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CPSM® COURSEWARE
© Copyright 2020. Institute for Supply Management TM; All Rights Reserved.
Leadership and Transformation in
Supply Management Exam
Exam 3
Certified Professional in Supply Management®
Exam 3: Categories and Tasks Leadership and Business Acumen –
Strategy Development – Task 3-A-1 – Task 3-A-2 – Task 3-A-3 – Task 3-A-4
Leadership and Business Acumen –
Stakeholder Engagement – Task 3-B-1 – Task 3-B-2 – Task 3-B-3 – Task 3-B-4 – Task 3-B-5 Leadership and Business Acumen –
People Development and Coaching – Task 3-C-1 – Task 3-C-2 – Task 3-C-3 – Task 3-C-4 – Task 3-C-5 – Task 3-C-6 – Task 3-C-7 – Task 3-C-8
Systems Capability and Technology – Task 3-D-1 – Task 3-D-2
Risk and Compliance
– Task 3-E-1 – Task 3-E-2 – Task 3-E-3 – Task 3-E-4 – Task 3-E-5 – Task 3-E-6 – Task 3-E-7 – Task 3-E-8 – Task 3-E-9
Corporate Social Responsibility and Ethics
– Task 3-F-1 – Task 3-F-2 – Task 3-F-3 – Task 3-F-4 – Task 3-F-5 – Task 3-F-6
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Exam 3
TASK 3-A-1
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Exam 3
Task 3-A-1 Task Outline
1) Supply management organization mission, processes, capabilities
2) Definition of customer requirements
3) Corporate processes and organizational dynamics
4) Influence
5) Internal negotiations and synergies
3-A-1 Participate in organization- wide objective setting.
All of the content in this task is bridge exam material.
Full 6Q; Bridge 4Q
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Exam 3
Supply Managers Should Understand the
Organization’s
Key objectives
Staffing
Policy development processes
Existing policies
Supply management’s
– Mission
– Processes
– Capabilities
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Exam 3
Supply Management Mission
Supply management’s primary mission is to
support organizational needs through
– Identifying
– Acquiring
– Accessing
– Positioning
Whatever the organization needs or potentially
might need to succeed
We must be proactive in this
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Exam 3
Supply Management’s New Environment
Forward looking, anticipatory approach
Planning, forecasting, collaboration
Strong focus on internal customer satisfaction
Assessment of internal competencies
Outsourcing many activities
– Materials and products
– Information technology
– Design activities
Much of this shifted to suppliers
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Exam 3
Supply Management Processes -
Typical Strategic sourcing and supplier base management
Strategic supply management
Management of countertrade activities
Market intelligence management
Purchase of materials and components
Project management services
Services procurement and contracting
Inventory management and control
Investment recovery and recycling
Outsourcing and subcontracting
Forecasting and planning
Supply management research
Value analysis
Value engineering
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Exam 3
Supply Management Capabilities -
Typical
Selection, development and maintenance of supply
– Stay abreast of market conditions
– Ensure supplier competitiveness
– Identify new suppliers
– Develop value-adding relationships
– Improve supplier performance
Develop a value-adding supplier base
Cross-functional, cross-organizational collaboration
Communicate/coordinate with internal customers and
suppliers
Ensure that agreement terms are followed
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Exam 3
To represent supply management in company-wide matters, supply managers should understand
External customer needs and expectations
What is required to meet those needs
How supply management helps to meet those needs
In other words, how does supply management “fit” into the external customer value proposition?
Definition of Customer Requirements
Supply managers meet internal customer needs by
Providing reliable sources of products and services
Consistently meeting operational requirements
– Optimize total cost of ownership
– Ensure supplier capabilities
– Ensure quality of product and performance
– Ensure timely delivery
– Ensure accurate delivery points
Internal Customers External Customers
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Exam 3
Supply Management’s Organizational “Fit”
Examples
– In a manufacturing environment: assurance of
quality/quantity of parts and materials
– In a service organization: assurance of performance
quality, locations of service equipment, etc.
– In a distribution organization: ensuring
• Adequacy of facilities and equipment
• Quality and service levels of logistics providers
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Exam 3
Corporate Processes and Dynamics
Supply managers should understand corporate
processes, including which functions are most
influential and what they need to succeed
Examples
– In manufacturing organizations: engineering and
manufacturing are likely to have the most clout
– In service organizations: marketing may have the most
clout
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Exam 3
Corporate Processes and Dynamics –
Cont.
Awareness of organizational dynamics enables supply management to provide maximum support where it makes the most impact
When proposing a supply management initiative, show how it helps achieve organizational goals
This implies that supply management can directly affect important organizational outcomes – Ensure that the net effect is positive
– Example: be sure that savings from lowering inventory through smaller deliveries is greater than the transportation cost increases
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Exam 3
Influence
The degree to which supply
management influences
organizational decisions
depends on the degree to
which supply is seen as
integral to organization
success
Low
Low
High
High
Org
an
izati
on
al P
erc
ep
tio
n o
f
Su
pp
ly M
an
ag
em
en
t’s
Co
ntr
ibu
tio
n t
o S
uccess
Supply Management’s
Influence 14
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Exam 3
Influence – Cont.
Supply strategies must integrate with and support
organizational strategies. This can be difficult
because
– Historically, supply was perceived as “tactical” and did
not participate in corporate planning
– Senior management is often slow to realize the potential
of a world-class supply function
Supply management must “market” the function by
showing how it helps achieve critical objectives
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Exam 3
Internal Negotiations and Synergies
Refers to the way
– Changes are made
– Improvements are approved
and implemented
– Budgets are developed
– Strategies, objectives,
policies and procedures are
proposed, developed and
implemented
To participate, must have
knowledge of
organization’s
– Mission
– Internal processes
– Capabilities
– Customer requirements
– Corporate processes
– Dynamics
– Influence processes
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Exam 3
Organizational Synergy
Synergy is a mutually advantageous conjunction,
where the whole is greater than the sum of its parts
– Example: a cross-functional new-product development
team could likely bring the product to market faster than
by using the old “step-by-step” approach
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Exam 3
Task 3-A-1 Recall Question #1
The ability of a supply management professional to effect
change in an organization is most commonly a result of
her ability to ____________ others?
(A) Influence
(B) Control
(C) Leverage
(D) Support
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Exam 3
Task 3-A-1 Recall Question #2
In general, the concept of “the whole is greater than the
sum of the individual parts” refers to:
(A) Influence.
(B) Leverage.
(C) Leadership.
(D) Synergy.
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Exam 3
Task 3-A-1 Application Question #1
You are a retailer of leisure products. Business has suffered over many years due to a soft economy. Market pressures have forced your firm to lower prices. At a press conference this morning, your CEO stated, “In spite of lower sales prices and the poor economy, we are on target to increase profits and expect to beat analysts’ projected earnings targets due to our vision to be the most streamlined and efficient supplier of fairly-priced quality leisure products.”
Given this information, as the head of supply management, what is the MOST appropriate mission statement for your department?
(A) Ensure products are available at the right price at the right time.
(B) While never diminishing quality, ensure all purchases are at the total lowest cost and all processes provide maximum value.
(C) Improve internal client perception of what we have to offer through stellar customer service and support.
(D) Maximize quality, service, and product availability.
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Exam 3
Task 3-A-1 Application Question #2
You are the head of supply management in the corporate office of a decentralized organization. Your strategic goal is to have 90% of your company’s spend under uniform management processes within five years. To accomplish this, you will need to influence others to follow strict bidding and contract processes.
Given this information, what is the MOST appropriate way to accomplish this goal?
(A) Build a sense of trust and credibility with stakeholders by demonstrating the value in adopting these new processes.
(B) Mandate the new processes be followed, and distribute quarterly status reports as to which units are complying and which are not.
(C) Do the work yourself with your own corporate staff and then hand off finished solutions for implementation to each business unit.
(D) Centralize all supply management, leverage the corporation’s spend and roll out new programs across the enterprise.
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Exam 3
Task 3-A-1 Summary and Review
Identify the basis of supply management’s mission
List some typical supply management processes
List some typical supply management capabilities
Define the two dimensions of customer requirements and key elements of meeting each
Discuss the impact of organizational dynamics on supply management
What affects supply management’s influence on overall organizational decisions?
Name four major outcomes of internal negotiations and synergies
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Exam 3
TASK 3-A-2
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Exam 3
TASK 3-A-3
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Exam 3
Task 3-A-3 Task Outline
1) Corporate goals
2) Elements of a business plan
3) Concept of goal alignment
4) Product price structure
5) Contribution to profit
6) Business planning process
7) SWOT analysis
8) Financial measures and other metrics
Develop, implement, revise and support business plans and operating policies and
procedures
All of the content in this task is bridge exam material.
Full 6Q; Bridge 6Q
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Exam 3
Corporate Goals
Goals are commonly defined as
– Broad statements of ideal future conditions
– Statements of anticipated or projected outcomes
– Specific objectives relating to specific time periods
– Objectives made specific in terms of time and degree
– The object of plans
From these definitions, several themes emerge
– A focus on the future
– A focus on desired outcomes
– The link between goals and plans
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Exam 3
Corporate Goals – Cont.
So, goals may be defined as the desired end
results towards which effort and resources are
directed. Goals should be
– Specific
– Measurable
– Attainable
– Results-oriented
– Time bound
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Exam 3
Corporate Goals – Cont.
Supply managers should understand the
differences in
– Strategic and operational goals
– Amounts of employee input
– Level of goal difficulty
– Quantitative and qualitative goals
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Exam 3
Corporate Goals – Cont.
GOALS
OPERATIONAL
•More specific than strategic goals
•Usually related to lower level
organizational goals
•Usually have shorter time frames
Strategic
vs
Operational
Quantitative
vs
Qualitative
STRATEGIC
•Tend to be associated with
corporate level goals
QUANTITATIVE
•Can be objectively measured
•Typically involve use of hard data
QUALITATIVE
•Often referred to as “soft dollar”
impact
•Usually, difficult to measure
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Exam 3
Corporate Goals – Cont.
Amount of employee input: employees are
generally more committed to goals when they are
involved in setting them
Level of goal difficulty. Goals should
– Be attainable
– Require focused effort
– Stretch employee comfort zones
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Exam 3
Elements of a Business Plan
A vision statement – The overarching purpose of the organization and its role in society
A mission statement (should address questions like) – Who are we?
– What need to we want to meet?
– How will we meet those needs?
– What are our central values?
A value statement (sets forth values in critical areas) – Hiring practice
– Resource allocation
– Performance measurement
– Treatment of suppliers
– Treatment of employees
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Exam 3
Elements of a Business Plan – Cont.
Strategy (strategy leads to strategic planning and
involves decisions in areas such as)
– Allocation of scare resources
– Customer analysis
– Competitor analysis
– Market analysis
– Government regulations
Strategy development is a dynamic process
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Exam 3
Types of Strategies
Corporate strategies (concerned with issues such as)
– Businesses in which the firms wishes to compete
– Goals concerning allocation of resources
Business unit strategies (concerned with establishing)
– Business-specific strategy
– How business strategy related to corporate strategy
Supply management strategies
– Typically, commodity specific
– Must support corporate and business unit strategies
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Exam 3
The Planning Hierarchy
Vision
Plans
Goals
Strategy
Mission
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Exam 3
Business Planning
Business plans evolve from corporate goals and are,
simultaneously
– Determination of organizational goals and objectives
– Roadmaps to achieving goals
– Formulation of specific courses of action
– A systematic consideration of alternatives
– Policies, programs, and procedures that lead to achievement
Business plans should answer questions such as
– What is our business?
– Who are our customers?
– Where are we going?
– How will we get there?
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Exam 3
SEVEN KEY AREAS OF BUSINESS PLANNING
1. Overview of the business A history of the organization
Organizational vision, mission, stated goals
2. Marketing plan (provides
analysis of:)
The market
Particular market segments of interest
The industry
Key competitors
3. Market strategy (should cover:) The value proposition
Goals; e.g., market share, sales revenue
4. Management and human capital Internal human resources
Skills, abilities, knowledge
5. Operations capabilities Technology, capacity, skill levels, etc.
6. Financial plan Revenues and expenses
Assets and liabilities
Historical and projected
7. Critical business risks Factors that could cause plan to change
Contingencies, etc.
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Exam 3
Proactive Plans Address Issues Such As
Resource requirements
Authority level for decision making
Individual skill requirements
Performance time frames
Additional supplementary data as appropriate
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Exam 3
Important Point
Plans are developed and implemented in
a dynamic environment. The only
certainty is that they will need
modification over time
That requires systematic monitoring to
ensure timely modification of plans
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Exam 3
Types of Plans – Other than Strategic
Tactical plans
– Typically for time frames up to a year
– They provide control and measurement mechanisms
Standing plans
– Used over and over until changed
– Examples include policies and procedures
Single-use plans
– Created for a particular situation
– End when goals are reached
– May be long or short term
– Example: increase capacity
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Exam 3
The Concept of Goal Alignment
Internal
– Connecting individual
department, function and
employee efforts directly to
the vision and mission
– Individual unit objectives
must support overall
organizational goals
External
– Relate to stakeholders
outside the organization
– Includes suppliers and final
customers
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Exam 3
Product Price Structure
Product pricing structure is a key part of the
business plan
While pricing strategy may be business unit
specific, the primary decision is whether to use a
market-based or cost approach to pricing
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Exam 3
Product Price Structure – Cont.
Requires consumer research
– Seeks to determine what customers ideally would pay
Requires market research on competitors
– Competitor intelligence facilitates analysis of their prices and services
Based on this research, organization seeks to identify what differentiates its product or service from competitors
The goal: to set a price that optimizes revenue and profit
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Exam 3
Product Price Structure – Cont.
Determines selling price by examining cost structure and adding
reasonable profit
In free market, this is dominant pricing model
Common when a fixed price is not appropriate (e.g., scope of
work known, but new product)
Buyers should ensure accurate seller costs and reasonable profit
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Exam 3
Product Price Structure – Cont.
Loss leader pricing
– Seeks to recover variable cost
– Seller may be seeking to “buy-into” the business
• Offer low price with view towards a profit on subsequent work
• Attempt to dominate market and force competitors out
• Retail: draw customers into the store where they may buy
profitable items
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Exam 3
Product Price Structure – Cont.
Market demand pricing – Similar to market-based pricing
– Seller determines demand and prices accordingly
– Objective: gain a certain market share
– Often called “skimming market share”
• Ex: Xbox and iPod: initial prices high, but dropped during growth and maturity phases
Time and material contract – Hourly rates, plus materials and expenses
• Ex: auto repair and consultants
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Contribution to Profit
Cost savings – Paying less than was previously paid
– Sources might include • Negotiated price reductions
• Volume leveraging
• E-procurement or systems contracts
• Outsourcing
• International sourcing
• Inventory reduction
• Spot or hedge buys
• Transportation improvements
Process improvement – Re-engineering
– Outsourcing
– Having suppliers assume different roles
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Exam 3
Contribution to Profit – Cont.
Collaborative cost takeout efforts
– Close collaboration with suppliers
– Joint efforts may include
• Reward sharing
• Joint performance improvement efforts
• Increased quality
• Product substitution
Collaboration may take the form of
– Early supplier involvement
– Joint, mutually beneficial strategies
– Shared design or product/process enhancement
– Collaborative Planning Forecasting Replenishment (CPFR)
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Exam 3
The Business Planning Process
Supply managers are the primary communicators
in the procurement process
All involved should understand
– Their roles
– Organizational objectives
– The plan from an operational perspective
Planning time frames
– Long term strategic: 5-10 years
– Short term strategic: typically 1-2 years – up to 5 years
– Operational: up to a year
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Exam 3
Key Considerations in Developing
Commodity Plans Forecasted requirements
Source selection
Type of market
– Traded on an exchange
– Manufacturer or distributor
– Domestic or foreign
Form in which the commodity will be purchased
– Raw, refined, converted, etc.
Total supply availability
Logistics
Geopolitical control of the commodity
Costs of acquisition
Communication with stakeholders
Overall financial considerations
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Exam 3
SWOT Analysis
Used to objectively view an organization’s
strengths, weaknesses, opportunities and threats
Opportunities
We
ak
nes
se
s
Str
en
gth
s
Threats
Q1
Q3
Q2
Q4
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SWOT Analysis – Cont.
May be directed toward any key area of activity; e.g.,
Governmental
– Government regulation
– Compliance with laws and
regulation (SOX)
– Specific industry regulations
(hazardous waste handling)
– International aspects as appropriate
Market
– Global market analysis
– Trends in particular markets
– Geographic market shifts
– Cost trends and changes
Environmental
– Global market environment
– Market conditions in key supplier
markets worldwide
– Buyer vs seller markets
Emerging supply chain practices
– Current developments
– Likely future developments
– Whether or not these constitute
opportunities or threats
Note: see Tasks 2-C-2(5) and 2-G-1
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Exam 3
Financial Measures and Other Metrics
Supply management plans should show how the
function will contribute to
– Improvement of key business metrics
– Achievement of organizational goals
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Exam 3
Task 3-A-3 Recall Question #1
Which of the following statements is NOT an example of a
corporate goal?
(A) Broad statements of ideal future conditions
(B) General statements of anticipated or projected outcomes
(C) Objectives made specific in terms of time and degree
(D) Tactical plans with implementation strategies
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Exam 3
Task 3-A-3 Recall Question #2
Which of the following elements is NOT part of a business
plan?
(A) Business overview and operations capability
(B) Marketing plan and market strategy
(C) Supplier relationship management and total quality plan
(D) Management and human capital
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Exam 3
Task 3-A-3 Application Question #1
As part of a long-term strategy, Linda Petit, the CEO of Lahaina Manufacturing, has established four key goals for this fiscal year:
– Increase Lahaina Manufacturing’s top line revenue.
– Increase volume.
– Reduce cost.
– Bring new, innovative product offerings to the marketplace.
Which of the following statements best illustrates how supply management can have the MOST impact toward achieving these goals?
(A) Increase revenue
(B) Increase volume and reduce cost
(C) Bring innovation from suppliers, reduce cost and increase volume
(D) Supply management does not have a direct impact on any of the organization’s goals as stated.
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Exam 3
Task 3-A-3 Comprehension Question #1
The Director of Supply Management for O’Shea Company
must create strategies that align with the company’s
business objectives to increase revenue, reduce cost and
generate new products. When creating strategies, which
criteria are MOST important for the director to consider?
Identification of:
(A) Actionable, measurable tasks.
(B) Investment in staffing levels required.
(C) Business changes required.
(D) Strategies which are long-term.
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Exam 3
Task 3-A-3 Summary and Review
Define goals and identify the criteria they should meet
Explain the differences in (1) strategic and operational goals and (2)
quantitative and qualitative goals
Identify seven key areas of business planning
Name and define four types of business plans
Compare internal and external goal alignment
Discuss the following pricing structures
– Market-based
– Cost approach
– Loss leader
– Market demand
Discuss three areas where supply management has responsibility for
contribution to profit
List some of the considerations in developing a commodity supply plan
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Exam 3
TASK 3-A-4
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Exam 3
TASK 3-A-4
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Exam 3
Task 3-A-4 Task Outline
1) Methods of evaluating assets and corporate value
A. Contractual issues
B. Management of redundancy and complexity
C. Liability exposure
D. Divestiture of assets
E. Global economic considerations
Participate in company mergers, Acquisitions and/or divestitures.
