question

What is a Supply Chain?

answer

A supply chain consists of the flow of products and services from Raw Materials to End Users and can include the following: -Raw materials manufacturers -Component and intermediate manufacturers -Final product manufacturers -Wholesalers and distributors and -Retailers Connected by transportation and storage activities & Integrated through information, planning, and technology

question

Components of a Supply Chain

answer

-Raw material suppliers -Intermediate component manufacturers -End-product manufacturers (or focal firm) -Wholesalers, distributors -Retailers -End customers

question

Institute for Supply Management

answer

The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer

question

Logistics and Supply Chain Management Society

answer

The coordinated set of techniques to plan and execute all steps in the global network used to acquire raw materials from vendors, transform them into finished goods, and deliver both goods and services to customers

question

Council of SCM Professionals

answer

The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities ... also includes coordination with channel partners, which can be suppliers, intermediaries, third party service providers, and customers

question

What is the Goal of Supply Chain Management?

answer

Goal is to have: -the correct product -in the needed quantity -at the right location -at the right time -for the lowest total cost. -Balancing low cost manufacturing with variable customer demand

question

4 Parts of SCM

answer

-Supply Management: Supplier selection, evaluation, certification, development and strategic partnership. Global sourcing, ethical and sustainable sourcing -Operations: Demand forecasting, CPFR, inventory management, production & capacity planning, lean, quality systems -Logistics: Transportation, warehouse, CRM, network design, RFID, location, sustainability, service response logistics -Integration: Process integration, risk, disruptions, performance measurement

question

Supply Chain Models

answer

-Efficient: designed to minimize cost predictable supply, low cost production, highly utilized capacity, high inventory turns, ideal for functional products, stable/predictable demand -Responsive: designed to respond to market demand; fast response, min. stock outs, need flexible capacity, min. production lead time, products available when want to buy, ideal for innovative products, short life-cycle & unpredictable demand

question

Push or Make-to-Stock

answer

Producing stock on the basis of anticipated demand

question

Pull or Make-to-Order

answer

Producing stock in response to actual demand

question

History of Supply Chain Management

answer

-In 1956 the world's first container ship was capable of carrying approx. 58 35ft containers -Integration w/ suppliers and customers for competitive advantage, sustainability ; social responsibility: Increased supply chain capabilities -Focus on core competency, outsource non core. Enter 3PLs: supply chain relationship formation and extension -Intense global competition- enter new concepts for quality, inventory, alliance: JIT, TQM, BPR, supplier ; customer alliances -New computer technology lead to development of Materials Requirement PLanning (MRP): inventory management and cost containment -Mass production techniques as their principal cost reduction and productivity improvement strategies: traditional mass manufacturing

question

Importance of SCM

answer

Firms have discovered SCM is a competitive advantage: Reduced operating capital requirements -Optimized inventory levels -Improved cash flow Reduced fixed capital requirements -Outsource manufacturing ; logistics (3PL) Reduced costs -Obsolescence / expiration / price erosion -Lower operating costs -Lower regulatory costs Looking at Total Cost of Ownership (TCO)

question

Purchasing (Sourcing)

answer

Obtaining merchandise, capital equipment; raw materials, services, or maintenance, repair, and operating (MRO) supplies in exchange for money or its equivalent

question

Contracting

answer

- the term normally used for the acquisition of services

question

Supply Management

answer

- the term used to encompass all activities in acquiring goods and services

question

Who is Purchasing?

answer

Merchant Buyers- Wholesalers, Distributors and retailers who purchase completed product for resale Industrial Buyers- Purchase raw materials, services, capital equipment, ; maintenance, repair, and operating (MRO) supplies to produce another product or service.

question

The primary goals of purchasing are to:

answer

1. Ensure uninterrupted flows of products at the lowest total cost 2. Improve quality of the finished goods produced 3. Optimize customer satisfaction.

question

Purchasing contributes to these objectives by:

answer

-Actively seeking better materials and reliable suppliers, -Working closely with strategic suppliers to improve quality materials -Involving suppliers and purchasing personnel in new product design and development efforts.

question

The Financial Significance of Supply Management

answer

-Profit-Leverage Effect: A decrease in purchasing expenditures directly increases profits before taxes, assuming no decrease in quality or other costs -Return on Assets (ROA) Effect: Improving profit for a set of assets or reducing asset requirements to produce the profit both improve ROA = profit / assets -Inventory Turnover Effect: Increased inventory turnovers indicates improved utilization of space and inventory levels and reduced impact of inventory obsolescence = COGS / Inventory

question

The Purchasing Process

answer

-Material Requisition: Identify need to acquire product or service (quantity ; price) -Supplier Determination: Identify potential suppliers. Issue: (RFI, RFP, RFQ) Select supplier Set up supplier -Issue Purchase Order: Determine flow of information ; goods. Establish terms of sale. State item, quantity, price -Receive, Inspect ; Pay: Receive product / service ; invoice. Confirm quantity, quality, performance. Match to invoice ; pay.

