO (Maintenance, Repair, and Operation) items, ink,
calibration: hiệu chuẩn/căn chỉnh- adjust measurement, pallet
Commodities (Low risk, high value)
Items are essential to production but typically have a lower risk. They include commonly
available products - BIG QUANTITY with high value or significant profit potential.
Example: Basic production items, basic packaging materials, logistic services, labels, top
papers: nhựa đóng góp

Challenges in the Competitive Environment

1. Increasing Numbers of World-Class Competitors

○ Explanation: The number of global competitors in any industry is constantly
growing, increasing the level of competition. Companies must compete not
just with local competitors but also with international players, which puts
pressure on pricing, quality, and customer service.
○ Example: In the smartphone industry, companies like Apple, Samsung, and
Huawei compete on a global scale, which forces each company to innovate
and maintain high quality at competitive prices.
2. Sophisticated Customer Base: More Performance at a Lower Cost
○ Explanation: Customers are becoming more knowledgeable and demanding,
seeking higher performance at lower prices. This shift requires businesses
to improve their value propositions, offering quality products and services at
competitive prices.
○ Example: Tesla faces this challenge in the electric vehicle (EV) market,
where customers demand innovative features, sustainability, and affordable
prices. Tesla has to balance cost-effectiveness while maintaining
technological superiority.
3. Widely Available Information Sources
○ Explanation: Information is now more accessible than ever, and this impacts
how consumers make decisions. Companies need to stay ahead by offering
better transparency and improving their reputation through reviews,
ratings, and information readily available on the internet.
○ Example: Amazon thrives in this environment because customers can access
detailed product reviews and make informed purchasing decisions.
4. Balance of Power Between Buyers and Suppliers
○ Explanation: The balance of power in procurement has shifted over time. In
many industries, buyers now have more negotiating power due to abundant
 suppliers, forcing companies to improve supplier relationships and offer better
terms.
○ Example: Large retailers like Walmart often have substantial bargaining
power over suppliers because of their size and ability to drive large orders,
forcing suppliers to meet stringent cost and quality requirements.
5. Greater Outsourcing
○ Explanation: Companies are increasingly relying on outsourcing for non-
core activities like manufacturing, IT services, and customer support. This
helps businesses reduce costs and focus on core competencies, but it can also
create risks in terms of quality control and vendor management.
○ Example: Many companies, like Apple, outsource the manufacturing of
iPhones to Foxconn, while they focus on product design, branding, and
marketing.

1. Straight Re-Buy (Low Risk)

Description:

● This is a routine procurement task that involves purchasing the same items from
the same suppliers that the company has bought from previously.
● There is no change in the specifications of the product or service, and the supplier
relationship is established.

Characteristics:

● Low Risk: Since the company has purchased the product or service before, the risk is
minimal.
● Examples:
○ Office supplies (e.g., pens, paper, ink)
○ Gas, water, electricity contracts
○ Cleaning materials
○ Spare parts
○ Bulk chemicals
Real-World Example:

● A large corporation needs to regularly purchase office supplies (paper, pens, etc.)
from the same supplier. Since this is a repeat purchase with low risk, this is
considered a Straight Re-Buy.

2. Modified Re-Buy (Medium Risk)

Description:

● In this case, the company is buying a product or service it has purchased before,
but with modifications to the specifications, terms, or suppliers.
● It may involve changes in the product’s design, the quantity, or the delivery schedule.
The company may also choose a new supplier or adjust pricing.

Characteristics:

● Medium Risk: The procurement involves changes or adjustments, which may lead to
new challenges.
● Examples:
○ Office furniture
○ Electronic components
○ Courier services
○ Business cars
○ Computer terminals

Real-World Example:

● A company might decide to modify the specifications of office furniture (e.g.,

changing the size or color of the desks) but still purchase from the same supplier or a
new one.

3. New Buy (High Risk)

Description:
 ● A New Buy is a procurement task where the company is purchasing a product or
service for the first time. It involves making a new decision, and the organization
needs to evaluate the supplier and the product carefully.
● This category typically involves high risk because the company is unfamiliar with the
supplier or the product.

Characteristics:

● High Risk: Since the product or service is new to the company, there's uncertainty
regarding the supplier's reliability, quality, and overall fit for the company's needs.
● Examples:
○ Telephone systems
○ Computers
○ Production equipment
○ Buildings
○ New technologies or large-scale infrastructure

Real-World Example:

● A company decides to invest in a new building for its headquarters or buys new
production equipment. This is a new purchase decision where the company
evaluates several factors such as cost, suppliers, and product quality.

1. Order Information Flow

● This flow involves communication about the products or services that the buyer is
requesting from the supplier. It includes details such as order quantities, product
specifications, delivery schedules, and pricing.
● Example: A buyer sends a purchase order (PO) to the supplier detailing the items and
quantities needed.