All of the content in this task is bridge exam material.
Full 6Q; Bridge 5Q
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Exam 3
Introduction
The goal of for-profit organizations is to maximize
long term profitability
They continually develop strategies to accomplish
this
Generally, a for-profit organization will
– Identify specific businesses in which to participate
– Identify value-creation activities in relation to those
businesses
– Determine the need to expand or contract those
businesses
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Exam 3
Five Basic Business Related Strategies
Diversification Addition of new businesses distinct from existing businesses
Geographic diversification: occurs when marketing begins in
new geographic areas
Horizontal
integration
Carried out through either a merger or an acquisition
– Merger: combining two or more businesses
– Acquisition: one organization acquiring another
Usually on the same level of the supply chain
Could be similar products or substitute products
Vertical
integration
Expanding upstream (e.g., acquiring suppliers)
Expanding downstream (e.g., acquiring distribution/retail outlets)
Outsourcing A version of “make-or-buy”
Typically, core competencies are not outsourced
Prevalent in high-technology (contract manufacturing)
May lead to “virtual corporation” (most activities outsourced)
Divestiture
Involves selling a specific business that no longer offers
strategic advantage or value add
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Exam 3
Issues Related to Evaluating
Assets and Corporate Value
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Evaluating Assets and Corporate Value
Contractual Issues
When seeking to vertically integrate, the search for
candidate organizations is initially broad. This
initial stage seeks to identify a list of candidates. It
should include
– Supply market analysis
– A list of major suppliers to the market
– A list of current or former suppliers
– Supplier recommendations about other organizations
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Exam 3
Evaluating Assets and Corporate Value
Assignment Consent
The transfer of a claim or right to another party
Assignment rights should be covered in the
contract
When dealing internationally
– Determine if supply contracts are directly transferable
– Determine if supply contracts are cancelable
– Ex: foreign law may limit the scope of inventory
management by not allowing certain materials out of the
country
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Exam 3
Evaluating Assets and Corporate Value
Confidentiality
A confidentiality agreement is a contract between
the parties
Outlines confidential material or knowledge to be
shared
The parties agree not to share any information
covered by the confidentiality agreement
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Evaluating Assets and Corporate Value
Due Diligence
Acquiring firms should be duly diligent in evaluating
potential acquisitions
Initial analysis focuses on strengths and
weaknesses
Assuming an “okay” initial analysis, detailed
analysis should be performed in three key areas
– The external environment
– The internal environment
– Financial strength and status
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Exam 3
Due Diligence – Three Key Areas
External environment
for supplier’s
products/services
Internal environment in
terms of
Financial strength and
status (analysis of key
indicators)
Market demand
Competitors
Market share
Market growth trends
Regulatory issues
Legal and political
climate
Product lines
The customer base
Manufacturing systems
and processes
The distribution system
Technical talent
Quality systems
Certifications
Profit levels
Profit margins and
growth
Breakeven points
Current ratio
Inventories
Long-term liabilities
Debt ratios and net
worth
A history of sales and
sales growth rates
Sustainability of sales
growth rates
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Exam 3
Evaluating Assets and Corporate Value
Current Contractual Obligations
Supply management should review all contractual
obligations to ensure continued supply
With each supplier, execute a statement that
outstanding contracts will be performed
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Exam 3
Evaluating Assets and Corporate Value
Management of Redundancy and Complexity
Redundancy
– Economy-of-scale is an objective of mergers and
acquisitions
– Elimination of redundancy
• Can help justify a merger or acquisition
• Eliminating redundancy often results in reduction of staff
Complexity
– Bringing organizations together can create complexities
– It is usually more complex than anticipated
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Exam 3
Evaluating Assets and Corporate Value
Liability Exposure
An acquired firm’s liabilities are also acquired
This could include – Products
– Retirement and pension plans
– Hazardous cleanup
– Etc.
Supply management’s typical role in mergers and acquisitions typically includes – Evaluation of service contracts
– Determining whether they are beneficial or detrimental to the merged organization
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Exam 3
Evaluating Assets and Corporate Value
Divestiture of Assets
Assets may be disposed or divested – Could be after an acquisition…..because they are not
needed
– Could be required by the FTC as a condition of a merger • Generally, if a merger will substantially reduce competition
• An agreement to divest certain assets is called a “consent decree”
Typical assets for divestiture include – Overlapping or redundant capabilities
– Products or services that don’t match strategic interests
– Outdated facilities
– Excessive liabilities or legacy costs
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Exam 3
Evaluating Assets and Corporate Value
Global Economic Considerations
Mergers and acquisitions are often viewed as a
pathway to growth
Combinations of companies may result from
– Partnerships
– Alliances
– Outright acquisition
Typically, supply management’s role is to help
identify candidates for outsourcing that will
– Contribute to globalization
– Enhance organizational competitiveness
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Exam 3
Task 3-A-4 Recall Question #1
The transfer of a claim or right from one party to another
is commonly referred to as:
(A) Due diligence.
(B) Assignment consent.
(C) Divestiture of assets.
(D) Outsourcing.
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Task 3-A-4 Recall Question #2
In general, assets that are likely candidates for divestiture are those in which:
I. Redundant capabilities exist between the organizations.
II. Services are aligned with the organization’s strategic interests.
III. Facilities are outdated.
(A) I and II only
(B) II and III only
(C) I and III only
(D) I, II and III
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Task 3-A-4 Application Question #1
Corporate management is pursuing a horizontal
integration strategy and has identified several
organizations for merger consideration. As a senior
supply manager, you are tasked with leading the team in
developing the detailed analysis for one of the target
organizations. In a meeting with the team, you review the
high-level overview created when initial target companies
were identified and discuss what approaches to employ.
Team members consist of members from the supply
market intelligence (SMI) and the mergers and
acquisitions (M&A) teams who will be collecting
competitive intelligence to develop the detailed analysis
requested by management. Cont.
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Task 3-A-4 Application Question #1 – Cont.
What should you do in reviewing the target company’s
external environment for products and services?
(A) Conduct an analysis of market demand, competitors, market share, market
growth trends, regulatory issues and legal and political climate.
(B) Examine the competitive information collected by the SMI team and evaluate
it, then create a narrative of the findings for senior management.
(C) Evaluate all elements of a high-level overview to understand the key
differentiators among the top competitors in the target company’s market.
(D) Conduct an analysis of the internal environment in terms of customer
base, manufacturing systems, technical talent and quality systems, and
report this to senior management.
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Task 3-A-4 Application Question #2
A supply manager was recently assigned to the corporate
merger and acquisitions (M&A) team as a subject matter
expert in supply management.
The supply manager focuses on creating a process to
identify redundancies and complexity in the supply base,
supply management processes, contracts, technologies,
job descriptions and roles. Failure to identify and mitigate
these risks may result in service disruptions to both
internal and external customers during a merger.
Cont.
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Task 3-A-4 Application Question #2 – Cont.
What actions should the supply manager take in
developing a plan to reduce these risks without
increasing costs?
(A) Conduct a supply management alignment initiative relative to both the supply
organization and other major groups within the merged company.
(B) Conduct a preliminary assessment of the risks related to the supply base,
supply management processes, contracts, technologies, job descriptions and
roles.
(C) Review all contracts to determine if they are assignable after the merger.
(D) Conduct an analysis of the proposed transaction in relation to the short- and
medium-term business goals of the acquiring organization.
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Task 3-A-4 Summary and Review
Discuss five basic strategies organizations pursue to attain
business goals
Describe supply management’s role in analyzing potential
merger and acquisition (M&A) opportunities including key
areas of concern
Define due diligence and list major areas that should be
addressed in detailed analyses of external and internal
environments and financial strength and status
Describe how and when to divest assets
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TASK 3-B-1
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Task 3-B-1 Task Outline
1) Role/perception of supply management within the organization
2) Establishment of trust and credibility
3) Feedback techniques
4) Influence techniques
5) Leadership techniques
6) Internal business partners’ roles, goals and objectives
7) Joint accountability
Develop and evaluate supply Management relationships with Internal departments.
This task contains no bridge exam material.
Full 5Q; Bridge No Q
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Supply management effectiveness and
efficiency is critical to successful long-term
relationships with internal customers
Developing processes and guidelines,
establishing objectives and measuring
results will ensure that supply
management professionals focus on this
important task
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Role and Organizational Perception of
Supply Management
Perception is critical….must view us as partners
Supply must be viewed as
– Progressive
– Innovative
– Entrepreneurial
– Service-oriented
– Focused on broad organizational goals
These focal points facilitate internal customer
willingness to work with supply with respect and
appreciation
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Establishment of Trust and Credibility
Establishment of trust and credibility
– Internal support and cooperation is based on belief that
supply can contribute to functional and organizational
success
– Trust and credibility are earned over time
– They must be reinforced regularly
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Feedback Techniques
Internal customer feedback should be organized
and regular
Two common methods of obtaining feedback
– Surveys
– Interviews
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Influence Techniques
Must know how to use influence techniques
effectively
Three possible tactics (according to the Center for
Creative Leadership)
– Depend on logic, target the listener’s rationale and
intellectual position
– Appeal to the emotions or some emotional motivator
– Support a cooperative effort, build connection with
others
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Leadership Techniques
Supply managers lead teams in support of organizational goals
Team leadership techniques (Sykes, 2007) – Provide clear expectations
– Give employees the tools for success
– Recognize good work
– Get interested in employees
– Value employee opinions
– Grow employee capabilities
– Communicate progress
– Make partners of your employees
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Internal Business Partners’ Roles, Goals
and Objectives
Must understand internal customer roles and goals
Know what is important to them
Maintain mutually supportive and cooperative
relationships
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Joint Accountability
Occurs when all involved assume accountability for
results
Supply management cannot excel, acting alone
Each function must perform its own work well
But, must be aware of its impact on the overall
outcome
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Task 3-B-1 Recall Question #1
According to the Center for Creative Leadership, “depend
on logic,” “appeal to the emotions” and “support a
cooperative effort” are three tactics that BEST represent:
(A) Influence techniques.
(B) Control techniques.
(C) Leverage techniques.
(D) Support techniques.
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Task 3-B-1 Recall Question #2
In the supply management profession, the term that
MOST closely means “the quality or power of inspiring
belief” is:
(A) Influence.
(B) Leverage.
(C) Leadership.
(D) Credibility.
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Task 3-B-1 Application Question #1
The supply management department goal for the next five years is to provide year-over-year savings of at least 3%. The department recently completed a multi-year aggressive campaign to drive down the cost of the goods and services purchased. It may not be feasible to go back to the suppliers to ask for further concessions at this time. Creativity and internal customer support will be key to the department’s success.
Which of the following is the BEST way to meet this goal?
(A) Developing a business plan
(B) Instituting joint accountability
(C) Empowering internal customers
(D) Demonstrating that staff will be trusted
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Task 3-B-1 Summary and Review
How does trust and credibility affect supply
management success?
Identify three influence tactics
Identify the Sykes Group leadership techniques for
outstanding teams
At what point can you say that “joint accountability”
occurs?
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TASK 3-B-2
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Task 3-B-2 Task Outline
1) Purpose of teams
Lead or participate in cross-functional and/or Multifunctional teams.
This task contains no bridge exam material.
Full 8Q; Bridge No Q
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Cross-Functional Teams
A cross-functional team is a group of individuals from various functions,
brought together to achieve clear, worthwhile and compelling goals that
could not be reached without a team
Teaming leverages resources across organizations by utilizing the
expertise of team members
When teams are international in scope, additional considerations such
as the diverse cultures and language abilities of members may need to
be addressed
International teams may never meet in person, but rather virtually on
the Web or other communication media
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Cross-Functional Teams
Purpose of Teams
Role of supply management in teams
– Support/service/information
• Provide information on sources, availability, and supply markets
• Supply should be the primary contributor of supply market intelligence
– Project management
• Refers to coordinating the organization, planning, scheduling,
controlling, monitoring and evaluating activities in order to meet the
objectives of a project
– Leadership
• As processes become more strategic, there is greater demand for
supply management leadership
• Supply management becomes a leader in the organization when it is
called upon to exercise its expertise in important business decisions
and acquisitions
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Cross-Functional Teams
Purpose of Teams – Cont.
Facilitation – There are six aspects
– Organizing the team
• Assembling team members
• Developing goals and guidelines
• Agreeing on processes to be utilized
– Assessing team requirements
• Determining how members will work with members from other
functions
• Establishing a collaborative environment
• Determining what results the team will be expected to produce
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Cross-Functional Teams
Purpose of Teams – Cont.
Facilitation – Cont.
– Understanding team support roles
• Identifying roles and responsibilities of team members and
sponsors
• Typical roles include
– Sponsor – has ownership/responsibility for team assignment
– Team leader – a key link to other parts of the organization
– Team members – attend meetings and contribute expertise
– Team facilitator – ensures member participation and consensus
– Team recorder – captures ideas and decisions and posts for the
team
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Cross-Functional Teams
Purpose of Teams – Cont.
Facilitation – Cont. – Working together
• Fostering mutual trust, concern, support, respect and celebration
• Fostering a positive emotional status
– Balancing diversity • Discovering and using team members’ cultural strengths
• Matching cultural strengths with team requirements
• Clarifying team cultural conflicts
– Running team meetings • Planning, coordinating and facilitating
• Documenting
• Assigning action plans
• Evaluating team results
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Cross-Functional Teams
Advantages of Teams
Brings together functions with vested interest in outcome
Provides a forum for contribution by each member
Enhanced communication among functions
Reduced cross-functional friction
Shared ownership of decisions and results
Stronger sense of unity of purpose
Better identification and resolution of problems
Faster solutions to mutual problems
Increased innovation
Increased organizational synergy
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Cross-Functional Teams
Other Important Considerations
Consensus building – Teams may have a diversity of ideas, motivations, and expectations
– Team leaders need methods to reduce these to a consensus
– Example: Prioritize from a larger list of possible actions. Then, prioritize the reduced list, etc., until a useful consensus is reached
– Should decide early in the process how consensus will be achieved
Time considerations – Teams may be one-time, short-term or ongoing
– One-time or short-term teams may face a time factor
– The relative level of urgency will influence the team process
Ownership issues – Individual contribution vs team contribution…..team should decide
– Better to get strong individual contribution as part of team effort
– Recognition of individual effort tends to increase it
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Cross-Functional Teams
Other Key Considerations – Cont.
Managing or introducing change – Cross-functional teams have representatives from all involved
functions
– These individuals are advocates for change from their areas
– They help build support for the team effort in their functional areas
Groupthink – Refers to a situation where individual team members simply “go
along” with the thoughts of others, rather than create their own
– This avoids the discomforts of critical and original thinking
– It rises out of a desire to minimize conflict and criticism
– A team involved in groupthink is less creative and less effective
– Members should support the team, but contribute with a degree of conceptual autonomy
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Cross-Functional Teams
Other Key Considerations – Cont.
Synergy
– A situation where the whole is greater than the sum
of its parts
– Team synergy leads to solutions that may not be
possible for individual team members working alone
– Requires shared vision, goals and process
expectations
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Cross-Functional Teams
Other Key Considerations – Cont.
Phases of team building – Forming
• Teams seek to understand their charters, assess their resources and establish a useful working environment
– Storming • Individual agendas are asserted, team goals are challenged and
dissention among members is common
– Norming • Members recognize that, to reach their goals, they must work together
• There is general agreement on what should be done…..and how
– Performing • The team is clearly focused and working towards project completion
– Adjourning
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Cross-Functional Teams
Other Key Considerations – Cont.
Conflict resolution – A structured resolution process is recommended, such as
• Identify the cause of conflict
• Determine team acceptable solution criteria
• Generate solution options, without regard for acceptance or feasibility
• Prioritize the possible solutions to those that are feasible
• Determine the best solution
• Achieve team consensus on the best solution
Personality profiles – Generally, the more diverse the team, the richer the contributions
– But, extreme diversity can be counter-productive
– Consider personality and cultural profiles when forming a team
– Objective: the right people with right qualifications, in the right place
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Cross-Functional Teams
Other Key Considerations – Cont.
Effectiveness measures – Members who receive open/honest evaluation, perform better
– Evaluate both individual and team performance
– Two critical issues
• How to evaluate performance
• Who is responsible for evaluating performance
– Individual evaluation
• Part time member evaluation should include a team-related component
• Best if the team-related evaluation comes from the team
• Full time member evaluation should be completed by the team leader with Input from team members
– Team evaluation
• Evaluation should focus on achievement of goals
• Members should receive accurate, specific, prompt, direct, reliable and appropriate feedback along the way
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Task 3-B-2 Recall Question #1
The BEST reason for forming a cross-functional team is
because it is:
(A) A way to motivate people.
(B) A good way to build consensus.
(C) A good way to foster team spirit throughout the organization.
(D) A method of sharing the credit and the blame.
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Task 3-B-2 Recall Question #2
Which one of the following is a true statement about the
phases of team building?
(A) Staffing the team is known as the forming phase.
(B) The storming phase is when the team discusses the main goal(s) of
the team.
(C) During the norming phase, the team establishes goals and objectives
and prioritizes them.
(D) During the adjournment phase all teamwork stops.
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Task 3-B-2 Case Study #1
Discussion Questions:
1. What is a cross-functional team?
2. Would Goods’ assignment fit the ISM Glossary definition of project
management?
3. Does Goods’ role in this case qualify him as a leader in the supply
management sense?
4. According to the CPSM Study Guide, when does the supply
management function become involved in a product return issue?
5. Goods has decided to call in a consultant. As that consultant, what
would you advise Goods to do?
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Task 3-B-2 Summary and Review
What is a “cross-functional” team?
Identify four typical supply management roles on
teams
What is “groupthink?”
Define “synergy”
Identify the five phases of team building
Identify the six step approach to conflict resolution
Describe the common link between effective
metrics and employee performance
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TASK 3-B-3
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Task 3-B-3 Task Outline
1) Knowledge assessment and situational analysis
2) Compliance metrics
3) The “learning organization” concept
Disseminate information and promote training related to supply management policies
and procedures.
This task contains no bridge exam material.
Full 5Q; Bridge No Q
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Knowledge Assessment and Situational
Analysis
Supply must clearly understand its current “situation”
This requires an assessment
– Knowledge of policies and procedures across the organization
• Supply
• Other functions that touch the supply management process
• External personnel who interact with supply
– Current level of compliance
– Organizational support
Then, a plan can be developed to close any gaps
Don’t overlook a need to include supplier employees when
developing training
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Compliance Metrics
After training, develop a method to monitor compliance
The method selected must include useful metrics
Typical policies and procedures to be monitored include – Bid procedure
– PO transaction process
– Releases against existing orders
– Supplier negotiations
– Inventory management
– Transportation
– Ethics
– Supplier relations
– Social responsibility
– Compliance with laws and regulations
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Compliance Metrics – Cont.
