Chilcutt OM 300 exam 3 |172 Questions and Answers
supply chain - -the network of activities that deliver a product or service to the customer.
-activities within the supply chain - -1. obtaining raw materials
2. transforming raw materials into basic finished goods
3. further processing of basic finished goods into customized products that are sold
-supply chain echelon/tiers - --the lower the tier level, the closer the level to the customer
-objective of supply chain management - -build a chain of suppliers that focuses on
maximizing value to the ultimate customer
-Supply Chain Management - -The business function that coordinates all of the network
links
-coordinates movement of goods through supply chain from suppliers to manufacturers to
distributors
-promotes information sharing in the supply chain, such as forecasts, sales data, &
promotions
-The Supply Chain's Strategic Importance - -supply chain management is the integration of
the activities that:
-procure materials and services
-transform them into intermediate goods and final products, &
-deliver them through a distribution system
-activities performed as part of supply chain management - -1. suppliers
2. distributors
3. warehousing and inventory
4. transportation vendors
5. order fulfilment
6. credit and cash transfers
7. accounts payable and receivable
8. sharing customer, forecasting, and production information
-Outsourcing - --transfers traditional internal activities and resources of a firm to outside
vendors
-utilizes the efficiency that comes with specialization
-firms outsource:
information technology, accounting, legal, logistics, & production
-6 sourcing strategies - -1. negotiating with many suppliers
2. long-term partnering with few suppliers
3. vertical integration
4. joint ventures
,5. Keiretsu
6. virtual companies that use suppliers on an as needed basis
-Many Suppliers - --Commonly used for commodity products
-Purchasing is typically based on price
-Suppliers compete with one another
-Supplier is responsible for maintaining necessary levels of technology, expertise,
forecasting abilities, as well as cost, quality, and delivery competencies
-Few Suppliers - --Buyer forms longer term relationships with fewer suppliers
-Create value through economies of scale and learning curve improvements
-Suppliers more willing to participate in JIT programs and contribute design innovations
and technological expertise
-Cost of changing suppliers is huge
Trade secrets and other alliances
-Vertical Integration - --developing the ability to produce goods or services previously
purchased
-integration may be forward, towards the customers, or backwards, towards suppliers
-can improve cost, quality, and inventory but requires capital, managerial talent, and
demand
-risky in industries with undergoing technological changes
-joint venture - --formal collaborations:
enhance skills, secure supply, & reduce costs
-cooperate without diluting the brand or conceding competitive advantage
-Keiretsu Networks - --part collaboration, part purchasing from few suppliers, and part
vertical integration
-supplier becomes part of the company coalition
-often provide financial support for suppliers through ownership or loans
-members expect long-term relationships and provide technical expertise and stable
quality production
-may extend through several tiers of the supply chain
-Virtual Companies - --Rely on a variety of good, stable relationships to provide services
on demand
-Exceptionally lean performance, specialized management expertise, low capital
investment, flexibility, and speed
-supply chain risk - --More reliance on supply chains means more risk
-customer and its suppliers are more dependent on each other as the number of suppliers
used decreases
-risk is compounded by globalization and logistical complexity
-types of risk - -Traditional Concerns:
, -vender reliability
-vendor quality
Concerns Due To Globalization:
-increase shipping times =>less reliable logistics
-tariffs and quotas impacting companies ability to do business
-more complex information flows
-greater political/currency risks
-Mitigation Tactic (supplier fails to deliver/supplier with quality problems) - --use
multiple suppliers, contract with penalties, subcontractors on retainer, pre-planning
-improver supplier selection process, require supplier certification, train and monitor
suppliers
-Mitigation Tactic (logistic delays or damage/distribution) - --have redundant
transportation modes and warehouses, improve packaging design, contracts with penalties
- careful partner selection, contracts with penalties, monitoring of partners
-Mitigation Tactic (political/economic) - --political risk insurance, diversify across
multiple countries, use franchising and licensing agreements
-hedge to combat exchange rate risk, purchase contracts that address price fluctuations
-Mitigation Tactic (natural catastrophes/theft, vandalism, terrorism) - --insurance,
diversify across multiple countries, alternate sourcing
-insurance, patent protection, security measures (RFID & GPS)
-local optimization - -focusing on local profit or cost minimization based on limited
knowledge
-Incentives (sales incentives, quantity discounts, quotas, and promotions) - --push
merchandise in to the system prior to occurrence of actual sales
-large lots - -low unit cost with respect to production and shipping, but results in larger
holding costs and does not reflect actual sales
-bullwhip effect - --stable demand becomes lumpy orders through the supply chain
-describes variation in replenishment orders at different supply chain levels with no
apparent link to final demand
-Bullwhip Effect Causes - --poor demand forecasting at each level, waiting to batch orders,
price fluctuations & promotions, rationing
-Counteracting the Bullwhip Effect - --collaborate forecast at all levels, share real demand
information (POS terminals)
-order based on demand rates, not batching
-stabilize pricing
supply chain - -the network of activities that deliver a product or service to the customer.
