L5M4 CONTRACT AND FINANCIAL - Learning Definition Business Model Formula Discussion (Advantages & Disadvantages)

outcomes
1.0 Understand and apply tools and techniques that can be used to measure and develop contract performance in procurement and supply
1.1 Assess the use of Key Performance Indicators KPI - Financial and nonfinancial Eckerson (2009) - Characteristics of effective KPIs: KPI must be SMART Advantage: 1. Motivate
(KPIs) Purpose of KPIs 1. Measure performance metrics used to reflect the Sparse, Drillable, Simple, Actionable, Owned, compliance and improvement. 2. Manage supply
improvement. 2. reward performance. 3. Justify why critical success factors of an Referenced, Correlated, Balanced, Aligned and risk. 3. Support contract management. 4. Identify
a supplier is on our supply base 4. Supplier organisation or contract. Key - Validated. Neely's Four CPs of measurements 1998 - high performing suppliers. 5. Identify closer
improvement. Critical components of supply chain CSF. Performance - State of 1. Check position. 2. Communicate Position. 3. partnership suppliers. 6. Gives feedback for
metrics 1. Translate financial objectives. 2. Translate business. Indicators - Way Confirm Priorities. 4. Compel Progress. learning and continuous improvement.
operational performance. 3. Engineer behaviour business is measured. CSF - are Disadvantages: 1. Focus is on the measured areas
that are essential for a contract only. 2. Can lead to cutting corners on quality or
or business to be successful. service to achieve targets 3. KPIs can be misaligned
with corporate objectives and 4. Can be time
consuming. 5. Risk that the wrong metrics have
been selected.

Cost Cost - Amount of money used Dolan 2004 - says that suppliers might also be rated KPIs for Cost: 1. Basic purchase price. 2. Whole
to make a product or deliver a on costs in relation to continuous improvement via life cost - benchmark. 3. Cost reduction submitted
service. (a) Supplier partnership initiatives (b) Performance by the supplier.
against cost and (c) Cost reduction recommendations
submitted by the supplier.