Possible approaches – Periodic review of documentation
– Discussion with involved individuals
– Reports on non-compliance
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The “Learning Organization” Concept
Learning organizations don’t just adapt to change, they learn from
change
– They challenge their mental models, core beliefs and their processes of
thinking and solving problems
Peter Senge developed the term “learning organization” and believes
there are five components that enable an organization to “learn.” They
are
– Systems thinking
– Personal mastery
– Mental models (deeply ingrained assumptions, generalizations)
– Building shared visions
– Team learning (involves the capacity to think and reason together
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The “Learning Organization” Concept –
Cont. Learning oriented supply management focuses on combining
– Adaptability – Continuous improvement – A strong sense of purpose
Traits of learning-dominated supply management – Shared vision – Using conflict constructively (forces reassessment) – A spirit of creativity and innovation – Commitment to education – Perceptive risk-taking (forces risk assessment) – Development of entrepreneurial talent (facilitates ownership)
Some of the tools that facilitate a learning organization – Knowledge management systems (systematic methods to acquire,
categorize and use knowledge) – Environmental knowledge scanning and intelligence – Internal data warehouse systems to capture and record data – Personal decision dashboards to use key data in decision-making
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Task 3-B-3 Recall Question #1
Which one of the following is NOT one of Senge’s five
disciplines of a learning organization?
(A) Personal mastery
(B) Compliance metrics
(C) Mental models
(D) Building shared visions
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Exam 3
Task 3-B-3 Recall Question #2
All of the following are management tools learning
organizations might use EXCEPT:
(A) Knowledge management systems.
(B) Well defined problem-solving methodologies.
(C) Personal decision dashboards.
(D) Internal data warehouse.
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Exam 3
Task 3-B-3 Application Question #1
All of the following are traits of learning-dominated supply management organizations:
(A) Shared vision
(B) Perceptive risk-taking
(C) Entrepreneurial talents
(D) Constructive conflict
Choose from the options above (A, B, C or D) the trait that BEST characterizes each of the following. A choice may be used once, more than once or not at all.
1. Supply professionals take new ideas, concepts and practices and convert them into profitable realities.
2. Where, how and why supply management contributes to organizational effectiveness.
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Task 3-B-3 Summary and Review
What is “situational analysis?”
What is a “learning organization?”
Peter Senge identified five components that
converge to enable an organization to “learn.”
What are they?
Identify six traits of a learning organization
Identify four management tools typically found in a
learning organization
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TASK 3-B-4
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Task 3-B-4 Task Outline
1) Level of communication
2) Methods of communication
Market the value of strategic sourcing and sourcing strategies and initiatives to
management and Internal stakeholders.
All of the content in this task is bridge exam material.
Full 5Q; Bridge 2Q
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As supply management organizations develop and
implement more strategic sourcing initiatives,
supply managers must interface with a wider array
of internal and external parties
The other party may not understand supply
management and strategic sourcing
Accordingly, we must convincingly market the value
of supply management initiatives
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Level of Communication
Senior management – Tactical
• Tangible cost takeout
• Preferably short term (over next 6 months)
– Strategic
• Organizational health
• Helping to meet customer expectations
• Contribution should be visibly and measurably linked to achievement of organizational strategic objectives
Internal customers – Communicate regularly on status, results and new opportunities
– Market the value of supply management
– Assist internal customers in solving supply related problems
– Be proactive
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Methods of Communication
Feedback mechanisms
– Used to develop insight into how supply management is performing
– Forms of feedback might include
• Periodic performance review (monthly, quarterly, etc.)
• Off-site workshop
• Audit by third party consultants (to identify strengths and weaknesses)
• Satisfaction surveys
• Intranet blogs (where feedback and suggestions are posted)
360 degree survey
– Incorporates review from supervisors, co-workers, subordinates and
external suppliers
– Facilitates a more “rounded” perspective of performance
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Presentation Skills
A key success factor
Requires ability to adapt a presentation to the
environment
– Consider the objective, the subject and the audience
– Recognize potential distractions and what must be done
to overcome them
– Select the appropriate medium
– Target the ultimate decision-maker, who may not be
present at the meeting
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Presentation Skills – Cont.
Presentations may be used to gather all
decisionmaking participants together, and to
– Ensure uniform understanding
– Help reach group consensus
– Obtain a group reaction to a situation
– Identify or solve a problem
– Obtain approval or acceptance of an idea or plan
– Resolve conflict
– Assign responsibility
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Seven Steps to an Effective Presentation
1.Define the objective
– What is the focus of the presentation?
– What do you want the audience to know or believe?
– Will it be audience-centered…..and not presenter-centered?
2.Analyze the audience
– Know the audience’s background and level of understanding
of the topic
– Know the audiences attitude towards the presenter and the
topic
– Put yourself in the audience’s position
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Seven Steps to an Effective Presentation –
Cont.
3. Plan the presentation tactics – Is one presentation sufficient, or will several be needed?
– Decide on length and timing
– Determine who will attend
– Plan how to overcome identifiable obstacles
4. Organize the presentation – Develop a strong opening that introduces the presenter and
sets up the topic
– Establish the issue and what is expected of the audience
– Identify the main theme (what you wish to communicate to the audience)
– Develop a strong ending
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Seven Steps to an Effective Presentation –
Cont. 5. Prepare the script
– Avoid unnecessary jargon
– Define unfamiliar terms
– Don’t use acronyms. They are short forms of jargon
– Consider the detail. Too little will confuse. Too much will be tedious
– Come to the point quickly
– Don’t emphasize differences between you and the audience
– Maintain unity. Don’t over-crowd slides
– Keep visual aids simple
– Use detail in visual aids sparingly. The presenter provides the details
– Keep visuals in a single presentation consistent in design
– Make visuals readable. Use simple, bold print, etc.
– Integrate audio and visuals. Let each channel do some of the work
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Seven Steps to an Effective Presentation –
Cont.
6. Consider physical factors that may affect the audience
– Temperature, room size, shape of the room, acoustics, air
circulation, ability to adjust the lighting, seating arrangement, sound
amplification, etc.
7. Deliver the presentation
– Be yourself. You don’t have to be perfect
– Engage the audience by using eye contact and involvement
– Be energetic
– Be empathetic with the audience
– Be aware of distractions such as repetitive body movements,
playing with objects, adjusting the microphone, etc.
– When things go wrong, keep going
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Intranet
Organizations are increasingly using Intranets to share information related to supply strategies
May be an “informational” site
Or, may be a “shared” site where users can download
Using the Intranet, stakeholders should be able to identify – Current market conditions
– Strategic sourcing decisions that took place
– Actions that will follow the strategies
Performance data and scorecards may be shared at a site
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Task 3-B-4 Recall Question #1
Which of the following processes will negatively impact
selling the value of supply management to internal
stakeholders?
(A) The development of a strategy to meet senior management’s
business objectives
(B) Meetings with internal stakeholders to assure business needs are met
(C) Sharing results of a supply management audit
(D) A 360° survey to look for deficiencies resulting in changes in
organization, processes and systems
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Task 3-B-4 Recall Question #2
To assure that supply management is aligned to the
business strategy and cross-functional goals, a
feedback mechanism is required. Which of the
following choices is the BEST feedback mechanism?
(A) Measure the number of cross-functional and management complaints.
(B) Informally interview key managers.
(C) Conduct a 360° survey.
(D) Rely on your manager for feedback.
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Exam 3
Task 3-B-4 Application Question #1
The MOST effective methods of communicating with top
management are:
(A) Detailed weekly reports.
(B) Formal quarterly presentations, including strategies and results.
(C) Informal meetings with senior managers.
(D) Following the chain of command and talking directly with your
immediate supervisor.
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Exam 3
Task 3-B-4 Application Question #2
In a typical company more than 50% of operating budget
is influenced by supply management. Based on this fact,
which choice reflects what a company’s senior
management is LEAST interested in?
(A) Tangible cost reduction goals
(B) Sourcing strategies
(C) Value enhancement
(D) Metrics on orders placed and requisitions processed
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Task 3-B-4 Summary and Review
How does supply management’s communication
with senior management differ from communication
with first line supervision?
What is a “360 degree” survey?
Identify the seven steps in delivering an effective
presentation
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TASK 3-B-5
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Task 3-B-5 Task Outline
1) Meeting dynamics
2) Issues in the external role and perception of supply management
3) Professional decorum
4) Feedback to management
5) Confidentiality
6) Legal restrictions (e.g., antitrust, export)
Represent Supply management in meetings with corporations, Government agencies,
Professional Associations and/or other organizations.
This task contains bridge and non-bridge exam material.
Full 6Q; Bridge 2Q
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Meeting Dynamics
Meetings frequently involve groups or teams
This makes the issue of team dynamics important
During its life, a team will move through 5 stages
– Forming
– Storming
– Norming
– Performing
– Adjourning
Guidelines for the leader of a meeting
– Have a clear purpose and agenda
– Encourage participation from everyone. Don’t dominate the meeting
– Start and finish on time
– Keep the discussion on track
– Record all ideas, solutions, recommendation, decisions and concerns that are developed
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Exam 3
The External Role and Perception of
Supply Management Research indicated in 2005 that senior management had the following
perceptions of supply management
– 60% view supply management as primarily a “price minimizer”
– 35% wanted supply management, on its own initiative, to utilize supplier capabilities to take out cost and speed up cycle times
– 20% wanted supply management, on its own initiative, to actively seek top-line revenue product and service innovation opportunities
About half of executives view supply as non-strategic
The other half wants supply to identify opportunities for the whole organization and take the lead in capitalizing on it
Three points about how supply management is changing
– Supply chains are different today
– Many impacts on supply management come from outside the field
– Supply must adapt to these impacts and position itself to add value
– Roles have changed: from buyer to supply manager
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Three Important Points
Supply management and Sales are responsible for most of
an organization’s contacts with the external business
community. Accordingly, supply management contributes
heavily to an organization’s external image
Different countries have different customs for business
relationships
Supply managers must clearly understand how business is
conducted, what is acceptable or unacceptable, and what is
legal or illegal in each foreign country where sourcing is
conducted
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Professional Decorum
Difficult to describe
What is acceptable in one sector or industry in the U.S.,
may not be in another
This is further complicated when compared across various
countries and cultures
In fact, what is legal in one country may not be in another
Supply managers must adapt as necessary
Perceptions, even if incorrect, can be damaging
There is no substitute for ethical behavior
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Feedback to Management
Must take the initiative to communicate effectively with management
Should indicate how supply management is supporting and contributing to organizational objectives
Must be results-oriented, with plans to deal with variances
Present proposals for new initiatives as business cases
Guidelines for communicating to management – Be thorough…..don’t assume the executive is familiar with details
– Synchronize team efforts prior to presentation (if applicable)
– Focus on what matters, not the trivial many little details
– Use graphs and charts
– Exercise good form – be concise and coherent
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Other Key Considerations
Confidentiality
– Agreements should protect confidential
information
Legal restrictions (anti-trust, export, etc.)
– Supply managers should be aware of many
different types of laws
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Types of Laws
Agency law
Contract and commercial law
e-commerce laws
Anti-trust laws
Trade regulations
Industry-specific laws and regulations
Government procurement regulations (where applicable)
Patent, copyright, trade secret and trademark laws
Environmental laws
Employment laws and regulations
Worker health safety laws
Transportation and logistics laws and regulations
Financial laws and regulations
Additional laws as appropriate
Export controls
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Task 3-B-5 Recall Question #1
Consider the following phases of team development:
I. Norming
II. Adjourning
III. Forming
IV. Performing
V. Storming
Select the choice that BEST describes the proper sequence of these phases (from first to last):
(A) I, III, IV, II, V
(B) II, IV, I, V, III
(C) III, V, I, IV, II
(D) III, I, V, IV, II
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Task 3-B-5 Recall Question #2
If a supply manager shares details of contract pricing and
other terms with another supply manager using the same
service provider, which of the following would he violate?
(A) Electronic commerce laws
(B) Trade secrets
(C) Antitrust law
(D) Contract law
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Task 3-B-5 Application Question #1
Senior managers at Wylie Corporation still view supply management as “reactive purchasing”; that is, when the organization needs something, the supply management people buy it.
This is viewed as critical on several fronts. First, although supply regularly reports significant cost takeout, the supply manager knows that senior management’s lack of understanding could easily translate into a reluctance to provide needed resources. Second, without sufficient resources to conduct business with a value-adding, strategic mindset, suppliers are more likely to perceive supply as less capable and “without clout” in the organization.
Cont.
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Task 3-B-5 Application Question #1 – Cont.
The supply manager knows that supplier perception of the function’s strength in the organization affects the manner in which they interact with supply management. The supply manager believes the best approach is to modify senior management’s perception of the function.
Thinking strategically, and with a view toward modifying senior management’s perception of the organization, which of the following is the supply manager’s BEST course of action?
(A) Be sure that the organization never runs out of needed materials.
(B) Present a complete business case to senior staff on the potential contributions of the supply function.
(C) Employ advanced negotiation skills to optimize value from each negotiation.
(D) Report supply management cost takeout in terms of its impact on return on assets.
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Task 3-B-5 Application Question #2
The management team of Able Corporation, an organization providing catering services to universities, recently held their semi-annual presentation on the state-of-the-company. In the presentation, management expressed a need for renewed emphasis on the company’s public image.
More specifically, management requested that all functions identify the various ways the function might further enhance the company’s external image, and present them to their immediate manager.
What can supply management do to enhance Able Corporation’s public image?
(A) Discuss organizational policy regarding supplier relations at each meeting with a supplier.
(B) Develop a clear, concise supplier orientation booklet and share with suppliers.
(C) Seek agreements with key suppliers that facilitate discontinuing incoming inspection.
(D) Clearly articulate a policy of not using any supplier that works with or provides environmentally unsafe chemical samples.
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Task 3-B-5 Summary and Review
Identify four key guidelines for effective meetings
Identify three key points about the way supply
management is changing
Identify five guidelines for communicating with
management
We identified 14 types of laws of interest to supply
management. Briefly describe each
What is meant by the term “export control?”
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TASK 3-C-1
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Task 3-C-1 Task Outline
1) Functional impact of organizational structure
2) Organizational types and their implications
3) Key issues
4) Workload distribution
Evaluate the supply management organizational structure and modify as necessary in
order to achieve the optimal structure.
This task contains no bridge exam material.
Full 5Q; Bridge No Q
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Functional Impact of Organizational
Structure
Centralized/decentralized/hybrid models – Centralized
• An organizational structure in which authority and responsibility for most supply-related decisions are assigned to a central organization
– Decentralized • An organizational structure in which authority and responsibility
for most supply-related decisions are assigned to individual sites, functions or managers
– Hybrid • Supply management authority and responsibility is shared
between a central supply organization and individual sites or business units
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Functional Impact of Organizational Structures
Key Influences on Structure
Degree of similarity of purchases across business units
Whether facilities are geographically dispersed or
concentrated
Total organizational spend
Potential for cost savings by leveraging across business
units
Level of technology and resulting level of coordination
across business units
Management philosophy
– Control oriented (likely more centralized)
– Profit center driven (likely more decentralized)
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Functional Impact of Organizational Structures
Advantages of Centralization
Increased volume-related leverage
More effective communication with suppliers
Increased ease of implementing e-procurement tools
Improved coordination of communication with global
suppliers (communication originates from one point)
Increased buyer specialization
Increased job satisfaction
More time to manage
Lower operating costs (economies-of-scale)
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Functional Impact of Organizational Structures
Advantages of Decentralization
Easier, more direct communication with internal
customers
Broadened responsibilities
Greater decision making authority (due to a flatter
organization)
Better timing of purchases
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Functional Impact of Organizational Structures
Hybrid Supply Management Organizations
Centralize or decentralize as advantageous and
appropriate
Forms of hybrid organizations
– Lead divisional buying
– Buying councils or commodity teams
– Corporate steering committee
– Shared services groups
– Geographical or regional buying teams
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Functional Impact of Organizational
Structures – Cont. Product or brand management
– Supply management is organized along the end product or brand
– There may be a separate supply group for each product or brand
– Typically, these groups will aggregate common items and leverage the volume
Geographic (there are two approaches)
– Global approach
• Approach used when global operations use similar goods
• Supply seeks suppliers that can serve all locations globally
– Regional approach
• When multiple operations are located in a specific region (U.S., North America, etc.)
• Suppliers could be anywhere in the world
• Contracts would originate from regional supply management offices
– In both cases, the objective is economies-of-scale
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Organization Types and Their Implications
Functional organization – Organized primarily by area of expertise
– Best suited to small organizations operating in stable
environments
– Advantage: high level of specialization on a narrow
range of skills
– Disadvantages • Response time may be slow if used in large organizations
• Possibility of conflict over product priorities
• May disperse overall responsibility
– Generally, as an organization grows and spreads
geographically, the functional form of organization
becomes less efficient
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Organization Types and Their Implications
– Cont.
Matrix organization – Typically involves dual reporting hierarchy where supply
managers are also assigned to support specific
operating units • Reports to supply management on general matters
• Reports to the operating unit on matters specific to that unit
– Promotes flexibility, cross-functional collaboration and
skills
– But, it can divide employee loyalty
– Requires good communication and interpersonal skills
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Organization Types and Their Implications
– Cont.
Project organization
– Organized around specific projects
– Each project gets a new supply support organization
– When project ends, the supply support organization disbands
– Advantage: ability to focus on a particular project
– Disadvantage: reduces opportunities for leverage and synergy
Category or commodity management
– Organized around specific spend categories or commodities
– Usually a specialized team
– Usually focused on large volume, critical spends
– Also focused on spends that offer significant economies-of-scale
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Other Key Considerations
Key Issues – Spend management
• Refers to managing the total organizational spend
• Objective: more efficient, value-adding spending
– Aggregation management • Refers to volume aggregation on like or similar goods/services
• Objective: maximum leverage of spend and economies-of-scale
– Service to end users • Refers to how end user needs and expectations will be met
• Objective: achieve and maintain required level of service
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Other Key Considerations – Cont.
Workload distribution (may be handled a number of
ways) – Commodity or class
– Department
– Special project
– Volume
– In rotation (work assigned to the next person on the
roster)
– Type of contract
– Staff expertise
– Supplier
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Task 3-C-1 Recall Question #1
Which of the following is LEAST likely to be an advantage
of centralizing supply management?
(A) Aggregation for leverage
(B) Lower operating costs
(C) Communication with internal customers
(D) Implementation and use of e-procurement tools
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Task 3-C-1 Recall Question #2
Which of the following issues is LEAST important when
establishing or changing the supply management
organizational structure?
(A) Spend management
(B) Aggregation management
(C) Service to end users
(D) Workload distribution
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Task 3-C-1 Application Question #1
Juan Diego is the newly hired Vice President of Corporate Supply
Management for an automotive service company. One of his first objectives
is to review, and possibly adjust, the organization’s structure to match
corporate objectives that include cost reduction and more rapid response
time to product, service and market changes. During his review he learns
that only half of the total spend consists of common items; the rest are
widely diverse. Supply management is required to provide services to sites
in six countries. Today’s corporate IT capabilities are limited. Given these
circumstances, Diego’s BEST option would be to:
(A) Centralize all commodities at the corporate level so that he can best leverage
spend and obtain as much cost reduction as possible.