question

People Involved in the process

answer

End user --> buyer --> supplier --> receiver --> end user --> accounts payable e-Procurement enables process to be automated

question

Advantages of the e-Procurement System

answer

Time savings Cost savings Accuracy Real time Mobility Tracking Management Benefits to the suppliers

question

Small Value Purchase Orders

answer

Need to minimize processing costs for small value purchases: -Procurement Credit Card -On line catalogs -Blanket Purchase Orders -Accumulating Small Orders to Create a Large Order

question

Supplier Selection

answer

The process of selecting suppliers, is complex and should be based on multiple criteria: -Product / process technologies -Willingness to share technologies ; information -Quality -Service -Location -Reliability -Order System ; cycle time -Capacity -Communication capability -Cost

question

Supply Base

answer

A list of suppliers that a firm uses to acquire its materials, services, supplies, and equipment. Firms emphasize long-term strategic supplier alliances consolidating volume into one or fewer suppliers, resulting in a smaller supply base

question

Preferred suppliers provide:

answer

-Early supplier involvement- Information on the latest trends in materials, processes, or designs -Information on the supply market -Capacity for meeting unexpected demand -Cost efficiency due to economies of scale

question

Reasons Favoring a Single Supplier

answer

-To establish a good relationship -Less quality variability -Lower cost -Transportation economies -Proprietary product or process -Volume too small to split

question

Reasons Favoring Multiple Suppliers

answer

-Need capacity -Spread risk of supply interruption -Create competition -Information -Dealing with special kinds of business

question

Sourcing Decisions

answer

The Make vs. Buy Decision

question

Reasons for Buying or Outsourcing

answer

1. Cost advantage: Especially for components that are non-vital to the organization's operations, suppliers may have economies of scale. Insufficient capacity: A firm may be at or near capacity and subcontracting from a supplier may make better sense. 2. Lack of expertise: Firm may not have the necessary technology and expertise. 3. Quality: Suppliers have better technology, process, skilled labor, and the advantage of economy of scale.

question

Reasons for Making

answer

-Protect proprietary technology -No competent supplier -Better quality control -Use existing idle capacity -Control of lead-time, transportation & warehousing cost -Cost advantage

question

The Make-or-Buy Break-Even Analysis

answer

Total Cost to Make = Total Cost to Buy Algebraically: Find break-even point by setting the total cost of the two options equal to one another and solving for Q: Make Buy 25,000 + 5Q = 500 + 7Q 7Q ? 5Q = 25,000 ? 500 2Q = 24,500 Q = 12,250 units = Break-even point If requirement is > B-E, make If requirement is < B-E, buy

question

Evaluate a Supplier's Total Cost

answer

More then purchase price Evaluate all costs to procure -Transportation -Payment terms -Tooling / Set up Include hidden cost estimates -quality -Reliability (supply issues) -Order processing costs "Total Cost of Ownership"

question

Strategic Sourcing Decisions

answer

1.Backward vertical integration : acquiring sources of supply 2. Forward vertical integration : acquiring channel partner operations. 3. Outsourcing : Taking in house activities / operations and deciding to purchase from suppliers instead. Outsourcing has become a key method to reduce costs and increase flexibility.

question

Outsourcing Programs

answer

Outsourcing allows an organization to: -Concentrate on core capabilities -Increase capabilities in the area being outsourced -Reduce staffing levels (not just labor arbitrage) -Accelerate reengineering efforts -Reduce risk and management dilution -Improve flexibility Risks associated with outsourcing, include: -Loss of control / loss of intellectual property -Increased reliance on suppliers -Increased need for supplier management -Public perception issues

question

Purchasing Organizations: Centralized vs. Decentralized

answer

Purchasing Organization: is dependent on many factors, such as market conditions, types of materials required, company culture -Centralized Purchasing- purchasing department located at the firm's corporate office makes all the purchasing decisions. -Decentralized Purchasing- individual, local purchasing departments, such as plant level, make their own purchasing decisions. -Hybrid purchasing organization - centralize large national contracts at corporate level and decentralize items specific to business unit at the local level

question

Advantages of Centralized

answer

-Consolidate orders -Lower transportation costs -Leveraging purchase volume -Avoid duplication -Specialization -No competition within units -Common supply base

question

Advantages of Decentralized

answer

-Close knowledge of requirements -Local sourcing -Relationships -Less bureaucracy -Customization *Hybrid approach can get the best of both worlds

question

International / Global Sourcing

answer

Opportunity / Challenges: -Import broker or sales agent -Import merchant or Trading company -Tariff -Non-Tariff barriers to international trade

question

International Trade Organizations & Agreements

answer

1. World Trade Organization (WTO) 2. North America Free Trade Agreement (NAFTA) 3. Regional Comprehensive Economic Partnership (RCEP) 4. European Union (EU)