Quality Quality - ability to meet and
exceed our customer
expectations through clearly
defined goals. It is our belief
that sustainable success as an
organisation can only be
achieved by constantly
challenging ourselves in the
pursuit of excellence.
SERVQUAL - A method of analysing customer KPIs for Quality 1. rejects parts per million (PPM).
perceptions of service quality. RATER Framework - A 2. Conformance to specification. 3. Point system
framework around which SERVQUAL measures are on general performance.
based (Reliability, Assurance, Tangibles, Empathy and
Responsiveness). Garvin 1984 - identified five major
approaches to how quality is defined; 1. transcendent
approach - equates quality with excellence. 2. User-
based approach - making a product that is fit for
purpose (Juran 2010). 3. Product-based approach -
sees quality precise and measurable. 4.
Manufacturing based approach - regards quality as
the manufacture of products that meets specs. 5.
Value based approach - develops with the
manufacturing based approach to future by
incorporating both cost and price.
Delivery Delivery -The process of
delivering goods or services.
Supply chain management is
concerned with the flow of
materials and services,
including delivery to the
ultimate customer, as well as
the associated flows of money
and information. Delivery can
include: 1. Service delivery. 2.
Product delivery and 3. on-
time logistics. Rights of
delivery: 1. Right time. 2. Right
Quantity. 3. Right Place.
Safety Health & Safety - The health,
safety and welfare of
management, employees and
contractors
Three Aspects of managing
suppliers; 1. Analysing the
suppliers. 2. Measuring
performance. 3. Managing the
1.2 Evaluate methods of measuring and improving supplier. Supplier
supply chain performance Management occurs in three
ways: 1. An integral part of an
existing contract. 2. Part of the
process of managing approved
supplier lists. 3. Part of the
supplier appraisal process
when an existing supplier is
competing for the renewal of a
contract.
Hiles business model on SLAs - Hiles (1993) defined
an SLA as “An agreement between the provider of a
service and its users, which quantifies the min.
quality of service which meets business needs.”
The Iron Triangle - Quality, cost and time. Bubshait
and Almohawis 1994 - noted with regards to safety
in relation to construction projects "the degree to
which the general conditions promote the
competition of a project without major accident or
injury.
Gordon 2005 - proposed seven steps for
development of an effective supplier performance
management system; 1. Align Supplier's performance
goals with organisational goals. 2. Determine an
evaluation approach. 3 Develop a method to collect
information about suppliers. 4. Design and develop a
robust assessment system. 5. Deploy a supplier
performance assessment system. 6. Give feedback to
suppliers on the their performance and 7. Produce
results from measuring supplier. Further Five. 1.
Increase performance visibility. 2. uncover and
remove hidden waste. 3. Leverage the supply base. 4.
Align customer and supplier businesses. 5. Mitigate
risk.
A safety performance
Index - SPI. SPI = (LTI x C)
divided by M. LTI - Lost
Time Incidents. M - total
man hours. C - Constant
KPIs on Delivery 1. % of OTIF. 2. % on early
delivery. 3. % on late delivery. 4. % on over
delivery. 5. % on correct paperwork. Below
service Performance - Service credits can apply.
KPIs on Safety 1. Audit non conformance reports.
2. HSE reports. 3. Accident incident reports. 4.
Lost time as a result of accidents. 5. Industrial
accident rates. 6. Accidents avoided. 7. Number of
reportable accidents.
Measuring Supplier Performance Advantages: 1.
Identify performance problems early. 2. Drive
continuous improvement and 3. Praise good
practice and giving constructive feedback can
improve supplier relationship. Disadvantage: 1.
Can be time consuming. 2. Can be costly. 3.
Negative reporting on performance can damage
relationships with suppliers.
 1. Gathering feedback (internal
& external) from customers
and other s/holders. 2. Gather
Collate and analyse data performance through
observation and testing's. 3.
Budgetary control - monitor
actual costs against budgets. 4.
Formal Performance reviews or
appraisal. 5. Contract
management - continue
monitoring compliance. 6.
Meetings. 7. Project
management. 8. Consultants.
9. Technical specialists.

1. Does not have to relate to a

Measure supplier innovation against agreed matrix
new innovation, but could
relate to; increased efficiency,
reduced risk improved product
design & quality and lower
costs. 2. Innovation can be
classed in three different
ways; incremental, radical and
discontinuous. 3. Innovation
can be broken down into four
key abilities; develop new
products to satisfy existing
market needs, ability to apply
appropriate processes in
product, ability to develop and
adopt new products and
processes to satisfy future
market needs and Ability to
respond to technological
opportunities.
Innovation audits - assessment tools such as IMP3 -
consists of 47 questions and helps an organisation to
understand its CSF across five management areas: 1.
Innovation strategy. 2. Innovation organisation and
culture. 3. Innovation life cycle processes. 4. enabling
factors. 5. Innovation results. Technological
Innovation Capabilities (TIC) has seven dimensions
of the TIC framework: 1. Learning capability. 2. R&D
Capability. 3. Resource allocation capability. 4.
Manufacturing capability. 5. Marketing capability. 6.
Organisation capability and 7. Strategic planning
capability.
Supplier innovation measures that are used: 1.
R&D. 2. Investment & R&D. 3. Innovations
proposed/implemented. 4. Type of innovating. 5.
Expenditure on new tech. 6. Tech support. 7.
Design capability. 8. Invention lead time. 9.
Product development capability and time. 10.
Level of collaboration in cross-organisation
innovating. Innovating capabilities and NPD (New
product development) 1. White box (Supplier has
little involvement). 2. Grey - joint. 3. Black box.
Supply has full responsibility.

