Supplier Relationship Management Flashcards

What is the purpose of a 'supplier development' program?

Answer: To systematically improve a supplier's capabilities, quality, and performance through joint investment and training

Supplier development involves the buying company actively helping strategic suppliers improve their processes, quality systems, or capabilities to meet higher standards.

In negotiation strategy, 'BATNA' stands for:

Answer: Best Alternative To a Negotiated Agreement

BATNA is your walk-away alternative — the better your BATNA, the stronger your negotiating position because you are less dependent on this particular deal.

Which payment term represents the best opportunity for a buyer to improve working capital?

Answer: Net 90 (payment due in 90 days)

Net 90 extends the payment period, allowing the buyer to hold cash longer and improve working capital and cash flow.

What does 'early supplier involvement' (ESI) in new product development achieve?

Answer: Incorporating supplier expertise during design to improve manufacturability, reduce costs, and shorten development cycles

ESI leverages supplier knowledge early in product design to catch problems before they are 'baked in,' reducing engineering changes and time to market.

A 'preferred supplier' designation typically means:

Answer: The supplier meets all qualification criteria, receives first consideration for new business, and may get favorable terms

Preferred supplier status rewards high-performing suppliers with priority access to new business opportunities and a closer collaborative relationship.

Which risk in supplier relationships is best mitigated by requiring suppliers to maintain business continuity plans?

Answer: Supply disruption risk from supplier facility disasters or operational failures

Business continuity plans document how a supplier will maintain deliveries through disruptions like fires, floods, or system failures.