2. Inventory Information Flow

 ● Buyers and suppliers exchange information related to inventory levels, which helps in
managing stock levels and ensuring timely replenishment.
● Example: A supplier provides real-time inventory updates to the buyer so they can
plan orders accordingly.

3. Demand Forecasting Flow

● This information flow helps suppliers anticipate future demand. Buyers often share
forecast data, which enables suppliers to plan their production and logistics in
advance.
● Example: A buyer provides monthly or quarterly demand forecasts to the supplier to
help them plan their production schedules.

4. Production Information Flow

● Information regarding the production status and lead times is shared between buyers
and suppliers. This allows the buyer to understand when the products will be ready for
shipment.
● Example: A supplier informs the buyer about the status of production, such as when
an order is being manufactured or ready for delivery.

5. Shipment and Delivery Information Flow

● This flow includes the tracking and status updates for shipments, including shipping
dates, tracking numbers, and estimated arrival times.
● Example: The supplier provides the buyer with shipping updates and delivery
confirmations, including tracking numbers.

6. Quality Control and Inspection Information Flow

● This flow involves sharing information related to the quality of the products or
services. Buyers might send specifications or quality criteria to the supplier, while
suppliers may provide test results or certifications.
● Example: A supplier sends quality assurance reports or certifications to the buyer
after the product has been inspected.

7. Payment and Billing Information Flow

 ● Communication regarding invoices, payment terms, and financial transactions is
crucial for maintaining the buyer-supplier relationship.
● Example: A supplier sends an invoice to the buyer, and the buyer sends payment or
confirms payment terms.

8. Returns and Claims Information Flow

● This flow involves information exchange related to returns, claims, or product defects.
If there are issues with a product, the buyer will inform the supplier and the supplier
will process the claim.
● Example: A buyer informs the supplier of a defective product, and the supplier
processes a return or replacement.

9. Compliance and Regulatory Information Flow

● Buyers and suppliers may exchange data regarding compliance with local and
international regulations, including product certifications and safety standards.
● Example: A supplier provides documentation showing that their products meet
specific regulatory requirements.
NOTE LUMLA
WEEK1
MAIN: Material Inventory Management & Control
Aggressive planning

Flow:
Left-side: Procurement - Sourcing & Buying
Transportation & Freight Logistics
Middle: Quality Management
Inventory Management - Production & Operations Management
Right-side: Transportation & Freight Logistics
Demand Management (Quantity, Customer needs, Delivery time - No late/No soon)

Riken Thailand to Nippro Vietnam

Intermodal: Thailand factory -> truck -> vessel at Thai's port -> Viet's port -> truck -> Nippro
Vietnam
Group's assignment: 6 members -> 6 micro companies (<20 employees, no branch or part of
any chain, physical location, buy goods, not services)
procurement practices -> compare -> common issues/big scope -> solution/improvement

WEEK2
Procurement & Supplier Manager & Purchasing
Types of product - what to buy -> Quantity -> Time to receive -> Price: LIST OF CRITICAL
Benchmarking: compare the best supplier in the market
Sourcing is the best supplier based on: Q (Quality): 50% / D (Delivery): 30% / C (Cost): 15%
/ S (Service): 5%

Insource: tự produce
Outsource: others produce
Example: Nike is the outsource (ask others to produce its product/ compensate for any
failures)

Annual depreciation expense (100%) = (Initial Cost - final resold cost) / No.of years
Deduction of annual depreciation expense (reality) (given %of usage) = Annual depreciation
expense x %

Chapter 4:
Initiator: offers an idea of buying a particular product or service
Influencer: Influence other members in purchase decision
Decider: make decisions on buying decision-whether to buy, what to buy, how to buy, or
where to buy
Buyer: Handles the paperwork of the actual purchase
User: the person(s) who consumes or uses the product or service
Gatekeeper: controls information or access, or both, to decision-makers and influencers

4 Product Types:
- Raw material: PVC
- Semifinished Products and Components: Connectors
- Finished Products: Boxes of SCT
- MRO (Maintenance - Bảo trì / Repair - Sửa chữa / Operations - Vận hành)

CALIBRATION QUOTE: Hiệu chuẩn / căn chỉnh - adjust measurement

Tension Testing Machines: Máy kéo giãn: 688.335.648vnd

Criticals: high-value, high-risk (cyclohexane: chất làm connector, Tension Testing Machines)
Generics: Low risk, low value (ink, calibration, pallet)
Distinctive: High risk, low value (assembly table, methyl ethyl ketone (MEK))
Commodities: low risk, high value (label, top papers: nhựa đóng gói)

Error = Actual - Forecast -> positive -> under forecast -> otherwise above forecast
+ People -> round up to serve
+ Things -> round down to minimize inventory