Using TTM supply chain

performance measurement -
Ares of innovation and
Measure time to market against agreed timescales learning; 1. Financial
perspective. 2. Buyer
perspective. 3. Internal TTM (Time to Market) Project initiation ------>
business perspective 4. Feasibility analysis ------> Planning and Design ------>
Innovation and learning Development and testing -------> Launch and
perspective. production --------> First revenue.

Create E-Systems integration across the organisation EDI - defined as the paperless
and its supplier network business transaction process.
B2B communication Key
elements of a system 1. inputs.
2. Transformation processes. 3.
Outputs 4. Feedback. Levels of
integration: Stage 1:
Fragmented integrally. 2. Some
internal integration Stage 3 Full
internal integration. stage 4
Fully integrated supply chain.
Integration process involves:
1. Preparation, Active internal
integration and Active external
integration.
Cost and benefits of investments measurement 1. ROI. 2. Payback and 3. NPV
(Net Present Value)
Ensure a balance between qualitative and
quantitative measures of performance
Supplier quantitative and
qualitative measures. Balance
Scorecards.
Guiled 2006 - identified two main types of systems
integrations - 1. BIG I (where all relevant activities
are on one system and 2. Secondly, Little I - a
network of reliable interfaced systems. Wisner,
Leong & Tan's supply chain integration model; steps
to supply chain integration; Step 1 identifies critical
supply chain partners. Steps 2 and 3 - Develop supply
chain strategies. Step 4 - concerns the development
of internal process performance measures. Step 5
and 6 - are about improving internal processes and
measures. Step 7 & 8 Improving external processes.
Step 9 is to annually re evaluate the model to ensure
changes can be made. Bowersox, Closs and Cooper
2002 - 8 key processes for supply chain integration:
1. Customer relationship Management (CRM). 2.
Customer service management. 3 Demand
management. 4. Order fulfilment. 5. Manufacturing
Flow management. 6. Supplier relationship
management. 7. Product development and
commercialisation. 8. returns management.
Return on Investment
(ROI) = Net Profit / total
invested capital x 100
EDI (Electronic Data Interchange) Advantages 1.
Reduction in cycle. 2. Increase in transaction
visibility. 3 Improvement in tracing and tracking
materials and products. 4. Reduction in no of
errors. 5. Reduction in transaction cost. 6. Increase
in speed of payments and 7. Improvement in
customer service. Disadvantages 1. Initial cost can
be expensive. 2. Training and educating staff is
required - may incur a cost. 3. High volume of
transactions may be required to justify the
expenditure. 4. Lack of EDI standards. 5. Data
security.
Supplier Evaluation Quantitative measure: 1. KPS
are easier to establish. 2. Easier to monitor over
time. 3. Measures focus one efficiency. 4.
Particularly suited to the purchase of products. 5.
Examples include; delivery performance, price
reject rates. Supplier Evaluation Qualitative
measure 1. KPS are likely to be subjective. 2.
Monitoring over time is subjective 3. Measures
focus on effectiveness. 4. Suitable for purchase of
services. 5. Examples include; staff issues,
management capability, level of technology
development. Balance scores - two types 1.
Lagging measures - financial outcomes. 2. Leading
measures - non financial. Included in the balance
scorecard: 1. A balance of measures. 2. Hard and
soft measures. 3. Lagging and leading indicators.