question

Procurement for Government & Non-Profit Agencies

answer

Competitive bidding- -Sealed Bids -Performance Bonds -Federal Acquisition Streamlining Act -Small Business promotion -Buy American Act -Green Purchases -General Services Administration (GSA) -State and Local Contracts and buying groups

question

Strong supplier partnerships

answer

-Important to achieving win-win competitive performance for the buyer and supplier -- these require a strategic perspective as opposed to a tactical position -Involve "a mutual commitment over an extended time to work together to the mutual benefit of both parties, sharing relevant information and the risks and rewards of the relationship"

question

Keys to Successful Partnerships

answer

1.Build Trust 2. Shared Vision & Objectives 3. Personal Relationships 4. Mutual Benefits & Needs 5. Commitment & Top Management Support 6. Change Management 7. Information Sharing & Lines of Communication 8. Aligned Capabilities 9. Continuous Improvement (Kaizen)

question

Keys to Successful Partnerships

answer

1. Performance Metrics: -Supplier Evaluation Process / Scorecards -TCO, Group costs around the transaction 2. Supplier Certification: -process for evaluating the quality systems -Internal / ISO 3.Supplier Development 4. Supplier Recognition 5. Supplier Relationship Management -Execution improvement -Sourcing analytics -Supplier scorecards -Performance monitoring -Supplier Development

question

Supplier Relationship Management(SRM)

answer

Involves developing partnerships with key suppliers -Reducing total costs -Innovating new products and services -Creating value for both companies Focus on a small set of critical suppliers -Largest impact on profitability -Provide most value -Critical to firm's success Manage remaining suppliers based on segmentation -Segmented based on company's supply goals -Manage all suppliers in the segment

question

Strategic sourcing

answer

managing the firm's external resources to support a firm's long term goals.

question

Drivers of Strategic Sourcing

answer

-Reduce costs & delivery cycle times -Improve quality & long-term financial performance -Increase number of global competitors -Increase customer focus -Reduce high costs of globalization & materials, -Deliver more innovative products more frequently & cheaply than competitors

question

Ethical and Sustainable Sourcing Strategies

answer

-Business Ethics -Corporate Social Responsibility -Ethical Sourcing

question

Business Ethics

answer

is the application of ethical principles to business -Utilitarianism (greatest good for greatest number of people -Rights and duties (recognize rights of others and the duties those rights impose on your actions)

question

Corporate Social Responsibility

answer

the practice of business ethics in a corporation

question

Ethical Sourcing

answer

that which attempts to take into account the public consequences of organizational buying or bring about positive social change through organizational buying behavior. -Promote diversity -Promote good working conditions -Promote environmental protection

question

Ethical Policies should include

answer

-Determining where all purchased goods originated & the manner in which they were made -Knowledge of the suppliers' workplace principles -Inclusion of ethics as a performance rating -Independent verification of vendor compliance -Report of supplier compliance to stakeholders -Provision of detailed ethical sourcing expectations to suppliers

question

Sustainable Sourcing

answer

a process of purchasing goods and services that takes into account the long term impact on people, profits and the planet.

question

Sustainable Sourcing Strategies

answer

-Green purchasing: is aimed at ensuring products or materials meet environmental objectives -Sustainability: is the ability to meet current needs of the supply chain without hindering the ability to meet future needs in terms of economic, environmental, and social challenges -Supports the three P's - people, planet, and profit --Environmental stewardship (care for resources) --Social Responsibility (worker safety, wages, working conditions, human rights) --While making economic sense (remain a viable company)

question

Successful Sourcing Strategies

answer

are different for functional products & for innovative products

question

Supply Chain Strategy Framework

answer

Step 1. Classify purchased items & their suppliers Step 2: Define supply chain goals for each item Step 3: Identify capabilities & improvement opportunities Step 4: Develop work plans linked to goals Step 5: Execute plans to achieve results Step 6: Monitor progress & make adjustments *Strategies of "squeezing" suppliers for a lower price hurts TCO

question

Supply base rationalization (supply base reduction or supply base optimization)

answer

is often the initial supply chain management effort Buyer-supplier partnerships are easier with a rationalized supply base & result in - -Reduced TCO (lower price, lower supply costs, improved quality) -Fewer supplier management problems -Closer & more frequent interaction between buyer & supplier -Greater levels of quality & delivery reliability

question

Early Supplier Involvement

answer

Early supplier involvement: 1. Key suppliers become more involved in the internal operations of the firm, particularly with respect to new product & process design, concurrent engineering & design for manufacturability techniques. Vendor managed inventory (VMI)- 1. Key suppliers manage buyer inventories to reduce inventory carrying costs & avoid stock outs for buyer.

question

Benchmarking

answer

comparing what you do to other businesses that do it best and implementing changes to improve Normally looking at statistics (TAT, cost, productivity measures)

question

Best Practices

answer

copying what other businesses do best and implementing in your organization Watch for culture and organizational fit

Supply Chain- Exam 1 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards