CPSM flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Economic order quantity
- EOQ = √(2DS/H), where D is annual demand in units, S is ordering cost per order, and H is annual holding cost per unit. It minimizes total ordering plus holding cost.
- Reorder point
- Reorder point = (average daily demand × lead time in days) + safety stock. It is the inventory level that triggers a new replenishment order.
- Safety stock formula
- Safety stock = z × σ × √L, where z is the service-level factor, σ is the standard deviation of demand per period, and L is lead time in periods.
- Purchase price variance
- PPV = (actual purchase price − standard price) × actual quantity purchased. A positive result is unfavorable; a negative result is favorable for the buyer.
- Kraljic portfolio matrix
- A 2×2 sourcing model plotting profit impact against supply risk to classify items as strategic, leverage, bottleneck, or noncritical and guide sourcing strategy.
- BATNA
- Best Alternative To a Negotiated Agreement: the course of action a negotiator will take if no deal is reached. It defines the walk-away point and bargaining power.
- ZOPA
- Zone Of Possible Agreement: the range between the buyer’s maximum acceptable price and the seller’s minimum acceptable price where a mutually acceptable deal exists.
- Firm-fixed-price contract
- A contract with a price fixed at award, so the seller bears most cost-overrun risk. It suits well-defined requirements and stable markets.
- Cost-reimbursable contract
- A contract that pays the seller allowable incurred costs plus a fee. The buyer bears most cost risk; it is suitable when scope is uncertain.
- Incoterms
- Standard international trade terms defining seller and buyer responsibilities for delivery, risk transfer, insurance, and customs. EXW is minimum seller obligation; DDP is maximum.
- ABC analysis
- A Pareto-based inventory classification: A items are roughly 20% of SKUs but 80% of spend; B and C items receive progressively less control.
- Total cost of ownership
- TCO sums all costs of acquiring and using an item over its life: price, transactions, transportation, inventory, quality, maintenance, and disposal. It supports best-value sourcing.
- Make-or-buy analysis
- A decision comparing relevant incremental costs and strategic factors of producing in-house versus outsourcing, including capacity, quality, and core-competency implications.
- Early supplier involvement
- Involving key suppliers during product design and development so their expertise improves manufacturability, reduces cost, and shortens time to market.
- Three-way match
- A control that compares purchase order, receiving report, and supplier invoice before payment; discrepancies are resolved to prevent overpayment or fraud.
- Spend analysis
- The process of extracting, cleansing, classifying, and analyzing purchase data to reveal spend by category, supplier, and business unit for sourcing decisions.
- Sales and operations planning
- S&OP is a monthly cross-functional process aligning demand, supply, and financial plans so sales forecasts and production capacity are reconciled.
- Supplier relationship management
- SRM is a structured approach to segmenting suppliers and managing interactions, performance, and collaboration according to their strategic value and risk.
- Triple bottom line
- A sustainability framework evaluating performance on three dimensions-profit, people, and planet-also called economic, social, and environmental results.
- Supply risk
- Supply risk = probability of a disruptive event × severity of its impact. It is reduced through dual sourcing, buffer inventory, and contingency planning.
- Dual sourcing
- Awarding business to two suppliers for the same item to reduce dependency and disruption risk, usually at some loss of volume leverage.
- Kotter's eight steps
- A change model: create urgency, form a coalition, build a vision, communicate it, empower action, generate short-term wins, consolidate gains, and anchor changes in culture.
- Lewin's change model
- A three-stage model-unfreeze, change, refreeze-that describes preparing people for change, implementing it, and stabilizing the new behavior.
- Tuckman's team stages
- Five stages of team development: forming, storming, norming, performing, and adjourning; each requires different leadership emphasis.
- ADKAR model
- A change framework with five outcomes: awareness, desire, knowledge, ability, and reinforcement. Change succeeds only when each element is achieved.
- Transformational leadership
- A leadership style using idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration to raise follower commitment and performance beyond expectations.
- Stakeholder salience
- A model ranking stakeholders by power, legitimacy, and urgency; those possessing more attributes have higher priority for manager attention.
- Balanced scorecard
- A performance framework measuring four perspectives-financial, customer, internal process, and learning and growth-to balance short-term results with long-term capability.
- SMART goals
- Goals that are specific, measurable, achievable, relevant, and time-bound; this format improves clarity, accountability, and tracking of supply management objectives.
- Situational leadership
- A leadership model holding that effective style varies with follower readiness or maturity: directing, coaching, supporting, or delegating as competence and commitment change.
- Ethical sourcing
- Purchasing practices that respect labor, human rights, safety, and environmental standards throughout the supply chain, often enforced through supplier codes and audits.
- Supply management KPI
- A quantifiable performance measure such as spend under management, cost savings, supplier diversity, cycle time, or compliance rate used to track supply management results.