Measure return on investment
LO1 1.3
1.3 Examine approaches available for supplier
development
Knowledge and technology transfer
ROI - expressed as a ratio or
percentage. ROI is at a
organisation, departmental
and project level. It is a
measure of the relationship
between an organisation's
profit and the investment in
assets it makes to generate
those profit.
Supplier Development Process performance areas . 9. reward and recognition. 10.
- three steps: 1. Prepare. 2. Systematically institute ongoing continuous
Develop and 3. Monitor
Development of knowledge:
Data ----> Information ---->
Knowledge. Transfer in supply
chains - Technology transfer
takes many forms: 1.
Machinery acquisition. 2.
Technology Licensing 3.
Intellectual property licensing
4. Know-how and technical
services and 5. Training.
Krause et all 2007: Methods for supplier
development; (1) Competitive pressure. 2. Evaluation
and certification systems 3. Incentives 4. Direct
involvement. Handfield et all 2000: 1. Identify critical
commodities for development. 2. Identify critical
suppliers for development. 3. Form cross-functional
commodity team. 4. Initiative communication with
suppliers management. 5. Provide Joint resources. 6.
Develop agreements. 7. Identify opportunities and
probability for improvements. 8. Identify critical
improvements.
Kotabe, Martinand Domoto 2003: suggest
knowledge transfer takes two forms: 1. Simple
technical exchanges 2. Technology transfer
associated with higher-level capabilities.
Advantages 1. Encourages managers to focus on
both generated profits and the investment
required. 2. ROI produces one sing measurement.
3. ROI can be used to evaluate the relative
performance of other investments centres and
companies. Issues 1. ROI calculations can be easily
manipulated. 2. It is difficult to measure many
investment benefits as they may be qualitative 3.
Benefits may be affected by other investments and
can be difficult to separate out. Disadvantages 1.
many methods to calculation ROI. 2. Over simplify
a complex decision. 3. Purchasing New assets will
increase the amount of capital investment and this
will affect ROI. This may delay new investment. 4.
Different account policies can make comparisons
difficult.
Major barriers to knowledge transfer include: 1.
Supplier's inability to absorb the info. 2. Supplier's
lack of receptivity or motivation 3. Buyer's lack of
credibility when delivering the knowledge. 4. Poor
buyer/supplier relationship 5. Causal Ambiguity

Collaborative product/service development
Continuous improvement reviews and strategies
Stages in NPD (New Product
Development) process: 1.
Concept generation. 2.
Concept screening. 3.
Preliminary design. 4. Design,
evaluation and improvement.
5. Prototyping and final Design. White, Grey or Black box (supplier involvement)
Supplier development review:
1. Meeting targets. 2. Identify
areas for support. 3. Processes.
4. Improvement activities. 5.
Continuous improvement
responsibilities: a. Establishing
processes to align continuous
improvement. b. focusing on
manufacturing process
approaches. c. VSM (Value
stream mapping d. improving
commodity manufacturing
process capability. e. reducing
scrap. f. Six Sigma projects and
7. Lean implementation
Advantages of early supplier involvement: 1.
Reduced product development cost. 2. Improved
performance 3. Higher return on R&D investment.
4. Faster product development. 5. Lower risk. 6.
Greater flexibility and 7. Access to product
development capabilities of the
supplier/knowledge of the buyer. ESI/CPD brings
on Risks: 1. Sharing of skills, etc. may form the
basis of organisation's competitiveness. 2.
Financial and time costs 3. Loss of direct control. 4.
Poor communication within organisations -
incompatible systems. 5. Trust issues, (see page
55)
Supplier's performance can be summarised in six
steps: 1. Analyse the supplier's current situation
and performance level. 2. Identify failure to meet
performance targets. 3. Develop improvement
plan. 4. Implement improvement plan. 5. Measure
level of improved performance. 6. Repeat the cycle
Plan, Do, Check & Act to ensure continuous improvement.