(B) Decentralize all commodities to the sites so that they can source locally for
the fastest response time.
(C) Centralize all commonly used items at the corporate level to leverage spend
and allow the uncommon items to be sourced locally.
(D) Develop IT and staff capabilities to a higher level of expertise and review the
organization’s structure after this is done.
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Task 3-C-1 Summary and Review
Identify at least five of the eight advantages of
centralization
Identify at lease three of the four advantages of
decentralization
Identify and define five forms of hybrid structure
Name four types of supply management
organization structures
What is “aggregation management” and how does
it affect supply management?
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TASK 3-C-2
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Task 3-C-2 Task Outline
1) Organization functional requirements
2) Position functional requirements
3) Elements of job design
4) Staffing implications
5) Span of influence
Conduct role design evaluation and potential job redesign requirements.
This task contains no bridge exam material.
Full 5Q; Bridge No Q
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Organizational Functional Requirements
Functional responsibilities and objectives vary by organization
More common responsibilities include – Strategic sourcing
– Inventory management
– Warehousing
– Service contracting
– Logistics and transportation management
– Recycling and investment recovery
– Quality management
There is need for faster response, resulting in – Need to address issues across functional boundaries
– Greater emphasis on a team approach to decision-making
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Position Functional Requirements
Functional strategies lead to organizational requirements
Organizational requirements lead to position requirements
Job design specifies methods and content of the work
Job analysis refers to collecting and analyzing job-related information – Facilitates hiring decisions
– Helps in determining training requirements
– Identifies performance-related successes and problems
– Facilitates sound compensation decisions
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Position Functional Requirements – Cont.
Job analysis is composed of:
– Job description (details on Study Guide page 177)
– Job specifications
• Required knowledge, skills and abilities
• Education requirements
• Experience requirements
• Certifications or qualifications
– Job evaluation
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Elements of Job Design
Job design has three components – Job activities (describes individual tasks)
– Work methods (how tasks will be performed)
– Job content (combinations of tasks into assignments)
Jobs performed efficiently can be boring and de-motivating
So, there is need for job enrichment – Hackman and Oldham’s job characteristics model
• Contains 5 core dimensions
– Skill variety
– Task identify
– Task significance
– Autonomy
– Feedback
– Jobs high on these dimensions positively influence employee psychological state
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Elements of Job Design – Cont.
Job enrichment – Cont.
– Employees in enriched jobs will have
• A sense of meaningfulness in their work
• Responsibility for job outcomes
• Knowledge of the results of work performed
– These psychological states are associated with four
favorable individual…..and resulting
organizational…..outcomes
• High internal work motivation
• High quality work performance
• High satisfaction with the work
• Low absenteeism and turnover
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Staffing Implications
After job design and description comes determination of required skills and knowledge, usually through job analysis – Typical supply management requirements include
• Product knowledge
• Principles of supply management
• Analytical ability, technology-related skills
• Negotiation skills
• Interpersonal skills
• A customer focus
• The ability to deal with and manage change
– Management positions require strategic thinking and experience
– Foreign sourcing may require country-specific knowledge
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Span of Influence
Influence – Is a subtle, but complex concept
– May directly or indirectly cause behavioral change in another
– Is manifested through multiple channels, working together • Position
• Power
• Status
• Credibility
• Knowledge
• Celebrity
Span of influence is the extent to which people interact with and influence others outside their span of control
Matrix organizations encourage increased span of influence
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Task 3-C-2 Recall Question #1
All of the following are elements of job design EXCEPT:
(A) Work method
(B) Job activities
(C) Job content
(D) Cross-training
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Task 3-C-2 Recall Question #2
All of the following are individual and organizational
outcomes associated with an employee with high job
satisfaction EXCEPT:
(A) High quality work performance
(B) Low absenteeism and turnover
(C) High need for information
(D) High satisfaction with the work
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Task 3-C-2 Comprehension Question #1
The CPO of a multi-national organization has decided to add a new position — Director of European Procurement — to her organization. The items listed below are elements that would be included in a job specification focusing on the knowledge, skills and abilities (KSAs) of this new position. Which of the following items is of LEAST importance for the CPO to include in the job description?
(A) Knowledge of exchange rates related to U.S. dollar and Euro
(B) Ability to speak multiple languages (Spanish, French and German)
(C) Understanding of European business practices
(D) Ability to build relationships with international suppliers
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Task 3-C-2 Summary and Review
How does today’s supply management
environment differ from the older, traditional view?
What is the difference between a job description
and job specifications?
What is “job enrichment?”
Name the three key components of job design
How does job design impact staffing?
Define the term “span of influence”
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TASK 3-C-3
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Task 3-C-3 Task Outline
1) Organizational expectations of supply management
2) Reasons for departmental performance appraisal
3) Steps in department-level evaluation
4) Concepts of a strategic supply management department
5) Evaluation of outsourced supply functions
6) Evaluation of feasibility and impact of outsourcing supply functions
Develop criteria for evaluating the overall supply Management Department
performance.
This task contains no bridge exam material.
Full 5Q; Bridge No Q
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Develop and Use Criteria to Evaluate
Supply Management Performance Evaluating and controlling performance is a major supply
management responsibility
Common categories of performance measures – Customer service
– Cycle times
– Quality
– Application of information technology
– Financial performance
– Organizational structure
– Flexibility
– Asset management
– Supplier management
– Workforce assessment
– Impact on capital efficiency
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Organizational Expectations of Supply
Management
Congruence with organizational objectives – Supply must support organizational mission, objectives,
strategy
– So, metrics must be consistent with this intent
– Congruence with supplier and customer objectives • Supply objectives should facilitate achieving internal customer
goals
• Ultimately, external customers must be served
– Scorecard • Refers to ratings from a performance evaluation process
• Should contain both quantitative and qualitative metrics
• Should compare actual results to original objectives
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Reasons for Departmental Performance
Appraisal Determine departmental effectiveness
– Refers to overall effectiveness
Determine the effectiveness of department management – Personnel capabilities, soundness of structure, scope of
responsibilities, plans, policies and procedures
Measure improvement or deterioration – Must know if process changes improve performance
– Provides early signs of deterioration
Provide incentives for improvement – People respond to the criteria by which they are measured
– Performance criteria facilitate objective measurement
Determine resources needed for improvement – Includes estimates for future resource requirements
Determine if value is added to the process
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Steps in Department Level Evaluation
1. Identify department objectives
2. Identify success criteria
3. Identify appraisal factors – Contribution to profitability
– Timeliness of actions
– Materials and services costs
– Supplier reliability
– Supplier development
– Order quantity and inventory investment
– Customer satisfaction
– Creativity
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Steps in Department Level Evaluation –
Cont. 4. Internal audits/self governance/self assessment
– An audit is a comprehensive, independent examination of • Organizational environment
• Objectives
• Strategies
• Activities
– An audit is used to identify strengths and weaknesses, and develop a plan to close any gaps in performance
– Internal auditors may hesitate to be critical, even when needed
– Self-governance refers to the extent to which supply management is allowed to manage itself
– Differences between internal and more independent audits indicate areas where supply management may need improvement
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Steps in Department Level Evaluation –
Cont.
5. Obtain supplier feedback – Close supplier relationships facilitate useful feedback
– Facilitation of supplier performance may be a scorecard item
6. Process benchmarking – Compares how an organization performs particular processes to how they
are performed in other organizations
– Objective: better/best practices
– Before initiating benchmarking, carefully consider
• Is the organization willing to make a major change?
• Is the expected improvement worth the expense?
• Are expected results important to the organization?
• Does the target process affect a critical success factor?
• Has investigation been completed….and all alternatives identified?
• Has the organization begun measuring the current process?
• Are the major cost and service factors known?
• Is the organization willing to finish a benchmarking study?
• Is the organization willing to reveal information about its processes?
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Steps in Department Level Evaluation –
Cont.
7. Best practice studies
– Similar to benchmarking
– Goal is to find and emulate the best practice in a
particular area
8. Exercising management control in response to
results
– Once performance evaluation results are known,
management must be willing to correct the problems
identified
– Otherwise, performance evaluation serves no purpose
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Concepts of Strategic Supply Management
Is focused on supply aspects of internal customer needs
Develops and maintains long-term supplier relationships
Supply management as profit center – A profit center must meet three conditions
• Value is added
• Capital is productively employed
• Costs are incurred
Supply management as a cost center – A cost center
• Emphasizes cost, not profit
• Does not necessarily encourage risk taking
• Generally does not allow supply to spend money to make money
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Evaluation of Outsourced Supply
Functions
Evaluate outsourcing providers just like any other
supplier
Examples of outsourced providers include
– Outsourcing organizations
– Cooperatives
– Consortiums
– Third-party logistics organizations
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Evaluation of Feasibility and Impact of
Outsourcing Supply
Evaluate outsourcing providers as service
organizations
Treat it as a “make-or-buy” situation
Additional evaluation factors include
– Loss of direct control
– Potential for service or quality problems
– Current and future cost of outsourcing vs handling it in-
house
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Task 3-C-3 Recall Question #1
Which of the following broad categories of performance
identified in various studies by CAPS Research is MOST
likely to be characterized as “quantitative?”
(A) Customer service
(B) Capital efficiency
(C) Workforce assessment
(D) Organizational structure
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Task 3-C-3 Recall Question #2
Which of the following is LEAST likely to occur when the
executive team views the supply function solely as a cost
center rather than a profit center?
(A) Resources will be invested in the team.
(B) The team will add value through its activities.
(C) Costs will be incurred as a result of operations.
(D) Internal relationships will affect performance.
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Task 3-C-3 Comprehensive Question #1
Which of the following is LEAST likely to be included as a
performance measure for a strategic procurement
function?
(A) Profit contribution
(B) Productivity improvement
(C) Total dollar spend
(D) Timeliness of actions
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Task 3-C-3 Comprehension Question #2
The PRIMARY reason for performing departmental level
evaluations is to determine:
(A) Department effectiveness in meeting organizational needs.
(B) The effectiveness of departmental management.
(C) The resources needed for departmental improvement.
(D) Whether or not value is added by the function.
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Task 3-C-3 Summary and Review
When discussing organizational objectives, what is
meant by the term “congruence?”
Identify six reasons for departmental performance
appraisal
Name and define the eight steps in department-
level evaluation
Identify four supplier reliability metrics
What is the difference between viewing supply
management as a profit center, or as a cost
center?
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TASK 3-C-4
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Task 3-C-4 Task Outline
1) Organizational human resource policies and procedures
2) Organization skill set requirements
3) Position skill set requirements
4) Issues in selection and recruitment
5) Issues in employee promotion
6) Issues in the termination of employees
7) Issues in employee retention
8) Legal issues in employment and interviewing
Hire, develop, retain, promote and/or dismiss supply management personnel.
This task contains bridge and non-bridge exam material.
Full 5Q; Bridge 2Q
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Every organization has human
resource policies and
procedures, whether or not they
are documented
Supply managers must be
familiar with these policies and
procedures
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Organization Skill Set Requirements
Organizations today recognize a need for
specialized supply management skills
These skills change with advances in technology
and management methods
Supply must provide training required to keep skill
sets current
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Position Skill Set Requirements
Assess skill sets based on current and future
requirements
– A change in business practices may require a change in
skill set requirements
– Identify and seek special skills where needed
• Examples
– Hedging to contain commodity pricing
– Other key financial skills
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Issues in Selection and Recruitment
Select employees with care
– People leave jobs when there is little challenge and
recognition
– Today’s applicants are tech savvy….and want the
organization to be also
– Working for several organizations to further careers is
common
– Employee turnover is costly
Recruitment
– Refers to where the organization will find qualified individuals
– Challenge is to discern “who will do well” from “who will apply”
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Knowledge, Skills and Aptitude
A job analysis should determine
– Job qualifications
– Skills
– Background
– Experience
– Personal qualifications
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Knowledge, Skills and Aptitude – Cont.
The job analysis facilitates a job description and
determination of required skills – Product or service knowledge
– Principles of supply management
– Analytical ability
– Computer-based skills
– Relationship development and management
– Management skills
– Knowledge of international business
– Negotiation skills
– Interpersonal skills
– A customer focus
– Ability to deal with and manage change
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Knowledge, Skills and Aptitude – Cont.
Particular positions may require international
skills – Language
– Dealing with various business cultures
– Working in different business legal environments
– Customs and international logistics
Management positions will require a
strategic mindset and a proven track record
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Knowledge, Skills and Aptitude – Cont.
Many organizations utilize various tests
– Burden is on the employer to ensure that the test is job related
– If not, there could be legal problems
Typical tests include
– Skill tests to identify basic abilities
– Aptitude tests to help determine knowledge base
– Personality/intelligence tests
– Physical examination
• If job related, it must be given to all applicants (in the U.S.)
• If for insurance purposes, it must be given after a job offer
– International-related skill test
– Drug tests
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Knowledge, Skills and Aptitude
References, Experience and Training
Verify all applicant-provided information
– Credentials
– Education
– Certifications
Many organizations will not provide references
Performance related references
– Verify information from immediate past supervisor
– Ask for performance appraisal documents
– If this information is not available
• Ask candidates to describe what their supervisors would say
• Put the burden on the candidate….insist on a past supervisor reference
• Never ask for opinions
Don’t ask questions that can be answered with “Yes” or “No”
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Interview Types
Screening interview
– Chooses candidates for further interview
Final interview
– Focuses on specific details of the job
– Seeks to determine if candidate will work well with
other team members
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Interview Types – Cont.
The structured interview
– Purpose: to eliminate bias and increase validity
– Uses similar questions for all candidates
– Typical steps
• Develop hiring criteria
• Develop questions related to hiring criteria
• Identify potential answers for all questions
• Develop a scoring sheet for each answer
• Train interviewers in listening skills
• Train interviewers in giving candidates opportunity to speak
• Train interviewers in legal obligations
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Interview Types – Cont.
The behavior based interview – Used to gauge candidate experiences and behaviors
– Identifies desirable experience, behavior, knowledge, skills, abilities
• Critical thinking
• Being a self-starter
• Willingness to learn
• Self confidence
• Teamwork
– Employer structures pointed questions to elicit detailed responses
– Questions are open-ended……no “Yes” or “No” answers
– Legally, questions must be job-related
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Issues in Employee Promotion
Standards and certification – Establishes a minimum standard of competence
– Helps eliminate arbitrary, haphazard promotion criteria
Career advancement – People tend to leave jobs where there is no advancement potential
– Advancement may involve rotating into other functions
Advantages and disadvantages of promoting from within – Advantages
• Higher morale
• Reduced training cost
• Employee characteristics are already known
– Disadvantages • May result in a chain of lower-level promotions….and loss of stability
• May lead to promoting one who is less qualified
• Decreases the inflow of new ideas
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Issues in Employee Promotion – Cont.
Advantages and disadvantages of hiring
from outside – Advantages
• Brings new ideas into the organization
• Prevents substitution of seniority for ability
• Candidate may bring other useful functional expertise
– Primary disadvantage • Training costs are higher
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Issues in Employee Promotion – Cont.
Training needs – Administrative, managerial, analytical and
leadership
– An ongoing requirement • First analyze skill requirements…..current and future
• Identify existing skills
• Identify gaps……and, therefore, training needs
– When developing personnel • Ensure interesting and challenging assignments
• Discuss career opportunities
• Facilitate participation in cross-functional international teams
• Send potential leaders on overseas assignments
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Issues in Employee Promotion – Cont.
Succession Planning
– Refers to plans for replacement of key personnel
– Important to assess if an individual is a good “global citizen”
• Cultural awareness
• Exposure to other geographies
– Rotation through non-supply functions facilitates broader growth
Objective attainment
– Employee performance review is a critical process
– Should involve mutually agreed, measurable goals
– Expectations should be clear
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Issues in the Termination of Employees
Consistent documentation and evaluation – Feedback should be continuous, no periodic
– Needed improvement should be made clear….with examples
– Employees on probation should clearly understand why
– Probation and a chance to improve should precede termination
– Foreign requirements may be different
Adherence to human resource policies/procedures, union requirements, due process and legal requirements – The termination process is typically formal and well documented
– There should be rules for exempt and non-exempt employees
– Union contracts will specify worker layoff, recall and seniority rights
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Issues in the Termination of Employees –
Cont. Quantifying and qualifying discussion to terminate
– Reasons should be documented and discussed with employee
– Best if a witness is present
– Seek advice from Human Resources (HR) beforehand
Outplacement – When dismissal is not for cause, an organization may offer
• Outplacement services
• Counseling
• Skills and aptitude assessment
• Assistance with resume development
• Help with networking and professional skills development
Exit interviews – Opportunity for employee to “vent” while HR gets useful feedback
– Helps clarify the underlying issues
– Provides basis for preventing a future, similar occurrence
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Issues in Employee Retention
Employee retention is correlated to employee satisfaction
Factors in employee satisfaction – Mentally challenging work
– Equitable rewards (a just and fair environment)
– Supportive working conditions
– Supportive colleagues
– Job involvement (provides “ownership” in results)
– Commitment to the organization
– Cultural factors • Status, symbols may be useful…..and important
• Should research cultural needs of workers from other countries
– Compensation and benefits
– Employees place high value on sound packages
– Should be perceived as equitable and fair
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Issues in Employee Retention – Cont.
Career progression
– There is a strong correlation between employee perception of
career advancement opportunities and job satisfaction
Work and life balance
– Occurs when employees perceive a proper balance between work
and personal life
– Employers recognize this with
• Concierge services
• Flexible work schedules
• Job sharing
Work environment
– Virtual, office settings, telecommuting, etc.
– Many positions can now be performed from home
– Correlates with job satisfaction 224
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Exam 3
Legal Issues in Employment & Interviewing
Equal Pay Act of 1963 – Requires that employees receive the same pay if they perform the
same work and are substantially equal in skill and responsibility
Federal Civil Rights Act of 1964 (Title VII) – Makes it illegal to discriminate among employees on basis of race,
religion, color, gender or national origin
– Also includes sexual harassment
Executive Order 11246 of 1965 – Prohibits discrimination in federal employment based on race,
religion, color, national origin and gender
Age Discrimination in Employment Act of 1967 – Restricts employers of more than 20 employees from discriminating
in employment and termination of employees over 40 years old
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Legal Issues in Employment & Interviewing
– Cont.
Equal Employment Opportunity Act of 1972
– Amended Title VII to include employers of 15 or more
employees
– Gave EEOC power to sue offending organizations
– Required “affirmative action” to achieve a workforce
reflecting the composition of the community
National Labor Relations Act (Taft-Hartley Act)
– Grants individuals a right to organize and bargain
collectively
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Legal Issues in Employment & Interviewing
– Cont.
Occupational Safety and Health Act
– Prohibits a dangerous or unsanitary workplace
– In 1983 issued the Federal Hazard Communication
Standard
• Required that workers be informed in 5 key areas
– Identification of hazardous materials
– Product warning labels
– Emergency response techniques
– A written hazardous communication standard
– Employee training in understanding all of this
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Legal Issues in Employment & Interviewing
– Cont.
Americans with Disabilities Act (ADA) – ADA Amendments Act of 2008 became effective January
1, 2009 • Applies to companies with 25 or more employees until January
1, 2011
• Effective January 1, 2011, the Act applies to companies with 15 or more employees
– Prohibits discrimination in hiring practice due to a disability
– Must provide candidates a list of essential functions of the job
– Must make reasonable accommodations for disabled employees
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Task 3-C-4 Recall Question #1
The process in which organizations strategically plan for
the orderly replacement of their key executives is called:
(A) Outplacement.
(B) Succession planning.
(C) Assessment.
(D) Management by objective (MBO).
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Task 3-C-4 Recall Question #2
A workplace accident occurring at a supplier’s location
that causes harm to an employee might be investigated
by an organization that was created under what U.S.
federal act?
(A) Americans with Disabilities Act
(B) National Labor Relations Act
(C) Federal Civil Rights Act
(D) Occupational Safety and Health Act
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Task 3-C-4 Application Question #1
Dan Callahan had worked for Capital Industries for nearly thirty years, the last ten in supply management as a senior supply manager for machined parts. The path to his position began when Dan left the armed services and began his career with Capital as a machinist. Prior to his supply management job, he spent five years as an inventory control clerk and three years as a manufacturing planner. Callahan had great industry experience, but his lack of formal education and marginal supply management skills were becoming evident to Ty Brown, the new director of supply management at Capital Industries. Everyone liked Callahan, especially the engineers he was working with, but it was becoming increasingly evident that his professional skill set needed to be upgraded. One of Brown’s initiatives was to make the supply management organization world class, beginning with an evaluation of staff expertise. What should Brown do?
(A) Encourage Callahan to get his bachelor’s degree in business.
(B) Demote Callahan to a lower level position in supply until his skill set is upgraded.
(C) Request Callahan resign his position.
(D) Create a career plan for Callahan that will leverage his skills.
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Task 3-C-4 Summary and Review
How does training fit into a strategic supply plan?
What’s the difference between organization skill set requirements and position skill set requirements?
What is the link between challenging work assignments and employee turnover rates?
Identify and define four of the six types of tests for potential employees
Identify any legal implications related to testing potential employees
Describe the four types of interviews
What are the advantages and disadvantages of promoting from within, rather than hiring from outside?
Identify five of the seven factors conducive to job satisfaction
Describe the intent of the Equal Pay Act, Federal Civil Rights Act, Executive Order 11246, Age Discrimination in Employment Act, Equal Employment Opportunity Act, National Labor Relations Act, Occupational Safety and Health Act, and Americans with Disabilities Act
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TASK 3-C-5
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Task 3-C-5 Task Outline
1) Determination of training and development needs
2) Types of job training (functional orientation)
3) Professional certification
4) Formal education/advanced degrees
5) Professional association involvement
Conduct/authorize job training for the professional development of the staff.
This task contains no bridge exam material.
Full 5Q; Bridge No Q
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Determining Training and Development
Needs
The usual steps
– Conduct an organizational analysis
– Set an organizational structure to meet goals
– Conduct skill assessments
– Prepare individual development plans
– Plan and initiate implementation
– Measure increase in skills and competencies
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Determining Training and Development
Needs – Cont. Needs and skills assessment
– A “skill” is an ability gained through practice or knowledge
– Skills assessment refers to identifying currently available skills
– Skills must then be translated into competencies
– Seven major areas of training focus • Team building (leadership, decision-making, influencing)
• Strategic planning (project scoping, goal-setting, execution)
• Communication (presentation, public speaking, listening, writing)
• Technical skills (web-enabled research, sourcing analysis)
• Broad financial skills (cost accounting, making a business case)
• Relationship management (ethics, facilitation, conflict resolution, creative problem solving)
• Legal issues (contract writing, risk mitigation in a global environment)
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Determining Training and Development
Needs – Cont.
Gap analysis – Compares required skills to actual skills
– This facilitates a comprehensive list of deficiencies (gaps)
Designing and planning training programs – Human skills and knowledge are key enablers for supply
management
– Training must support organizational and supply strategies
– Required skill sets will change over time
– So, must periodically review and update the training plan
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Determining Training and Development
Needs – Cont. Top 10 skills (current) Ethics
Negotiation skills
Ability to make decisions
Interpersonal communication
Common sense
Assessing ethical situations
Influencing and persuasion
Decision-making/problem solving
Conflict resolution
Problem solving
Top 10 skills (future) Ethics
Interpersonal communication
Negotiation skills
Strategic thinking
Ability to make decisions
Influencing and persuasion
Cross-functional teams
Decision-making/problem solving
Leadership
Ability to work in teams
The future role of supply management will be more strategic,
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Exam 3
Career Development and Needs
Assessment A six step process
– Assess current and future requirements
– Identify required skills
– Identify goals and gaps
– Identify key knowledge areas that will improve job competencies
– Assess training mediums
– Evaluate outsource providers and negotiate a contract
Generally, a pilot program will be used – The pilot group may consist of selected experts
– Comments from the pilot group can be useful in modifying training
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Types of Job Training
Self training – Requires taking some responsibility for one’s career
– Self training takes many forms, including • Studying periodicals, books and research reports
• Studying selected business publications
• Studying trade magazines and resource materials
• Attending supply management association meetings
• Enrolling in university evening courses
• Attending seminars and workshops
Orientation – Involves introducing a new employee to the job and organization
– Employees will want to know what’s expected of them
– Thorough orientation prevents many future problems
– An employee’s first few days or months on the job play a role in developing organizational commitment
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Types of Job Training – Cont.
The sponsor/mentor system – Involves the assignment of a sponsor to each new employee
– The bulk of the training rests with the sponsor
– Can be effective if the sponsor is a good teacher
– Downsides • The sponsor can only teach what he/she knows
• The sponsor’s own work may go lacking
Classroom training – A series of targeted courses
– Provides a formal framework to expose a new employee to • Organizational and supply management philosophies
• Job processes
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Types of Job Training – Cont.
Functional rotation – Rotating a new employee through a series of brief assignments in
supply management and other functions
– Objective is to gain understanding of the complete supply cycle
– Results are evaluated using a 4-level model (Kirkpatrick, 1994)
• Reaction – evaluation completed after a training session
• Learning – seeks to measure increases in knowledge and skill
• Behavior – assesses if on-the-job skills and behavior have changed
• Results – quantifies how training/development affects the bottom line
Professional certification – Requires demonstration of proficiency and knowledge in specific
job-related areas…….based on a body of knowledge
– Certification endorses skills beyond specific position requirements
– Re-certification requires individuals to stay current
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Types of Job Training – Cont.
Formal education/advanced degrees
– Colleges and universities offer degree programs
– Advanced degrees in supply management are available
– Many are offered on-line or “distance learning”
Professional association involvement
– An excellent way to facilitate growth and development
– ISM, ISM affiliates, local chapters
– ISM has affiliates in other countries
– Opportunities for leadership roles
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Exam 3
Task 3-C-5 Recall Question #1
The reconciliation of individual skills and competencies
with essential performance criteria is completed through
the use of a(n):
(A) Strategic plan.
(B) Environmental scan.
(C) Gap analysis.
(D) Key skill analysis.
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Exam 3
Task 3-C-5 Recall Question #2
A certification that endorses skills associated with a
specific profession is typically awarded through a:
(A) Third party organization.
(B) Company’s human resources department.
(C) College or university.
(D) Standardized exam.
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Exam 3
Task 3-C-5 Application Question #1
Nada Riyadh, the global director of supply management for Sunburst Hotels located in Saudi Arabia, was dreading the meeting she was about to have. Layla Lanka, the senior supply manager for administrative services, wanted to talk about the mandatory career development program that Riyadh recently discussed with her. All of Riyadh’s direct reports had recently completed an evaluation of their skills and it was determined during the gap analysis that Lanka was lacking in interpersonal communication and strategic thinking skills, two very important talents that were required to support the hotel chain’s strategic sourcing initiative. Riyadh had provided Lanka with a career development plan, but she refused to attend the two recommended courses at the local community college. She threatened to quit if she was pressed to do so. Lanka was an experienced and dedicated employee with expertise in e-commerce. Riyadh needed to keep Lanka in the organization, but her interpersonal communication and strategic thinking skills needed quick upgrades to meet changing business conditions. Cont.
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Task 3-C-5 Application Question #1 – Cont.
What should Riyadh do?
(A) Find another job for Lanka in the company that better matches her skills.
(B) Determine if there were alternate educational methods available for Lanka.
(C) Ask Lanka to retake the skills assessment survey to see if there was an error
in scoring.
(D) Force Lanka to take the courses, or ask her to leave the organization.
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Exam 3
Task 3-C-5 Summary and Review
What is the first step in determining training and
development needs?
What is “gap analysis?”
Identify and define each of the six-steps in a supply
management career development and needs
assessment process
Identify and define five types of job training
Identify and define each level of Kirkpatrick’s four-
level model for evaluating the effectiveness of
training
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TASK 3-C-6
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Task 3-C-6 Task Outline
1) Issues in the evaluation of employees
Evaluate Supply Management Employee performance.
This task contains no bridge exam material.
Full 6Q; Bridge No Q
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Exam 3
Introduction
Management must – Clearly establish organizational business objectives
– Evaluate performance of supply management employees at all levels
Good practice requires that measures must be – Aligned vertically and horizontally
– Comprehensive
– Dynamic and aggressive
– Transparent and broadly communicated
– Tied to incentive compensation
– Backed with resources
– Championed by strong leadership
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Issues in the Evaluation of Employees
Evaluations must be objective
Align employee objectives to organizational goals
– Supply management department’s goals should support
organizational objectives
– Each employee’s objectives also support organizational
goals
Determine criteria for success
– Identify how supply management contributes to
organizational objectives
– Develop measurements to move in that direction
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Exam 3
Issues in the Evaluation of Employees –
Cont.
Determine appraisal factors – use both – Quantitative factors
• Elements that can be measured numerically
• Examples include cost, quality, delivery performance
– Quantitative factors • Elements that are more subjective to measure
• Examples include teamwork, creativity, customer focus
Conduct interviews/provide feedback – Need effective two-way communication and clear, open,
honest dialogue
– Feedback should include assessment of effectiveness as well as input to improve
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Exam 3
Issues in the Evaluation of Employees –
Cont.
Sources of feedback
– Team and/or peer input
– Self assessment
– Internal customer input
– Supplier input
Employee accountability (for example, performance
improvement plan)
– Performance assessment process should provide employees an
understanding of how they can improve their contribution to the
organization
– In case of low performing employees
• Need clearly documented improvement plan
• Including consequences for not improving/sustaining performance
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Exam 3
Task 3-C-6 Recall Question #1
Which of the following individual performance rating
factors is considered MOST qualitative?
(A) On-time delivery performance
(B) Quality of materials or services
(C) Responsiveness to customers’ questions
(D) Quantity of work completed
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Exam 3
Task 3-C-6 Recall Question #2
When a supply manager diagnoses a weakness in an
employee’s performance, what category of evaluation is
considered the MOST descriptive?
(A) Summative
(B) Investigative
(C) Formative
(D) Reflective
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Exam 3
Task 3-C-6 Case Study #1
Discussion Questions:
1. What resources or tools might Manoj use to assist him in developing
his new individual performance metrics?
2. What are some of the characteristics of best practice performance
metrics for individuals in a supply management function?
3. What are the key issues in defining effective individual metrics within
the supply function?
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Exam 3
Task 3-C-6 Summary and Review
Describe criteria that effective performance
measures must meet
Discuss the steps involved in the evaluation of
employees
Identify multiple sources of input that can be used
to assess an employee’s contribution to the
organization
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Exam 3
TASK 3-C-7
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Task 3-C-7 Task Outline
1) Issues in organizational management and administration
2) Group dynamics
3) Leadership principles
4) Change management techniques
Supervise and lead supply Management employees.
This task contains no bridge exam material.
Full 5Q; Bridge No Q
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Exam 3
Issues in Organizational Management and
Administration
Delegation of authority and responsibility
– Involves the assignment of tasks, granting of authority
and holding people responsible for results
– Involves the following phases
• Assignment of tasks – clarify tasks and goals
• Granting of authority – refers to authority to carry out the tasks
• Responsibility – refers to responsibility to fulfill assigned tasks
– Employee has immediate responsibility
– Manager still has “ultimate” responsibility
• Parity of authority and responsibility
– Responsibility and authority should be matched
– May affect “who” is selected for a particular task
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Issues in Organizational Management and
Administration – Cont. Chain of command
– Refers to the internal reporting hierarchy
– Best if each subordinate is responsible to only one supervisor • Referred to as “unity of command”
– Responsibilities in matrix structures should be clearly understood
– “Flat” vs “Tall” organization structures
Span of influence – Refers to the extent to which people interact with/influence others
– Matrix organizations encourage increased span of influence
– Supply management is a “boundary-spanning” function
Span or information dissemination – Refers to the diffusion of information in order to spread useful
information within and outside the organization
– A wide span of information dissemination facilitates a wide span of influence
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Theories of Management
General theories – Holds that managerial skills are transferable to any organization
– Based on the propositions that
• All managers perform the same universal functions
• All business operations can be divided into six basic activities
– Technical (producing, manufacturing, providing services)
– Commercial (buying and selling)
– Financial (acquiring capital)
– Security (protecting employees and property)
– Accounting (records keeping)
– Managerial
Operational theories – Hold that worker output increases as they become more specialized
– It was later shown that this can be “overdone”
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Theories of Management – Cont.
Motivational theories – Held that people and relationships should be a primary focus
– Seek to improve productivity by balancing working conditions and motivational influences
– The “Hawthorne effect” holds that workers produce more if they perceive management support and interest in them
– Contingency theory states that • Managers should identify what techniques fit a particular situation
• Example
– If technology is complex, workers must be more skilled
– If workers more skilled, they will want some control over the work
– If worker decision-making is allowed, then leaders must move from a command-and-control style to a counsel-and-coach style
• The theory argues that there is no one best way to motivate a person
– Ultimately, a manager’s job is to clearly link good performance to a desirable outcome
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Other Key Considerations
Diversity in the workplace – in supply management, diversity usually refers to – Sourcing from different categories of suppliers
– The use of minority-, women-, and veteran-owned businesses indicates use of a diverse supplier base
– Also involves dealing with opportunities and challenges • Cross-cultural communication
• Differences in expectations
• Varying work ethics
– Diversity should be an element in supplier evaluation
Reward and recognition programs – Research confirms that recognition and opportunity for growth are
positively correlated with employee satisfaction
– Recognizes that individuals can “make a difference”
– Facilitates reinforcement of desirable behavior
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Group Dynamics
Recognizes that people are social, even in the workplace – Formal work group
• Formally organized for an identifiable purpose
• Task forces, teams, committees
– Informal work group • Usually small and structured around member interests
• May be social, special interest or pressure groups pushing for change
• Managers must align group interests with those of the organization
• Specific approaches include – Seek appropriate input on decisions that affect them
– Use the input to arrive at group-oriented decisions
– Create a climate and reward system to encourage cooperation
– Seek to align informal group objectives with positive outcomes
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Group Dynamics – Cont.
Characteristics of a good group include
– Ability to focus on the mission
– Open recognition of its strengths and weaknesses
– Ability to integrate personal agendas into a “team”
agenda
– Ability to define, simplify and solve problems, using facts
and logic
– Commitment and enthusiasm
– Ability to experience and express pleasure in other’s
success
– Ability to accept praise with grace
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Group Dynamics – Cont.
Advantages of a group – Collective knowledge, skills, and creativity
– Dynamic cross-functional interaction
– Reduced time required to solve a problem or make a decision
Possible disadvantages – Group often lacks the power or authority to make major
decisions
– May have little insight into its performance over time
– Managers may seek to influence activities or decision
– Meetings may be dominated by one individual
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Leadership Principles
Refers to the ability to influence individuals or group members
Leaders have a clear vision and can articulate it to others
Leadership functions (two major groups) – Task related
• Refers to problem solving behavior
• Involves making decisions, offering input, suggesting alternatives
– Group maintenance • Includes anything that helps the group operate more effectively
• Mediating disputes, compliments on results, recommendations
Leadership styles (two major styles) – Task-oriented
• Leaders seek to direct and closely supervise subordinates
– Employee-oriented • Leaders seek to motivate employees rather than control them
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Leadership Principles – Cont.
The contingency approach to leadership
– Seeks to match leadership techniques to the specific situation
– Identifies three elements of a work situation
• Quality of the leader-member relationship (most important)
• Structure of the task (workers should clearly understand
expectations)
• The leader’s position power
The path-goal approach (expectancy theory)
– Holds that individual motivation depends on reward
expectation
– Leadership directly influences the reward structure and
indirectly influences motivation level
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Leadership Principles – Cont.
Group leaders
– They set direction, align people and resources, motivate
and inspire
– Position power is usually low, so must use
influence/persuasion
– An effective group leader
• Facilitates group analysis and decision making processes
• Encourages member participation, conflict resolution and
consensus building
• Is able to work with little, no or unclear authority
• Adapts as requirements and working conditions change
• Works with the group to establish goals
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Exam 3
Change Management Techniques
Managing change means making change in a planned and
systematic fashion
Objective: effectively implement new methods/systems
Managing the change process involves
– Getting people to adopt change
– Clearly articulating what is going to change
– Establishing a “saleable” rationale for change
Steps for managing change include
– Collect data
– Identify and evaluating value-adding opportunities for change
– Design a strategy that covers rationale, implementation plan, individual
involvement, resource requirements, time frame and evaluation methods
– Implement strategy
– Review periodically
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Exam 3
Change Management Techniques – Cont.
The usual reasons for failure to effect needed
change
– Inconsistency between management’s words and
actions
– No effective system to evaluate the change
– No change in recognition, information or organizational
systems
– Unrealistic timelines
– An assumption that training is all that’s needed to effect
change
– Lack of consistent communication
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Exam 3
Task 3-C-7 Recall Question #1
What definition BEST ensures a subordinate being
empowered to complete a task?
(A) Assignment of tasks
(B) Parity of authority and responsibility
(C) Presence of responsibility
(D) Chain of command
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Exam 3
Task 3-C-7 Recall Question #2
The theory that states employees would work harder if
they believed management was concerned about their
welfare is called:
(A) Scientific management.
(B) The Hawthorne effect.
(C) Theory X.
(D) Theory Y.
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Exam 3
Task 3-C-7 Comprehension Question #1
Asian Group, Inc.’s Chief Procurement Officer has determined there are significant issues with the quality of plumbing services the company provides to their plants and office buildings worldwide. They have received numerous complaints and requests for either rework or refunds. The quality issues and the potential financial ramifications could significantly impact the firm’s shareholder value. Which of the following approaches should the CPO employ to BEST address the situation? (A) Delegate the task to a single subordinate.
(B) Set up a formal work group.
(C) Hold a staff meeting and ask the staff to solve the problem.
(D) Institute an informal work group.
