CE Supply Chain & Supplier Relationship Management Flashcards

What is a Request for Proposal (RFP) and how is it used when sourcing international suppliers?

Answer: A formal document sent to multiple potential suppliers specifying requirements and inviting competitive bids, used to compare capabilities and pricing

An RFP outlines the buyer's technical, quality, capacity, pricing, and compliance requirements, allowing multiple international suppliers to submit bids for structured comparison.

What is 'total cost of ownership' (TCO) in supplier selection and why does it differ from purchase price?

Answer: TCO includes all costs associated with sourcing from a supplier—purchase price plus shipping, duties, quality failures, inventory carrying costs, and risk—not just the unit price

TCO reveals the true cost of supply by capturing hidden expenses like tariffs, longer lead times requiring larger safety stock, defect rates, and supplier failure risk that the purchase price alone misses.

What is dual sourcing in supply chain strategy and why do U.S. exporters implement it?

Answer: Using at least two separate suppliers for a critical input to reduce dependency on any single source and ensure continuity if one supplier fails

Dual sourcing mitigates single-source risk by ensuring a second supplier can step in during disruptions, preventing production halts when one supplier faces capacity, quality, or geopolitical issues.

What is a supplier code of conduct and why do U.S. companies increasingly require international suppliers to sign one?

Answer: A document outlining ethical, environmental, labor, and anti-corruption standards suppliers must adhere to, driven by regulatory requirements and reputational risk management

Supplier codes of conduct address forced labor, child labor, environmental practices, bribery, and safety; U.S. companies require them to comply with laws like the FCPA and to protect brand reputation.

What is vendor-managed inventory (VMI) and how does it benefit international supply chain management?

Answer: An arrangement where the supplier monitors and replenishes the buyer's inventory levels based on agreed parameters, reducing the buyer's ordering burden and improving availability

In VMI, the supplier takes responsibility for maintaining agreed stock levels at the buyer's location, using shared demand data to time replenishments and reduce stockouts and carrying costs.

What is the importance of intellectual property (IP) protection when working with international contract manufacturers?

Answer: Without proper contracts and IP protections, foreign manufacturers may copy designs, processes, or technology—exposing exporters to loss of competitive advantage and legal costs

U.S. exporters must register IP in key markets, use non-disclosure agreements, limit technology transfer to what's necessary, and include strong IP clauses in manufacturing contracts to prevent counterfeiting.