Supplier capability assessment
Technical road map: 1. Where
we want to go. 2. Where are
we now and 3. How can we get
there? Technology road maps
& Supplier development:
Questions to consider when
selecting a supplier for a joint
development of anew product:
a. which suppliers should be
included? b. Can the supplier
meet the requirements? c.
Does the supplier's technology
road map align with our map?
d. to what extent should the
supplier be involved in the
project? e. At what stage
should the supplier be involved
in the project?
Sarkar and Mohapatra 2006: (performance
capability matrix): Includes Lysons and Farrington,
Monczka et al and Carter's models. Capability factors
and Performance factors. Lyson and Farrington: 1.
Finance. 2. Insurance. 3. Productive capacity and
facilities or service support. 4. Quality. 5. Health &
Safety. 6. Environmental management. 7. Existing
contracts held; performance. 8. Organisational
structure key personnel (resources). 9. Sub
Contracting & Procurement capability and 10. Supply
chain management. Monczka et all 1. Cost & Price. 2.
Quality and Delivery. 3. Management capability. 4.
Total quality performance. 5. Cost structure. 6.
Employee capabilities. 7. Systems and philosophy. 8.
Process and technology 9. Sustainability and
environment 10. Financial stability. 11. Production
scheduling. 12. Control systems. 13. E-commerce and
14. Supplier sourcing strategies, policies and
techniques. Carter's 10 C's 1. Competency. 2.
Capacity. 3. Consistency. 4. Commitments to quality.
5. Cash and Finance. 6. Control of processes. 7.
Culture and r/ships. 8. Communication 9. CSR. 10.
Cost and Cost management.

Identify opportunities to use technology
LO1 1.4
1.4 Assess innovative measures to improve the
supply chain
3D printing - benefits include: a. cost savings. 2.
Information Technology: 1. EDI reduction of waste and 3. reduced carbon
(electronic data interchange. 2. footprint. 4. Improved time to market. Benefits of
Barcodes 3. radio frequency ERP: 1. Time Savings. 2. Transparency 3.
identification (RFID) and 4. The communication. Cloud computing & Cloud-based
internet. Collaborative management advantages: 1. Communication. 2.
planning, forecasting and Coordination 3. Collaboration 4. Cost control 5.
replenishments. Four key Competitive advantage. Extranets is formed by
collaborative activities to extending the intranet beyond a company to its
improve supply chain Jacobs 2007: categories technologies used in customers - Advantages. 1. Improved supply chain
performance 1. Strategy and manufacturing as hardware systems and software integration. 2. reduced operational costs. 3.
planning. 2. Demand and systems: Hardware 1. numerical controlled Improved collaboration and relationship potential
supply management 3. machines. 2. Machining centres. 3. industrial robots between users. 4. Authorised business information
Execution and 4. Analysis. CPFR and 4. automated materials handling (AMH) systems can be directly accessed by suppliers. 5. A single
solutions include 1. Forecasts including AGV (Automated guided vehicle) systems. user interface is shared between business partners
and historical data sharing. 2. Software 1. computed aided design (CAD). 2. and 6. Improved communication security.
Automation of the Computer aided Process planning (CAPP) and 3. Challenges in technology 1. Implementing a new
collaboration arrangement and Computer aided Manufacturing (CAM). AT Kearney technology can be disruptive. 2. You have to
joint business plan. 3. 2013: Technology is used in supply chains: 1. demonstrate the benefits and return on
Evaluation of exception Tracking goods. 2. Transaction processing. 3. investments. 3. Change management is a big part
conditions. 4. The enabling of Planning support. 4. Decision support and 5. of it. 4. Need to sort data from old system to new
revision and commentary. Automation in handling and across operations. system.
 Cross function team Design
team, Sourcing team,
operations logistics teams and
Customer. Steps to a
successful application of cross
function teams: 1. Select a
task. 2. Select team members.
3. Train team members. 4.
Authorise or prohibit certain
actions and responsibilities of
the team. 4. Conduct
performance reviews and
reward team members.
Successful application could
also include: 1 cross function
perspective needs to be Advances of Cross functional teams: 1. Can be
extended to inter-organisation. effective across many different settings in the
2. Team members need to supply chain. 2. cross functional team realise
have a broad business synergies by combining individuals and functions.
perspective, experience and 3. Time compression - rather than operating with a
skills. 3. Must have strong team Lyons and Farrington A cross-functional team refers complex sequential process, the cross functional
building ability. 4. Goals must to group of individuals from various organisational team approach is much simpler and reduces time.
be clearly understood. 5. functions who are brought together to achieve clear, Disadvantages 1. High requirements and
Adequate resources must be worthwhile and competing goals that could not be expectations of the people involved. 2. Process
Cross-functional working available. reached without the team....(Page 72) loss risk. 3. Groupthink