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Exam 3
Task 3-C-7 Summary and Review
Identify and define the five phases of delegation
What is the “Hawthorne effect?”
Define “contingency theory”
What are the organizational implications of a “diverse” work force?
What is the difference between a formal and an informal work group?
Identify five of the seven characteristics of a good work group
Define “leadership”
Identify the five steps for managing change
Identify the typical reasons for failure of change initiatives
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Exam 3
TASK 3-C-8
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Exam 3
Task 3-C-8 Task Outline
1) Cross-training
2) Mentoring
3) Professional development
4) Delegation of leadership opportunities
5) Human resources policies, procedures and planning
6) Elements of a succession plan
7) Organizational structure
8) Educational opportunities
9) Job rotation
Create and manage a succession plan.
All of the content in this task is bridge exam material.
Full 4Q; Bridge 3Q
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Exam 3
Succession Planning
Succession planning refers to a process of
preparing for eventual replacement of key players
Suitable, high-potential employees are identified
and prepared through mentoring, training and job
rotation
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Cross-Training
Refers to training employees on jobs other than their own
Multiple-skill capability enhances departmental flexibility
Broadens skill sets, which can lead to – Future promotion
– Pay increases
– A more challenging job
Could lead to broader responsibility
Is positively linked to – Job enrichment – the addition of tasks and more control or
responsibility
– Job enlargement – the addition of tasks on the same level of skill and responsibility
Requires a change based mentality
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Mentoring
A formal employee development process in which an experienced worker assists in training and support
Also referred to as the “sponsor” or “buddy” system
Initial job instruction comes from a supervisor
But, the “bulk” of training comes from the mentor
Mentoring usually begins after formal orientation
Level of effectiveness depends on the mentor
Possible downsides – Restricts training to one individual
– A mentor can only teach what he/she knows
– May negatively impact performance in the mentor’s job
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Professional Development
Refers to increasing skills and knowledge of current and future jobs
Goal is to achieve career objectives
Types of professional development include – Job rotation
– On-the-job training
– Classroom training
– Self-training
If training for management, development should include – General leadership skills
– Managerial skills
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Professional Development – Cont.
Other professional development activities
include
– Continuing education programs
– Site visits to supplier, customers and other
organizations
– Audio-visual and print media programs
– Peer-to-peer interaction
– Web-based programs
– Competency-based programs
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Delegation of Leadership Opportunities
Over time, supply management could be depleted of managerial talent – Promotions
– Retirements
– Other opportunities
– Cross-functional transfers
We must continually develop future leaders
This requires delegation of key tasks – Provides experience
– Allows the supply professional to assess performance
Should include cross-cultural and other international experience
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Human Resources Policies, Procedures
and Planning
Promotions and assignment changes may directly impact
supply management or the overall organization
– Performance
– Morale of other employees
Must comply with laws, regulations and organizational
policies
– Affirmative action
– Equal employment opportunity
– Non-discrimination in hiring, firing, promotion or transfer
– Skill-based job descriptions
For all these reasons, and more, Human Resources should
be consulted
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Elements of a Succession Plan
Refers to a process in which successors are
identified for critical supply management
positions
Succession plans must consider – An individual’s existing talent
– The planned time cycle for succession
• Even some high-potential individuals may require more time
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Elements of a Succession Plan – Cont.
Characteristics of an effective succession plan
include – Visible CEO and top management support
– A level of ownership and support by management and staff
– Simplicity….tailored to unique organizational needs
– Flexibly and visibly linked to a strategic plan
– A thorough HR resources review process
– Well developed competencies and objective assessment
– Employee input
– Association with a broader management development effort
– Plans for developmental job opportunities
– Integration with other human resources systems
– An emphasis on accountability and follow-up
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Elements of a Succession Plan – Cont.
Typical activities performed in succession planning – Identification of possible successors
– Periodically challenging and updating the plan
– Agreeing on individuals and positions
– Developing individual-specific plans
– Prioritizing to accelerate closing of skill and experience gaps
– Continuous review, monitoring and updating plans in accordance with changes in required skills, organizational goals, etc.
The usual benefits of succession planning – Better match of employee and job requirements
– Ability to quickly fill vacant positions
– Active development of a highly skilled talent pool
– Developing a core group of employees with core skills and values
– Increased morale among lower level employees
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Organizational Structure
Will affect succession planning and individual careers
As organizational structure changes, so will jobs – Examples: centralized vs decentralized procurement
Changing skill requirements can trigger job redesign
Mergers and acquisitions will impact succession plans – Succession plans would need modification to reflect the
changes
Flatter organizations may mean – Fewer levels of administrative responsibility
– Lower headcount, leading to changes in types and number of jobs
The move towards strategic supply management is changing job design and skill set requirements
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Other Key Considerations
Educational Opportunities
– Career advancement is often tied to educational degrees,
certifications, etc.
– Employees desiring promotion should be aware of the
organizational mindset on this
Job rotation
– Is often used to broaden exposure for succession candidates
– Should include both
• Basic skills sets required for a job
• The strategic implications
– Multinational organizations should provide opportunities for
international experience
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Task 3-C-8 Recall Question #1
Which of the following factors should be considered
LEAST in identifying a high potential employee for a
succession plan?
(A) Educational experience
(B) Job performance
(C) Age
(D) Years of service
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Task 3-C-8 Recall Question #2
All of the following are effective techniques used in
succession planning programs EXCEPT:
(A) Cross-training
(B) Management by objectives
(C) Mentoring
(D) Job rotation
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Task 3-C-8 Comprehension Question #1
Ann Able is a professional services procurement manager.
Carol Crawford is a marketing collateral procurement
manager. The organization recognizes talent and drive in
both women and is interested in building depth in their
supply organization. Which technique should their
organization implement to BEST offer both of them more
career development opportunities?
(A) Job rotation
(B) Mentoring
(C) Management development
(D) Cross-training
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Task 3-C-8 Summary and Review
Describe the pros and cons of a “mentoring”
approach to employee training
Identify at least eight of the eleven characteristics
of an effective succession plan
What are the benefits of succession planning?
What is “job rotation” and what is its primary
objective?
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TASK 3-D-1
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TASK 3-D-2
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TASK 3-E-1
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TASK 3-E-2
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Task 3-E-2 Task Outline
1) Classifications of risk stakeholders
2) Contractor tier considerations
3) Probability estimation procedures
4) Risk management procedures
Develop risk mitigation plans that align with organizational risk tolerance.
All of the content in this task is bridge exam material.
Full 4Q; Bridge 3Q
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Classifications of Risk Stakeholders
Stakeholders: persons with a vested interest in something;
those who will be affected by and/or can influence a
decisionmaking process. At the corporate level,
stakeholders include management, employees,
stockholders, customers, suppliers and so on who may gain
or lose by a specific decision
Types of supply chain stakeholders
– Internal
– External
– First responders
Each of these stakeholders has something to lose if a
supply disruption occurs
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Contractor Tier Considerations
Prime contract – First-tier suppliers
– Legal responsibility for performance of their suppliers, etc.
– Risk assessment of first tier must examine relationship with second and third tiers
– The primary supplier’s management of its suppliers is a strong predictor of supply chain stability
Subcontract – Second tier suppliers
– Assess risk through the lens of primary’s relationship
General – Supply chain only as strong as its weakest link
– Risk management demands examination of all involved
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Probability Estimation Procedures
Typical supply disruptions include
– Misalignment of interests
– Disasters
– Union work stoppage
– Regulatory shutdown
– Transportation disruption
– Sale of the organization
To estimate probability of disruption
– Define the trading network – customers and suppliers within a commodity or
service category
– Examine history of disruption – gather historical data or poll experts within
the network
– Based on this information, develop a base probability estimate
– Conduct a supplier-by-supplier risk assessment
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Risk Management Procedures
Risk management: directing or conducting the activities necessary to reduce, eliminate or mitigate the impact of factors that could lead to injury, loss, damage or failure
Risk management includes
– Identifying the risk
– Quantifying the risk
– Assigning responsibility for
• Management of the risk
• Risk mitigation actions
Risk management can be done on an organization-wide basis; however, it typically occurs on a site basis
Supply management should examine risk on a part or SKU basis if possible – This level of detail needed to effectively manage risk
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Risk Management Procedures – Cont.
Risk planning – the first step in risk management
– A five-step approach to risk management
• Confirm scope and current state
• Conduct impact assessment
• Define alternatives
• Develop plans
• Implement readiness
– Examine plans continuously for effectiveness
– Share plans with supply chain partners
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Risk Management Procedures – Cont.
Risk assessment
– Risk analysis: the process of identifying elements or
factors, and their probability of occurrence, that could
lead to injury, damage, loss or failure
– Identifies and quantifies risk of a supply disruption
– Uses a framework that describes
• Attributes of suppliers
• Their relationships with the buying organization
• Their interactions with the buying organization
– Risk profile is usually a numerical score given as a result
of applying the framework
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Risk Management Procedures – Cont.
Risk mitigation: specific steps undertaken by managers to
reduce the impact of factors that might lead to injury, loss,
damage or failure and thus reduce the liability of the
organization in its relations with various stakeholder groups,
including employees and customers
Risk mitigation actions – Identified by reviewing risk profile
– Frequently, actions can be taken to change the risk profile; i.e.,
reduce risk
Risk monitoring – An important part of a risk management program
– Must identify which factors must be monitored in order for prompt
detection and reaction to occur
– Must have a plan in place and assign “person responsible”
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Task 3-E-2 Recall Question #1
Typical supply network disruptions include all of the
following EXCEPT:
(A) Regulatory shutdown.
(B) Disasters.
(C) Alignment of interests.
(D) Union work stoppage.
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Task 3-E-2 Recall Question #2
At what level are risk management procedures most often
developed?
(A) Individual sites
(B) Corporate functional areas
(C) Geographic region of supply
(D) Production lines
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Task 3-E-2 Comprehension Question #1
A major metropolitan transit authority has been purchasing fluorescent bulbs from only two suppliers for the past several years. The supply professionals have become concerned that this concentration of spend puts the transit authority at high risk should one supplier no longer be able to deliver the quantities required. All of the following risk mitigation strategies might be considered EXCEPT:
(A) Distributing the spend to several suppliers with the capacity to grow.
(B) Working with the two suppliers to ensure their continued overall business health.
(C) Moving the entire spend to one supplier, thus getting first priority for its production.
(D) Developing alternative specs that more suppliers can produce.
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Task 3-E-2 Summary and Review
Describe contractor tier considerations in risk
management
Identify the first step in risk management and
describe what it entails
Define risk assessment
What is a risk profile and how can you change it?
List key elements of risk monitoring
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TASK 3-E-3
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TASK 3-E-4
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TASK 3-E-5
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Task 3-E-5 Task Outline
1) Laws/regulations related to documentation, storage, handling,
transportation and disposal (“cradle to grave”) and (“cradle to cradle”)
2) Risk
3) Ethical issues
4) Audit
5) Organization values and policies
6) ISM “Principles of Social Responsibility and Audit”
7) Customer-driven requirements
Manage the storage and disposal of hazardous and/or Regulated materials.
This task contains bridge and non-bridge exam material.
Full 4Q; Bridge 3Q
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Law/Regulations Related to Documentation,
Storage, Handling, Transportation and Disposal
Hazardous waste: waste that is corrosive, flammable or
toxic. Environmental laws impose various requirements
concerning storage, transportation and disposal of such
waste
Resource Conservation and Recovery Act (RCRA): a U.S.
federal law, passed in 1976, that focuses on the
management of hazardous waste, its generation, storage,
transportation and disposal
– Requires that hazardous wastes must be tracked from time they are
generated until time they are ultimately disposed of or recycled
– Imposes penalties for improper handling of hazardous waste
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Law/Regulations Related to Documentation, Storage,
Handling, Transportation and Disposal – Cont.
Comprehensive Environmental Responsibility,
Compensation and Liability Act (CERCLA): a U.S. federal
law that, in combination with the Superfund law (SARA),
gives the Environmental Protection Agency (EPA) authority
to regulate hazardous waste sites and to recover costs from
organizations that are responsible for damage
– Provides for the cleanup and remediation of closed and abandoned
hazardous waste sites
Hazardous Materials Transportation Act (HMTA): U.S.
federal laws regulating transportation of hazardous
materials including classification, equipment design,
packaging and handling
– U.S. Department of Transportation (DOT) regulates HMTA
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Law/Regulations Related to Documentation, Storage,
Handling, Transportation and Disposal – Cont.
Hazard Communication Standard (HCS): a U.S. federal requirement enforced by the Occupational Safety and Health Administration (OSHA) requiring that information about chemicals used in the workplace be disclosed to employees – Material Safety Data Sheets (MSDS) are used to inform workers
– Supply management professionals should obtain MSDS
Regulations regarding hazardous waste are complex and growing throughout the world – For example, in the European Union (EU), the International
Organization for Standardization (ISO) has established standards and requirements for doing business with member countries of the EU
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Risk
Cradle-to-grave: responsibility or ownership from the
creation of an item to its ultimate disposal
Cradle-to-cradle – A principle in which products and services are designed with a goal
of an efficient and essentially waste-free life-cycle for all
components
– The design incorporates material inputs and outputs that are
categorized as either technical or biological nutrients • Technical nutrients are inputs or outputs that may be recycled or reused
with no loss of quality
• Biological nutrients are inputs or outputs that may be composted or
consumed
– A distinguishing characteristic of this principle is that it incorporates
putting the constituent components of the product or service back
into use (recycle, reuse, compost or consume)
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Risk – Cont.
Considerations in minimizing risk include
– Contractual
– Insurance
– Legal
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Ethical Issues
Not advisable to work with suppliers that are
known to have questionable ethics
Chance exposure to a number of serious business
risks
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Audit
Organizations use audits to ensure compliance and reduce
risk when dealing with hazardous materials
Areas where audits occur include
– Internal: annual audit of an overall organizational hazardous
materials policy
– Supply chain: both pre- and post-purchase audits are conducted on
suppliers to ensure they are meeting legal requirements
– Reporting: audits of waste activities are conducted to ensure that
generators of hazardous waste are correctly reporting their activities
– Certification (e.g., transport, storage, abatement): contractors are
audited to ensure receipt of appropriate certificates of disposal
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Organization Value and Policies
A generating organization has responsibility for their material from cradle-to-grave
Moral implications should be recognized
Should be proactive – Avoid future exposure by permanently disposing of hazardous
wastes
– Creatively turn costs of environmental compliance into profits from environmental leadership
Collection programs – Organizations need internal controls to ensure collection and
shipment of wastes to disposal facility within prescribed timeframes
– Recycling programs can reduce/eliminate transportation and disposal costs, and may yield revenue
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ISM Principles of Social Responsibility and
Audit Established in 2004 to increase supply management’s
awareness of social responsibility including the environment
Environment principles include – Encourage your own organization and others to be proactive in
examining opportunities to be environmentally responsible within their supply chains either “upstream” or “downstream”
– Encourage the environmental responsibility of your suppliers
– Encourage the development and diffusion of environmentally friendly practices and products throughout your organization
Supply management leadership in this area – Supports the ideal of protecting the environment
– Ensures that the organization complies with all legal and regulatory requirements
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ISM Principles of Social Responsibility and
Audit – Cont.
Business reasons for adopting environmentally responsible
practices
– Costs savings may be recognized over life cycle of a program as
sound environmental practices are adopted on the front end
– Organizations may reap competitive advantage from being known
as environmentally responsible
Supply management professionals
– Embed environmentally responsible language and specific
measurements into contracts
– Audit suppliers and their own organizations to ensure
environmentally responsible practice
• ISM and others provide information and tools for environmental audits
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Customer-Driven Requirements
Customers have expectation that suppliers and
organizations with which they do business will act in an
environmentally compliant and responsible manner
Environmental regulatory agencies often publish names of
noncompliant organizations
As part of their business strategy, many organizations adopt
policies that integrate environmental protection and
stewardship
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Task 3-E-5 Recall Question #1
Which of the U.S. Acts provides for the clean-up and
remediation of closed and abandoned hazardous waste
sites?
(A) Comprehensive Environmental Responsibility, Compensation and
Liability Act (CERCLA)
(B) Hazardous Materials and Transportation Act (HMTA)
(C) Occupation Safety and Health Act (OSHA)
(D) Health Care System (HCS)
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Task 3-E-5 Recall Question #2
The PRIMARY purpose of the U.S. Federal Resource
Conservation and Recovery Act (RCRA) record-keeping
system is to:
(A) Ensure the validation methodology of assessing damages and
liabilities for violators.
(B) Provide a vehicle to ensure Sarbanes-Oxley (SOX) compliance for
the supply manager’s company.
(C) Track the life cycle of hazardous waste.
(D) Provide a vehicle to assess penalty for violators.
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Task 3-E-5 Application Question #1
Megan Montie, an internal auditor assigned to the purchasing and supply chain management department, wanted to make sure the department was following the procedures of the organization while pursuing industry best practices. The procedure manual for the company looked fair and the policy statement directed personnel to follow the regulatory agencies’ requirements. However, when she compared the process to the approved government policies and procedures standards, the manual did not support the government standards.
A critical area of the policy addressed providing timely notices to the hazmat carrier and disposer. The supply manager's manual stated that after a reasonable time they should contact and follow up with the authorized disposers. Yet, when she questioned the various supply managers involved in the tasks, the answers they gave about “reasonable time” ranged from one year after tender to the carrier to three months after disposal, with some not having any idea of what might be “reasonable.”
Cont.
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Task 3-E-5 Application Question #1 – Cont.
In the past, the company had been in trouble with the government because
the paperwork had not been delivered on time to the regulatory agency.
What is the “best practice” policy Montie might suggest to ensure that the
supply chain department stays on top of these critical areas of
responsibility?
(A) Before you retire from the company, or exit from the department, all
associated paperwork must be properly closed.
(B) If a copy of the hazmat's shipping manifest has not been received within 45
days, the supply manager should initiate an investigation.
(C) If the completed paperwork is not received within one year of disposition, the
supply manager should make contact with the hazmat's transporter.
(D) If the completed paperwork is not received within one year of disposition, the
supply manager should make contact with the hazmat’s disposer.
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Task 3-E-5 Summary and Review
Name 4 U.S. environmental laws/regulations that
impact supply management and describe the
primary purpose of each
Define cradle-to-grave and cradle-to-cradle
Summarize the ways organizations use audits to
ensure environmental compliance
Identify two business reasons for adopting
environmentally responsible practices
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TASK 3-E-6
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Task 3-E-6 Task Outline
1) Creation of measurements
2) Compliance metrics
Develop tools and processes to measure, report and improve compliance with Supply
Management policies and regulations.
All of the content in this task is bridge exam material.
