CHAPTER 11 SUPPLY CHAIN MANAGEMENT QUESTIONS
AND ANSWERS #15
Most firms spend a huge portion of their sales dollars on _________ (important) -
correct answer Purchases.
Because of this supply chains are a good place to look for savings. Effective cost-
cutting may help a firm reach its profit goals more easily than would an increased sales
effort.
Because an increasing percentage of an organization's costs are determined by
purchasing, relationships with suppliers are increasingly integrated and long term.
Combined efforts that improve innovation, speed design, and reduce costs are
common.
The objective of supply chain management is to - correct answer coordinate activities
within the supply chain to maximize the supply chain's competitive advantage and
benefits to the ultimate consumer.
Supply chain management (important) - correct answer the coordination of all supply
chain activities involved in enhancing customer value.
Starting with raw materials and ending with a satisfied customer.
Includes suppliers, manufacturers and/or service providers, and distributors,
wholesalers, and/or retailers who deliver the product and/or service to the final
customer.
Supply chain's strategic importance (continued) - correct answer - Supplier relationships
increasingly integrated and long term. Improve innovation, speed design, reduce costs.
- Managing supplier relationships has added emphasis.
Three distinct functions of supply chain are - correct answer 1. Purchasing (produce)-
procedure for raw material
2. Production/manufacture- transform them into intermediate goods and final products.
3. Distribution- deliver products to customers through a distribution system
(Hau Lee's) Three supply chain strategies are - correct answer 1. Low cost strategy
2. Response strategy
3. Differentiation strategy
(risk hedging strategy)
Low cost strategy - correct answer Demand stable and Supply stable
Profit margin is thin. Lower the costs to gain profit commodities. Ex: milk, gas, butter.
- Primary supplier selection criteria: cost
, - Supply chain inventory: Minimize inventory to hold down costs.
- Distribution network: Inexpensive transportation and sell through discount
distributors/retailers.
- Product design characteristics: maximize performance and minimize cost.
Response Strategy - correct answer Demand unstable and supply stable
Profit margin is high. You don't know how much it will sell but they have been made for
a while. Ex: laptops, ipads.
- Primary supplier selection criteria: capacity, speed, flexibility.
- Supply chain inventory: Use buffer stocks to ensure speedy supply
- Distribution network: Fast transportation and provide premium customer service.
- Product design characteristics: Low setup time and rapid production ramp-up.
Differentiation Strategy - correct answer Demand unstable and supply unstable
Applies more for new objects in the market and don't know if people will like it in the
market. Ex: iwatch, drones.
- Primary supplier selection criteria: Product development skills, willing to share
information, jointly and rapidly develop products.
- Supply chain inventory: Minimize inventory to avoid product obsolescence.
- Distribution network: Gather and communicate market research data. Knowledgeable
sales staff.
- Product design characteristics: Modular design to aid product differentiation
Risk hedging strategy - correct answer Demand stable and supply unstable
Not officially considered part of the supply chain strategies.
This depends on if there is a new process coming out. Ex: In summer, people want to
use this new product but we don't know the new technology for a hyper electricity air
vent and went to a competitor to get more help.
Make-or-buy decision - correct answer A choice between producing a component or
service in-house or purchasing it from an outside source.
AND ANSWERS #15
Most firms spend a huge portion of their sales dollars on _________ (important) -
correct answer Purchases.
Because of this supply chains are a good place to look for savings. Effective cost-
cutting may help a firm reach its profit goals more easily than would an increased sales
effort.
Because an increasing percentage of an organization's costs are determined by
purchasing, relationships with suppliers are increasingly integrated and long term.
Combined efforts that improve innovation, speed design, and reduce costs are
common.
The objective of supply chain management is to - correct answer coordinate activities
within the supply chain to maximize the supply chain's competitive advantage and
benefits to the ultimate consumer.
Supply chain management (important) - correct answer the coordination of all supply
chain activities involved in enhancing customer value.
Starting with raw materials and ending with a satisfied customer.
Includes suppliers, manufacturers and/or service providers, and distributors,
wholesalers, and/or retailers who deliver the product and/or service to the final
customer.
Supply chain's strategic importance (continued) - correct answer - Supplier relationships
increasingly integrated and long term. Improve innovation, speed design, reduce costs.
- Managing supplier relationships has added emphasis.
Three distinct functions of supply chain are - correct answer 1. Purchasing (produce)-
procedure for raw material
2. Production/manufacture- transform them into intermediate goods and final products.
3. Distribution- deliver products to customers through a distribution system
(Hau Lee's) Three supply chain strategies are - correct answer 1. Low cost strategy
2. Response strategy
3. Differentiation strategy
(risk hedging strategy)
Low cost strategy - correct answer Demand stable and Supply stable
Profit margin is thin. Lower the costs to gain profit commodities. Ex: milk, gas, butter.
- Primary supplier selection criteria: cost
, - Supply chain inventory: Minimize inventory to hold down costs.
- Distribution network: Inexpensive transportation and sell through discount
distributors/retailers.
- Product design characteristics: maximize performance and minimize cost.
Response Strategy - correct answer Demand unstable and supply stable
Profit margin is high. You don't know how much it will sell but they have been made for
a while. Ex: laptops, ipads.
- Primary supplier selection criteria: capacity, speed, flexibility.
- Supply chain inventory: Use buffer stocks to ensure speedy supply
- Distribution network: Fast transportation and provide premium customer service.
- Product design characteristics: Low setup time and rapid production ramp-up.
Differentiation Strategy - correct answer Demand unstable and supply unstable
Applies more for new objects in the market and don't know if people will like it in the
market. Ex: iwatch, drones.
- Primary supplier selection criteria: Product development skills, willing to share
information, jointly and rapidly develop products.
- Supply chain inventory: Minimize inventory to avoid product obsolescence.
- Distribution network: Gather and communicate market research data. Knowledgeable
sales staff.
- Product design characteristics: Modular design to aid product differentiation
Risk hedging strategy - correct answer Demand stable and supply unstable
Not officially considered part of the supply chain strategies.
This depends on if there is a new process coming out. Ex: In summer, people want to
use this new product but we don't know the new technology for a hyper electricity air
vent and went to a competitor to get more help.
Make-or-buy decision - correct answer A choice between producing a component or
service in-house or purchasing it from an outside source.