Simultaneous engineering
attempts to optimise the
design of the product and
manufacturing process to
achieve reduced lead times
and improved quality and cost
by the integration of design
and manufacturing activities
and by maximising parallelism I
working practises - 1990 The
over the wall approach Design
Stage ....... Production Stage. Traditional Sequential development 1. Idea Advantages: 1. getting products to market in a
Seven steps to implement generation 2. Business technical assessment 3. shorter time. 2. Incorporating more features or
simultaneous engineering: 1. Concept development 4. Detailed design 5. Prototype variety into product at less cost. 3 Producing more
Develop a strategy. 2. Assess. and 6. Introduction/launch. Manuela Rata 2011 New new products more often. Disadvantages 1. Lack
3. Create a culture. 4. Prioritise structures and processes are required: 1. New of in-house expertise. 2. Lack of training 3. Lack of
improvements. 5. Plan the product development teams. 2. Concurrent work management support. 4. Lack of communication.
change.6. Implement and 7. flow. 3. Early involvement. Principle of simultaneous 5. Inadequate reward system. 6. Improper
Simultaneous engineering Support. engineering People, Process and Technology & Tools. company culture.

Early supplier involvement
Early Supplier Involvement
(ESI). Fundamental to the
success of ESI - three factors:
1. Supplier selection. 2.
Infernal capabilities of the
buyer. 3. Supplier relationship
development.
Hadfield et al - none to black box. Van Bechtel 2004
short term benefits of ESI 1. Better production quality.
2. Lower production costs. 3. Shorter development
clue. 4. Lower development costs. Long term benefits
of ESI 1. more efficient and effective future
collaboration. 2. Alignment of technology strategies.
3. Improved access to supplier's technologies and 4. A
contribution to product differentiation.
Advantages: 1. Reduced development cost. 2.
Reduced lead times, faster time to market. 3.
Improved product functionality, features and
technology and 4. reduced production costs. also
see Bechtel model. Disadvantages 1. May find it
difficult to manage the processes. 2. Risk of loss of
control of the process or design. 3. Risk can be high
if the buyer relies on a sole supplier. 4. Increased
dependency. 5. Deceased flexibly and 6. loss of
information.

Hines et al - aims and objectives of Kyoryoku Kai 1.