Full 7Q; Bridge 4Q
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Creation of Measurements
It is supply management’s responsibility to
– Create policies
– Assure they are being used by developing quantifiable
metrics
– Have systems or processes that ensure control and
compliance
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Creation of Measurements
Audit Processes
Supply management audit – A comprehensive, systematic, independent and periodic
examination of an organization’s supply management
• Environment
• Objectives
• Strategies
• Activities
– Used to
• Identify strengths and weaknesses
• Develop plan to improve performance
– Can be internal or external audits
If the organization is found to be non-compliant – Management plan and process-improvement plan probably
necessary
– Disciplinary action also may be necessary
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Creation of Measurements
Validation Process
Established to ensure that standards and rules
– Are appropriate
– Comply with legal and regulatory requirements
Validation reviews accomplished both
– Internally
– Externally through outsourcing
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Creation of Measurements
Reporting Requirements
Need to establish a management reporting
system/structure to ensure measurements and
processes are tracked on regular basis for
– Compliance
– Information accuracy
Accomplished through
– Established management meetings
– Audit meetings
– Peer review meetings
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Creation of Measurements
Remediation
If audit reveals deficiency
– Process improvement plan should be established to
• Correct the defect
• Establish solutions
• Define actions to be taken
– Often, a written action plan must go back to auditor
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Creation of Measurements
Training
Training should keep up with evolution of supply chain
management, both internally and externally
Training on supply management policies and procedures
must include
– Supply management personnel
– Supply management’s customers
Methods of training
– Web-based education
– Face-to-face classes
– Lessons learned packages
– Discussion after audit reviews
Can be accomplished internally or through external
education sources
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Compliance Metrics
Organizational Policies (e.g., Supplier Diversity, Social Responsibility)
Policy: a plan to guide decisions and achieve rational
outcomes
Many organizations
– Follow unique policies based on requirements established by
• Organization leaders
• Stakeholders
– Require compliance by their suppliers
Among these policies are
– Supplier diversity
– Social responsibility
– Ethics
©2020 ISM All Rights Reserved
Exam 3
Compliance Metrics
Organizational Policies – Cont.
Supplier diversity policies
– Many organizations establish policies regarding
purchasing from a diverse supplier base including
• Minority-owned business enterprises (MBE)
• Women-owned business enterprises (WBE)
• Business enterprises with gay, lesbian, bisexual or transgender
ownership (GLBT)
• Business enterprises owned by people with disabilities (PWD)
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Compliance Metrics
Organizational Policies – Cont.
Social responsibility policies – Social responsibility: a framework of measurable policies and
resulting behavior designed to benefit the workplace, the individual, the organization and the community in the following areas
• Community
• Diversity
• Environment
• Ethics
• Financial responsibility
• Human rights
• Safety
– An emerging trend for organizations worldwide
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Compliance Metrics
Organizational Policies – Cont.
Ethical supply management policies
– Most organizations have ethical policies and practices in
the form of how business should be conducted by their
employees
– Many organizations have used ISM’s Principles and
Standards of Ethical Supply Management Conduct as
their guide
©2020 ISM All Rights Reserved
Exam 3
Task 3-E-6 Recall Question #1
The development, implementation and validation of
corrective action for non-performance or non-compliance
to performance measures is known as:
(A) Team input.
(B) Validation.
(C) Critical to quality.
(D) Remediation.
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Task 3-E-6 Recall Question #2
Supply management organizations must develop tools
and processes to audit compliance. The MOST important
reason for such processes and tools is to:
(A) Meet the needs of the audit group of corporate headquarters.
(B) Ensure standardization of policies throughout the supply
management organization.
(C) Provide a benchmark for the company to use when working with other
organizations within the same industry.
(D) Ensure results of actions and decisions of the supply management
organization can be measured and improved as required.
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Task 3-E-6 Case Study #1
Discussion Questions:
1. Why would the Bay Company want global training in English with
sensitivity to local culture?
2. How could a supplier be measured on compliance with company travel
policy?
3. Why would the Bay Company want instructors to be able to
troubleshoot room
temperature?
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Task 3-E-6 Summary and Review
Explain how each of the following are used to
ensure compliance with supply management
policies
– Audits
– Validation
– Reporting
– Remediation
– Training
Describe supplier diversity, social responsibility
and ethics policies and identify who has to comply
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TASK 3-E-7
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Task 3-E-7 Task Outline
1) Typical types of audits (e.g., ISO, GAAP, SOX)
2) Measurement of change initiatives
3) Validation of current policies, procedures, work instructions and forms
4) Corrective action process
5) Audit schedules and reports
Analyze and resolve issues raised in supply management audit reports.
This task contains bridge and non-bridge exam material.
Full 6Q; Bridge 2Q
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Introduction
Reasons for audit
– Compliance with given standard(s)
– Prevention of mistakes and problems
– Gauging system and process efficiency and
effectiveness
– Regulatory or industry compliance requirement
Types of auditors
– Internal
– External
– Self-inspection
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Typical Types of Audits (for example, ISO,
GAAP, SOX)
ISO (International Organization for Standardization)
– Audit conducted by an external third-party
– Initial audit for certification, then regularly scheduled audits
– ISO requires internal auditing and a corrective action program
GAAP (Generally Accepted Accounting Principles)
– Established by U.S. Financial Accounting Standards Board
(FASB)
– Widely accepted set of rules, conventions, standards and
procedures for accounting and reporting financial information
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Typical Types of Audits (for example, ISO,
GAAP, SOX) – Cont.
SOX – Sarbanes-Oxley Act of 2002
– Regulates accounting profession
– Imposes extensive reporting requirements on all publicly-traded corporations in U.S.
– Requires internal financial controls to provide assurance of the reliability of financial reporting and preparation of financial statements
• There is an oversight board
• Certification of financial reports is required
• Compliance must be maintained through use of an independent audit committee
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Measurement of Change Initiatives
One function of an audit
– Document the effects of changes in supply management
• Processes
• Policies
• Procedures
• Organization
– Final step in this process is periodic review of outcomes
using measurement criteria defined in the process
– Supply management audit may be used to evaluate
outcomes of previous changes
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Validation of Current Policies, Procedures,
Work Instructions and Forms
Purpose of an audit – Could be as narrow as verifying that completed
purchase orders are filed correctly
– Or, as broad as an ISO 9000 systems audit
– Determines resources required
Other purposes include – Are proper monetary limits being adhered to?
– Are appropriate personnel conducting transactions?
– Are competition requirements being met?
– Are best transportation methods consistently used?
– How good are forecasts?
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Corrective Action Process
Audit reports – Are based on observations
– Are representations of facts
– Do not seek to assign blame
Audits find areas for improvement – Normally requires plan that outlines steps to be taken to
address audit findings
Corrective action plan includes – Establishing time frames for improvement
– Prioritizing steps in the improvement plan
– Cost benefit analysis to determine resource allocation
355
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Exam 3
Audit Schedules and Reports
Auditor’s report
– A formal opinion
– By internal auditor or independent external auditor
– A result of internal, external or self-inspection audit
– Provided to whomever requested audit
Depending on type of audit, schedules included will
vary
– For example, a financial audit includes various financial
statements and accompanying notes
356
©2020 ISM All Rights Reserved
Exam 3
Task 3-E-7 Recall Question #1
All of the following are requirements of the Sarbanes-
Oxley Act (SOX) of 2002 EXCEPT:
(A) Creation of public company accounting oversight board (PCAOB).
(B) Certification of financial reports by the company Chief Executive
Officer (CEO) and Chief Financial Officer (CFO).
(C) Establishment of an independent audit committee to oversee the
relationship between the company and its auditors.
(D) Audit of supplier relationships.
357
©2020 ISM All Rights Reserved
Exam 3
Task 3-E-7 Recall Question #2
Which of the following BEST defines the corrective action
process to put in place to resolve problems identified in a
supply management audit?
(A) Identify internal and external auditors, validate current policies and
review outcomes
(B) Identify cross-functional team, define requirements, plan and
implement
(C) Establish time frames, prioritize steps and perform a cost/benefit
analysis
(D) Identify individuals responsible for non-compliance, identify
remediation steps and implement
358
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Exam 3
Task 3-E-7 Case Study #1
Discussion Questions:
1. What benefits would Bulldogger hope to achieve through a significant
change to current process?
2. How important would it be for Bulldogger to conduct an audit of
current policies and procedures?
359
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Exam 3
Task 3-E-7 Summary and Review
List reasons for an audit
Name the types of audits
Discuss ISO, GAAP, SOX
Describe the corrective action process that occurs
as a result of an audit
What is an auditor’s report?
360
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Exam 3
TASK 3-E-8
361
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Exam 3
TASK 3-E-9
362
©2020 ISM All Rights Reserved
Exam 3
TASK 3-F-1
363
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Exam 3
Task 3-F-1 Task Outline
1) “Principles and Standards of Ethical Supply Management Conduct”
2) ISM “Principles of Social Responsibility”
3) Organizational policies
4) Industry codes of conduct
5) International issues
6) Communication and training to key stakeholders
7) Laws governing issues in ethics
8) Customer-driven requirements
Develop and implement a code of business conduct for the Supply Management
function.
All of the content in this task is bridge exam material.
Full 5Q; Bridge 2Q 364
©2020 ISM All Rights Reserved
Exam 3
365
Introduction: Social Responsibility
Organizational codes and policies vary
Matters affecting the supply chain should always
be addressed
Three key areas
– Organizational and supply chain safety
– Environmental compliance and responsibility
– Ethical standards of conduct
©2020 ISM All Rights Reserved
Exam 3
366
ISM Principles and Standards of Ethical
Supply Management Conduct
Three key principles
– Loyalty to your organization
– Justice to those with whom you deal
– Faith in your profession
From these derive 12 standards of supply
management conduct (Study Guide page 168)
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367
ISM Principles of Social Responsibility
Community
– Local communities and citizens are stakeholders
– Standards should reflect goals of
• Maintaining ethical and environmental ecology of the communities
• Complying with all laws and regulations
• Demonstrating respect for community resources
• Aiding the community through contributions and involvement
Diversity
– Organizational policies, procedures and objectives should
address commitment to diversity in employment and suppliers
– Supply managers are key to a diversified supplier base
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368
ISM Principles of Social Responsibility – Cont.
Environment – environmental responsibilities include
– Compliance with laws
– Commitment to sustainability
– Recycling and use of renewable resources
Ethics – informed supply managers understand ethical
matters and reflect on the ethical aspects of supply
management
Financial responsibility
– Must ensure the application of sound financial practice
– Supply managers should consider how buying decisions financially
affect both buyer and supplier organizations
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369
ISM Principles of Social Responsibility – Cont.
Human rights – issues may relate to
– Supplier wage rates and working conditions
– Doing business in a country with human rights violations
• Many governments and economies are evolving in their
recognition of human rights
• Should have policies/principles in place for dealing with such
countries
• Contract clauses and inspection should address compliance with
Global Sullivan Principles
Safety
– Should be a key concern to supply managers
– Supply managers play a key role in promoting safety
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370
Organizational Policies
Should have written policies and procedures dealing with ethics, safety and the environment
Content should include at least the following – A code of ethics relating to supply management
• Gratuities, conflict of interest, reciprocity, human rights, safety, environmental impact, and compliance with applicable law
– Document retention and control
– Environmental management systems (pursuant to ISO 14000)
– Organizational structure and reporting channels
– Purchasing process and authority levels
– Commitment to the local community
©2020 ISM All Rights Reserved
Exam 3
371
Industry Codes of Conduct
Refers to industry-specific codes
Example: architects have a professional code that
imposes additional standards beyond ISM
requirements
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Exam 3
372
International Issues
The United Nations’ The Ten Principles of
the Global Compact deals with issues of
international business conduct
The principles have been adopted by 1,300
international organizations
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Exam 3
373
International Issues – Cont.
The Ten Principles of the UN Global Compact – Human Rights
1. Business should support global human rights…within their influence
2. Ensure no complicity in human rights abuses
– Labour standards 3. Uphold freedom of association and respect collective bargaining
4. Eliminate all forms of forced and compulsive labour
5. Effectively abolish child labour
6. Elimination of discrimination in employment and occupation
– Environment 7. Approach environmental challenges with caution
8. Promote greater environmental responsibility
9. Encourage development and diffusion of environmentally friendly technology
– Corruption 10. Work against corruption in all forms, including extortion and bribery
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374
Communication and Training to Key
Stakeholders
Important steps to implementing standards, codes
and objectives
– Training should cover principles, values, goals, ethical
standards and organizational objectives
– SOX requires evidence that employees received such
training
• This is an indication of the efficacy of internal controls
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375
Laws Governing Issues in Ethics
Defamation is a verbal or written expression of false
statements that diminishes an organization’s or individual’s
reputation
– If it’s written, it’s called libel
– If it’s oral, it’s called slander
Disparagement is making malicious or false statements
about an organization’s products or service
Bribery refers to giving cash, gifts or other favors in
exchange for the award of business of favors (a felony in
many U.S. states)
– Thwarts free market forces
– Prevents decision-making on the basis of price and quality
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376
Customer-Driven Requirements
A buying organization may be subject to customer-
stipulated contract terms
– May be related to their social responsibility initiatives
– May be applicable to subcontracts
– May specify a particular supplier or product
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Exam 3
377
Task 3-F-1 Recall Question #1
The United Nations’ Global Compact addresses all of the
following EXCEPT:
(A) Anti-corruption.
(B) E-commerce.
(C) Environment.
(D) Human rights.
©2020 ISM All Rights Reserved
Exam 3
378
Task 3-F-1 Recall Question #2
Which of the following is NOT a typical corporate
governance practice in global business?
(A) Disbursed equity ownership
(B) Disparagement
(C) Bribery
(D) Remediation
©2020 ISM All Rights Reserved
Exam 3
379
Task 3-F-1 Comprehension Question #1
Which of the following situations is NOT in conflict
with the ISM Principles and Standards of Ethical
Supply Management Conduct?
(A) Discussing order winning criteria with unsuccessful bidders
(B) Purchasing cleaning supplies from your part-time home product sales
business
(C) Buying from a customer at uncompetitive prices
(D) Installing company software on your home computer
©2020 ISM All Rights Reserved
Exam 3
380
Task 3-F-1 Comprehension Question #2
A supply manager’s statement that, “Supplier X cannot
deliver promised services on time” to another potential
purchaser of that supplier’s services when, in fact,
Supplier X does deliver on time, is an example of:
(A) Defamation.
(B) Libel.
(C) Disparagement.
(D) Slander.
©2020 ISM All Rights Reserved
Exam 3
381
Task 3-F-1 Summary and Review
Articulate the issues surrounding ethical and socially responsible behavior with external suppliers
What do we mean when we refer to “behavior that is guided by the” – Code of conduct?
– Organizational policies?
– Legal statute?
What is the UN Global Compact and what are its key components?
Define – Libel
– Slander
– Disparagement
– Bribery
©2020 ISM All Rights Reserved
Exam 3
TASK 3-F-2
382
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Exam 3
Task 3-F-2 Task Outline
1) Rationale in developing programs
2) Sources of information on socially or economically disadvantaged
suppliers/historically underutilized businesses or other country’s
equivalent
3) Small business/small disadvantaged business (SB/SDB) requirements
4) Program elements
Develop and/or implement a supplier diversity program.
This task contains no bridge exam material.
Full 5Q; Bridge No Q 383
©2020 ISM All Rights Reserved
Exam 3
384
Rationale in Developing Diversity
Programs The World Trade Organization (WTO) estimates that,
in many countries, government purchases are 10-15% of Gross Domestic Product (GDP)
Objectives of diversity programs – Government
• Counteract discrimination
• Help reduce unemployment
• Expand the tax base by stimulating business growth
– Private business • Benefits to local communities and to society in general
• Build customer good will
• Comply with government regulations
• Increase competition among suppliers
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385
Rationale in Developing Diversity
Programs – Cont. Organizational policies – Many organizations develop
diversity goals and policies that support them
Impediments – Inability of small diverse suppliers to meet high level goals
– Many organizations seek to assist diverse suppliers in this regard
Benefits may include – Lower cost
– New ideas and innovation
– Enhanced community goodwill
– Increased competitiveness
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386
Rationale in Developing Diversity
Programs – Cont.
Assessing program goals – requires objective
measurement of actual to goal
Disparity studies – refers to a study of categories,
level of penetration by tier, etc.
Customer driven requirements – refers to customer
demands for use of diverse suppliers in socially
acceptable ways
Subcontracting plans – government requirements
for subcontractors are often the same as for primes
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387
Sources of Information
U.S. Small Business Administration
– Maintains a computerized directory of diverse suppliers
– Directory has a search engine
Minority/Women Business Development Agency
– The only federal agency created to foster establishment
and growth of minority owned businesses in the U.S.
Business directories
– Provide information on certified and uncertified sources
– Sources are categorized by commodity and location
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388
Sources of Information – Cont.
Minority/women owned business development
councils
– Established to support supplier diversity efforts
– Provide certification of Minority and Women Owned Business
Enterprises, training, organized networking opportunities, etc.
Local minority/women chambers of commerce
– Organized around the world to assist minority/women owned
businesses
Business fairs
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Exam 3
389
Small Business/Small Disadvantaged
Business Requirements Certification as a SB/SDB
– Eligibility based on specific social, economic and ownership criteria
– At least 51% owned/controlled by one or more individuals who are socially
and economically disadvantaged
Registration
– Refers to registering with the national or local small business agency
Applicable classifications
– In the U.S., an organization with 51% or more ownership by one or more
socially and economically disadvantaged individuals is classified as a Small
Disadvantaged Business
Elements of a successful program
– Top management support
– Organizational policies that support the program
– A program coordinator
– Buyer diversity goals
©2020 ISM All Rights Reserved
Exam 3
390
Task 3-F-2 Recall Question #1
Which of the following is the only federal agency created
specifically to foster the establishment and growth of
minority-owned businesses in the U.S.?
(A) Business directories
(B) The Small Business Administration (SBA)
(C) The Minority/Women Business Development Agency
(D) Minority/women business development councils
©2020 ISM All Rights Reserved
Exam 3
391
Task 3-F-2 Recall Question #2
Which of the following BEST defines certification
classification for Minority Business Enterprises (MBEs)?
(A) Social demographics of the buying company
(B) Ethnic percentage of the supplier employees
(C) 51% owned and controlled by one or more socially and economically
disadvantaged individuals
(D) 51% women owned and controlled
©2020 ISM All Rights Reserved
Exam 3
392
Task 3-F-2 Application Question #1
Joy Jones, purchasing manager, is new to her company. She has
inherited a successful, mature supplier diversity program that tracks
payments to its direct suppliers. Diversity suppliers are routinely
included in RFPs as standard company procedure. The company is
widely recognized for its diversity program and support of diversity
suppliers.
How can Jones improve on an already successful company supplier
diversity program?
(A) Institute policies and procedures to include tier two and tier three spend.
(B) Ensure that only supply management professionals have supplier diversity goals.
(C) Shift responsibility for supplier diversity to the marketing department.
(D) Develop a strategy to replace the existing program with an entirely new program.
©2020 ISM All Rights Reserved
Exam 3
393
Task 3-F-2 Application Question #2
The supply manager of an organization is striving to enhance its supplier diversity
program. The manager knows the department is not capturing data for all of the
existing diverse suppliers currently used, nor for any new ones. Even worse, the
supplier records do not track this information. The manager tasked Bill Smith, a
subordinate, to develop a system and process to identify which suppliers are, in fact,
diversity suppliers. The manager tells Smith to determine what data is needed and
how to track the data for diversity suppliers. Later the same day a new local supplier
called on Smith and presented itself as a diversity supplier. While visiting with the
supplier, Smith decided that this would be a good opportunity to begin identifying and
developing the new process. Smith learned that he should start by establishing a
validation methodology.