Supplier forums and associations
Kyoryoku Kai - Japanese term
for a supplier association or co-
operative association.
However, Toyota use the name
Kyohokai. Purpose of Suplier
associations 1. Devolve
strategy and policy through the
chain 2. Strengthen trust and
relationships 3. Share
knoweldge and experitise 4.
Facilitate joint development
and learning. 5. Jointly identify
ways of minimising waste.
Improve abliites and skills of suppliers in terms of a.
JIT. b. TQM c. Statistical process control d. Value
analysis/value engineering e. Computer-aided design
f. Management flexibiliy and g. Cost reduction. 2.
Produce a uniform supply system. 3. Facilitate the
flow of information and strategy. 4. Increase turst. 5.
Keep suppliers and buyers in touch with market
developments. 6. Enhance the reputaiton of the
buyer, etc (Page 83). Izushi and Morgan 1998 -
problems with suppier associations 1. Associations
can be more talking about techniques than
implentation and can simply become a talking shop.
2. Do it your self approach. 3. The association can
loses momentum. 4. In activity can result from lack of
management. Six steps to over come these problems
1. One ot one assitance. 2. Leadership and openness
of the buyer. 3. Uses of expertise from emver
suppliers. 4. Measureble goals and regular check ups.
5. Selection of members conductive to collaboration.
6. Internal consensus and training.
 CIPS L5M4 - Advanced Contract and Financial Management - Key Definitions
LO Definition
1 Cost-Based Metrics
1 Critical Success Factor (CSF)
1.1 Health & Safety
1.1 Historic Cost Baseline
1.1 Key Performance Indicators (KPI)
1.1 Lost time incidents (LTI)
1.1 Manufacturing-Based Approach
1.1 Metrics
1.1 OTIF
1.1 Product-Based Approach
1.1 RATER Framework
1.1 Safety Performance Index (SPI)
1.1 SCOR
CIPS L5M4 - Advanced Contract and Financial Management - Key Definitions
Description LO Business Model/Theorist Description
On KPI@s - characteristics on effective KPIs: Sparse,
Measurements of organisational performance using
1.1 Eckerson (2009) Drilliable, Simple, Actionable, Owned, Referenced,
cost.
Correlated, Balanced, Aligned and Validated.
Those areas that are essential for a contract to be KPIs in performance measurements as per Neely’s
1.1 Four CPs of measurements 1998: 1. Check position. 2.
successful.
Communicate Position. 3. Confirm Priorities. 4. Compel
Neely’s Four CPs of measurements 1998 Progress.
This is so via: 1. Supplier partnership initiatives. 2.
Performance against cost reduction targets
The health, safety and welfare of management, Dolan, 2004 regarding continuous
1.1 3. Cost reduction recommendations submitted by the
employees and contractors improvements relating to cost
supplier.
1. transcendent approach. 2. user-based approach. 3.
The actual cost at a past point in time when the KPI Garvin (1984) identified five major
1.1 product-based approach. 4. manufacturing-based
was first established approaches to how quality is defined;
approach. 5. value based approach.
Hiles (1993) defined an SLA as “An agreement
Financial and nonfinancial metrics used to reflect
between the provider of a service and its users, which
the critical success factors of an organisation or 1.1
quantifies the min. quality of service which meets
contract.
business needs.”
Hiles (1993) defined an SLA
The number of lost time incidents to date
The view that quality of a product that precisely
meets specifications
A measure of how well a project is performing
On-time Delivery In Full = the percentage of orders
that are shipped on time and in full, meaning the
customer gets everything they ordered, on the day
they expected to receive it.
The view that quality is precise and measurable
A framework around which the SERVQUAL
measures are based (Reliability, Assurance,
Tangibles, Empathy and Responsiveness)
A calculation based on time lost and total man-
hours worked.
A management tool used to address, improve, and
communicate supply chain management decisions
within a company and with suppliers and customers
of a company.

1.1 Service Credits
1.1 SERVQUAL
1.1 SLA (Service Level Agreement)
1.1 SMART
1.1 Supplier Rating
1.1 Supplier Scorecard
1.1 Total Cost of Ownership (TCO)
1.1 Transcendent Approach
1.1 User-Based Approach
1.1 Value Chain
1.1 Value-Based Approach
1.1 Whole-Life Cost
Compensation given by a supplier to a buyer when
service fails below the required level.
A method of analysing customer perceptions of
service quality.
A contractual document, which sets out the
expected service level and service credit regime in a
contract for services
Specific, Measurable, Achievable, Relevant and
Time bound.
Measuring the performance of an existing supplier.
Reports used to track a suppliers achievement of, or
progress towards targets or goals, which can include
quantitative and qualitative data.
An estimate used to help buyers to determine the
costs, both direct and indirect, of a product or a
service.
The view that equates quality with excellence
the making of a product that is fit for purpose and
use
A description of the set of processes and activities
that add value to raw materials in order to turn
them into a viable product to sell to customers.
A development of the manufacturing-based
approach that incorporates both cost and price.
The total cost of an asset over its whole life,
including, for example, its purchase price and costs
relating to servicing repairs, consumables, disposal
and other end of life costs