What would be the BEST method to validate that the supplier is a diversity supplier?
(A) Take the supplier’s word for it and track the diversity spend.
(B) Ask the supplier to show ownership status to determine its status.
(C) Require a copy of the certification document by a recognized third party certifying
organization.
(D) Require submission of a W-9 tax ID form for their organization.
©2020 ISM All Rights Reserved
Exam 3
394
Task 3-F-2 Summary and Review
Identify six sources of information on socially or
economically disadvantaged suppliers/historically
underutilized businesses or other country’s
equivalent
What are the requirements for a supplier to
become certified as a small business/small
disadvantaged business (SB/SBD)?
What are the key organizational influences on
success of a supplier diversity program?
©2020 ISM All Rights Reserved
Exam 3
TASK 3-F-3
395
©2020 ISM All Rights Reserved
Exam 3
Task 3-F-3 Task Outline
1) Environmental laws and
regulations
2) Risk transfer
3) Ethical issues
4) Audit
5) Organization values and
policies
Establish and monitor programs for sustainability And Environmental responsibility.
All of the content in this task is bridge exam material.
Full 5Q; Bridge 2Q
6) ISM Principles of Social
Responsibility and Audit
7) Buy–recycled programs
8) Minimization of waste
9) End of life cycle
396
©2020 ISM All Rights Reserved
Exam 3
397
Environmental Laws and Regulations
There are three categories of U.S. environmental law
– Regulation of air pollution
• The Clean Air Act of 1970…..amended many times
– Regulation of water pollution
• The Clean Water Act of 1972…..amended to include the Oil Pollution
Act and the Safe Drinking Water Act
– Regulation of solid and toxic waste disposal
• The Toxic Substances Control Act…..amended to include the
Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA)
Each state has its own environmental laws and
enforcement agency
States work closely with the U.S. Environmental Protection
Agency (EPA)
©2020 ISM All Rights Reserved
Exam 3
398
Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA)
Under CERCLA, all in the chain of creation, distribution and
use of toxic or hazardous waste are responsible for cleanup
costs after a violation, even if they did not actually commit
the violation. There are three areas of concern
– At the source
• Cradle-to-grave liability attaches to a toxic substance
• Refers to taking responsibility for disposal of goods it produces
– In transit
• Must ensure that the transportation method is appropriate
• A “closed-loop” manifest system is employed
– At the destination
• Methods of processing, storing and treating must satisfy the law
©2020 ISM All Rights Reserved
Exam 3
399
Environmental Laws and Regulations – Cont.
Two primary EU environmental directives are – Restriction of Hazardous Substance Directive (RoHS): a directive,
the purpose of which is to place restrictions on the use of certain
hazardous substances in electrical or electronic equipment sold or
used in the European Union after July 1, 2006
– Waste Electrical and Electronic Equipment Directive (WEEE): a
directive, the purpose of which is to prevent the emergence of
electrical and electronic equipment waste, and to promote the
reuse, recycling and other forms of recovery of such waste
Pollutant Release and Transfer Register (PRTR): systems
established by various countries to collect and make public
information on environmental releases and transfers of
toxic chemicals from industrial and other facilities.
Countries having PRTRs include the European Union,
Norway, Australia, Mexico and Canada
©2020 ISM All Rights Reserved
Exam 3
400
Risk Transfer
Efforts to limit or eliminate risk associated with environmental laws fall into three categories – Contractual
• The original generator of a hazardous waste cannot escape liability, even if the contract with transporters and disposers contains disclaimers. There is cradle-to-grave liability
• CERCLA holds generators responsible for their service suppliers
• What was once a legal means of disposal, may not be in the future
– Insurance • Commercial general liability insurance does not cover an environmental
cleanup. A special rider is required
• “Indemnity” clauses will not eliminate responsibility to the EPA
– Legal • Insurance may mitigate, and a hold-harmless clause may offer potential
of recovery, but there are no legal guarantees that a buying organization will escape environmental cleanup liability
©2020 ISM All Rights Reserved
Exam 3
401
Ethical Issues
ISO 14000, initiated in 1996, required creation and maintenance of an environmental management system
ISO 14001 and 14004, added in 2004, requires an organization to document, update and continually improve the environmental management system. Further, they require visibility to employees, suppliers and customers
A new part is an annual “Evaluation of Compliance” with law and environmental regulations. It includes – An update on legal compliance with a focus on the future
– Corrective action and systematic record keeping
Renewable resources – Investment in and use of renewable resources is a best practice
©2020 ISM All Rights Reserved
Exam 3
402
Audits
An audit seeks to determine accuracy of transactions, whether or not procedures are followed, and if those procedures actually work – Internal audit
• Performed by employees who have no stake in the outcome
• Self inspection – those involved in the work audit themselves
– Supply chain audit
• Objective is to measure compliance (policies, procedures, contracts, law, etc.)
Before initiating any audit, answer the following questions – Who will see the results?
– What will be done with the results?
– Who will have authority to make changes based on audit results?
©2020 ISM All Rights Reserved
Exam 3
403
Other Key Considerations
Organizational values and policies – Statements should address
• Compliance with all laws and regulations
• Preventing harm to the environment
• Preserving the environment (recycling, renewable resources, etc.)
• Commitment to goals and metrics related to compliance
• Commitment to implementing changes where necessary
ISM Principles of Social Responsibility and Audit – ISO standards require an ongoing internal audit
– ISM further suggests a corrective action process, to include • Timeframes for improvement
• Prioritization of corrective actions
• Cost/benefit analysis of expectations from improvements
©2020 ISM All Rights Reserved
Exam 3
404
Other Key Considerations – Cont.
Buy-recycled programs
– Refers to an internal program with goals of
• Reuse of materials
• Purchasing recycled, environmentally friendly, products
– May further implement these expectations at the supplier level
Minimization of waste (three considerations)
– Reduce waste in all forms
– Reuse existing products and materials
– Recycle
End of life cycle
– Seek disposal options in advance
– Use elsewhere in the organization, sell, scrap, convert into energy
©2020 ISM All Rights Reserved
Exam 3
405
Task 3-F-3 Recall Question #1
The concept of creating production techniques that are
not just efficient but are essentially waste-free is called:
(A) Cradle to grave
(B) Cradle to cradle
(C) Risk mitigation
(D) Simplification
©2020 ISM All Rights Reserved
Exam 3
406
Task 3-F-3 Recall Question #2
Which of the following describes the process of
reclaiming materials from used products and using them
in the manufacturing of new products?
(A) Reduce
(B) Reuse
(C) Recycle
(D) Dematerialization
©2020 ISM All Rights Reserved
Exam 3
407
Task 3-F-3 Application Question #1
During a supplier visit, the supplier has disclosed that he is very conscious of issues associated with environmental waste and hazards. The prospective supplier learned a lesson about a dozen years ago when a leak from an underground tank cost them huge fines and cleanup associated with this violation. Today they have an active program of internal self-audits and external audits by their supply chain to monitor all operations and ensure immediate reports to the EPA and other regulatory agencies when an event is discovered. The MOST likely reason the supplier shared this information with you is that:
(A) You have adequate information to determine that the supplier has visible safety and environmental procedures in place to be an environmentally compliant supplier.
(B) The supplier’s disclosure of proactive internal self-audits and external audits suggests that measures are in place to prohibit any type of future problems.
(C) The manager is unsure about his company’s ability to be environmentally compliant.
(D) The manager is confident that the internal self audits and external audits will aid in preventing future safety and environmental problems.
©2020 ISM All Rights Reserved
Exam 3
408
Task 3-F-3 Application Question #2
An organization’s supply manager recently attended a new seminar on Environmentally Preferred Purchasing (EPP) and sees the need and value for his organization to support and embrace the aspect of minimization of waste and associated hazards for materials. However, the organization is very focused on the bottom-line and cost containment. Which of the methods listed below should the supply manager suggest implementing FIRST to senior management?
(A) Reduce the quantity of these items used.
(B) Reuse the existing product where able.
(C) Recycle the products used within the company.
(D) Renovate the structure to be more environmentally friendly.
©2020 ISM All Rights Reserved
Exam 3
409
Task 3-F-3 Summary and Review
What is the intent of the Comprehensive Environmental
Response, Compensation, and Liability Act?
Outline environmental responsibility and compliance
including
– Legislation
– Risk transfer
– Auditing
– Waste minimization
– Renewable resources
Identify three ways to minimize waste
Discuss the legal implications of insulating against risk
©2020 ISM All Rights Reserved
Exam 3
TASK 3-F-4
410
©2020 ISM All Rights Reserved
Exam 3
Task 3-F-4 Task Outline
1) Laws and regulations
2) Policies and procedures
3) Supplier and subcontractor safety (e.g., safety, history)
4) Customer-driven requirements
Implement, monitor, and Promote organizational and supply chain health and safety
policies and procedures.
This task contains bridge and non-bridge exam material.
Full 4Q; Bridge 1Q 411
©2020 ISM All Rights Reserved
Exam 3
412
Laws and Regulations
Applicable laws and regulations
– In the U.S. – safety and health, environmental, anti-trust, etc.
– Other countries have equivalent laws and regulations
– Understand the intent of the law or regulation
Personal liability
– An individual may be liable if, while violating law, regulation or policy, another is injured
Organizational liability
– Employers are responsible for ensuring a safe, healthy workplace
– Failure could result in criminal and/or civil prosecution
©2020 ISM All Rights Reserved
Exam 3
413
Laws and Regulations – Cont.
Department of Transportation or other country’s equivalent
– DOT has counterparts in nearly all countries
– Responsible for rules/regulations for air, water and ground transport
Department of Homeland Security (DHS) or other country’s equivalent
– Created to prevent/deter terrorist attacks, and protect/respond to threats and hazards to the nation.
– DHS includes Coast Guard, Customs Service, Immigration and Naturalization Service, and the Transportation Security Administration
– When studying: understand DHS’s 6-point agenda
©2020 ISM All Rights Reserved
Exam 3
414
U. S. Department of Homeland Security
Six Point Agenda
Increase overall preparedness, particularly for catastrophic events
Create better transportation security systems for people and cargo
Strengthen border security, interior enforcement and reform immigration processes
Enhance information sharing with DHS’s partners
Improve DHS financial management, human resource development, procurement and information technology
Realign the DHS organization to maximize mission performance
©2020 ISM All Rights Reserved
Exam 3
415
Policies and Procedures
Organizations develop policies and procedures
related to – Employee safety
• Training requirements
• Sourcing Occupational Safety and Health Administration (OSHA)
approved products
• Wearing appropriate protective equipment
• Material Safety Data Sheets (MSDS) posting
requirements……..etc.
©2020 ISM All Rights Reserved
Exam 3
416
Policies and Procedures – Cont.
Records retention. Considerations include
– What kind of records?
– The cost of retention
– Who should have custody of the records?
– How will records be organized?
– Who will have access to the records?
– What is the objective of retaining specific records?
– How long should the records be retained?
– Storage requirements and ease of access
– Authorization requirements for records access
– Destruction of aged records as appropriate
– Industry best practices
©2020 ISM All Rights Reserved
Exam 3
417
Policies and Procedures – Cont.
Supplier and subcontractor safety
– To be effective, policy must be practiced as written
• A simple contract clause isn’t sufficient to ensure supplier safety
• Must also enforce safety policies
– Review the supplier’s safety record
– Becomes more critical, and important, when sourcing
globally
Training
– Many organizations require supplier participation in
safety training
– Should occur before work begins
©2020 ISM All Rights Reserved
Exam 3
418
Customer-Driven Requirements
In 1958, the International Labour Organization
implemented the principles embodied in the United
Nations’ Declaration on the Elimination of All
Forms of Racial Discrimination
Certain customers, such as the U.S. federal
government, may require compliance with these
and similar requirements
©2020 ISM All Rights Reserved
Exam 3
419
Task 3-F-4 Recall Question #1
Individuals or corporations in the U.S. may be held liable
for injuries to persons injured while on a plant tour under
which of these laws?
(A) Criminal law
(B) Occupational Safety and Health Act
(C) Personal liability
(D) Organizational liability
©2020 ISM All Rights Reserved
Exam 3
420
Task 3-F-4 Recall Question #2
Today, in a global environment, safety and health issues
not only apply to safety of the work environment,
employees and supplier personnel but also apply to:
(A) Intellectual property rights.
(B) Product regulations.
(C) Environmental hazards.
(D) Ethical conduct in foreign countries.
©2020 ISM All Rights Reserved
Exam 3
421
Task 3-F-4 Application Question #1
OSHA (Occupational Safety and Health Act) was enacted
in 1970 to establish standards for safety in the workplace.
States have also developed their own standards. What
level of government controls these standards in the U.S.?
(A) The federal government always has the highest level of control over
all state standards.
(B) The state government always has the highest level of control.
(C) The state government has the highest level of control in cases where
state standards are higher than federal standards.
(D) The United Nations’ World Health Organization has the highest level
of control.
©2020 ISM All Rights Reserved
Exam 3
422
Task 3-F-4 Application Question #2
In the new records retention policy established by an organization, Joni Grenwald was assigned the task of developing an effective program. While she told managers she would need a few days to prepare for the new task, one of the managers stated that it was not necessary. She should apply her best effort to the task as the type of document determines the category of classification, and then both the legal and internal and external audit departments create the time requirements for retention. Grenwald still did not feel comfortable with the task assigned by the manager, but felt she had the greatest amount of influence on the front end of the process. She focused on the foundational aspects of program use and development. As such, Grenwald’s greatest impact could be applied to:
(A) Designing the security and entry processes associated with records retention and
procedures.
(B) Creating the log for notifying the owners of the records of destruction activity for the organization.
(C) Developing a process to both withdraw and copy logged files.
(D) Assessing risk management factors to the records management program over the life of the retention period.
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Exam 3
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Task 3-F-4 Summary and Review
Articulate supply management’s role in the
execution of supply chain safety policies and
procedures by examining
– Ethical responsibilities
– Legal responsibilities
What is the Department of Homeland Security’s
six-point agenda?
What are the requirements related to Material
Safety Data Sheets (MSDS)?
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Exam 3
TASK 3-F-5
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Exam 3
TASK 3-F-6
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Exam 3
Task 3-F-6 Task Outline
1) Federal/state/local laws and regulations
2) Organizational policies and procedures
3) Court rulings pertaining to employment discrimination
4) Other country equivalent laws and regulations
5) Diversity training
Implement policies to prevent discrimination and harassment.
This task contains no bridge exam material.
Full 4Q; Bridge No Q
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Exam 3
Federal/State/Local Laws and Regulations
Protected classes: race, color, religion, sex, national origin, disability or age – U.S. laws related to employment include
• Equal Pay Act of 1963
• Federal Civil Rights Act of 1964 (specifically Title VII)
• Executive Order 11246 of 1965
• Age Discrimination in Employment Act of 1967
• Equal Employment Opportunity Act of 1972
• National Labor Relations Act (Taft-Hartley Act)
• Occupational Safety and Health Act
• Americans with Disabilities Act
Sexual harassment is prohibited by Title VII of the Civil Rights Act
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Exam 3
Organizational Policies and Procedures
Effective discrimination-related organizational policies and procedures require senior management support
Policies should reflect that an organization will adhere to all applicable federal, state and local laws related to fair and equal treatment in the workplace
Internationally, organizational policies should exceed (or at least respect and reflect) the laws of the country in which the organization is doing business
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Exam 3
Court Rulings Pertaining to Employment
Discrimination
Different U.S. state and municipal governments
have court rulings that reflect their specific region
These rulings may be stricter than U.S. federal or
international laws
Organizations must be aware of local laws where
they do business
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Exam 3
Other Country Equivalent Laws and
Regulations
The United Nations adopted the International Covenant on
Civil and Political Rights 16 December 1966; as amended
– Similar to the U.S. Civil Rights Act
– Not all countries have signed on to this Covenant
Examples of laws that govern other countries
– Mexico: Federal Labor Law
– United Kingdom: Employment Relations Act
– European Union: Treaty of Amsterdam
– Canada: Employment Equity Act
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Exam 3
Diversity Training
As more organizations become multinational, awareness of
other cultures and practices is essential
Diversity and cultural sensitivity training is effective in
creating awareness and improving team interaction
Training should focus on
– Organizational and performance goals
– Behaviors to increase an organization’s effectiveness
To increase achievement of success factors, attach
diversity training to performance metrics
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Exam 3
Task 3-F-6 Recall Question #1
The U.S. Act that covers intentional offenses including
sexual harassment providing monetary damages is the:
(A) Equal Pay Act of 1963.
(B) Federal Civil Rights Act of 1964.
(C) Equal Employment Opportunity Act of 1972.
(D) National Labor Relations Act.
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Exam 3
Task 3-F-6 Recall Question #2
The U.S. Taft-Hartley Act is also known as:
(A) The American with Disabilities Act.
(B) The Occupational Safety and Health Act.
(C) The Age Discrimination Act of 1967.
(D) The National Labor Relations Act.
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Exam 3
Task 3-F-6 Application Question #1
The management job you have been waiting for has finally come available and you are well qualified. It will require some international travel, working with people in a variety of plant environments and managing employees globally. Overall, it represents a considerable increase in authority and responsibility, but you believe you are up to the task. Prior to your interview, you had a chance to visit with the manager who is retiring from this position. You tell him most areas of the job description are well within your scope of knowledge and experience. However, you are less familiar with issues related to managing international employees and customers. Thus, you ask for his suggestions on complying with worker and human rights laws within the countries involved until you have time to learn more about them. His comments were surprising based upon your training in global sourcing, international laws and treaties. He said, “Just don’t sweat it! If they want a job, they will work for us under our laws and standards despite the location of the plant. Just treat them as anyone here and you are cool.” This did not sound reasonable and, in fact, contradicted what you had been taught about managing employees internationally. Before the job interview, you want to check out the top five countries in which the organization has manufacturing plants and large workforces.
Cont.
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Exam 3
Task 3-F-6 Application Question #1 – Cont.
You should consider counsel from:
(A) Human Resources about personnel issues and concerns in these
countries to determine whether they are the same or have different
laws and standards.
(B) Other people who work in your local plant as they might have a
different perspective from your own and could share light on the
issues.
(C) The plant managers in the specific countries in question.
(D) The retiring manager for a more detailed discussion on the specific
country’s laws.
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Exam 3
Task 3-F-6 Summary and Review
Identify the primary purpose of the following U.S. laws
– Equal Pay Act of 1963
– Federal Civil Rights Act of 1964 (specifically Title VII)
– Executive Order 11246 of 1965
– Age Discrimination in Employment Act of 1967
– Equal Employment Opportunity Act of 1972
– National Labor Relations Act (Taft-Hartley Act)
– Occupational Safety and Health Act
– Americans with Disabilities Act
Describe diversity training
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