-activities within the supply chain - -1. obtaining raw materials
2. transforming raw materials into basic finished goods
3. further processing of basic finished goods into customized products that are sold
-supply chain echelon/tiers - --the lower the tier level, the closer the level to the customer
-objective of supply chain management - -build a chain of suppliers that focuses on
maximizing value to the ultimate customer
-Supply Chain Management - -The business function that coordinates all of the network
links
-coordinates movement of goods through supply chain from suppliers to manufacturers to
distributors
-promotes information sharing in the supply chain, such as forecasts, sales data, &
promotions
-The Supply Chain's Strategic Importance - -supply chain management is the integration of
the activities that:
-procure materials and services
-transform them into intermediate goods and final products, &
-deliver them through a distribution system
-activities performed as part of supply chain management - -1. suppliers
2. distributors
3. warehousing and inventory
4. transportation vendors
5. order fulfilment
6. credit and cash transfers
7. accounts payable and receivable
8. sharing customer, forecasting, and production information
-Outsourcing - --transfers traditional internal activities and resources of a firm to outside
vendors
-utilizes the efficiency that comes with specialization
-firms outsource:
information technology, accounting, legal, logistics, & production
-6 sourcing strategies - -1. negotiating with many suppliers
2. long-term partnering with few suppliers
3. vertical integration
4. joint ventures
,5. Keiretsu
6. virtual companies that use suppliers on an as needed basis
-Many Suppliers - --Commonly used for commodity products
-Purchasing is typically based on price
-Suppliers compete with one another
-Supplier is responsible for maintaining necessary levels of technology, expertise,
forecasting abilities, as well as cost, quality, and delivery competencies
-Few Suppliers - --Buyer forms longer term relationships with fewer suppliers
-Create value through economies of scale and learning curve improvements
-Suppliers more willing to participate in JIT programs and contribute design innovations
and technological expertise
-Cost of changing suppliers is huge
Trade secrets and other alliances
-Vertical Integration - --developing the ability to produce goods or services previously
purchased
-integration may be forward, towards the customers, or backwards, towards suppliers
-can improve cost, quality, and inventory but requires capital, managerial talent, and
demand
-risky in industries with undergoing technological changes
-joint venture - --formal collaborations:
enhance skills, secure supply, & reduce costs
-cooperate without diluting the brand or conceding competitive advantage
-Keiretsu Networks - --part collaboration, part purchasing from few suppliers, and part
vertical integration
-supplier becomes part of the company coalition
-often provide financial support for suppliers through ownership or loans
-members expect long-term relationships and provide technical expertise and stable
quality production
-may extend through several tiers of the supply chain
-Virtual Companies - --Rely on a variety of good, stable relationships to provide services
on demand
-Exceptionally lean performance, specialized management expertise, low capital
investment, flexibility, and speed
-supply chain risk - --More reliance on supply chains means more risk
-customer and its suppliers are more dependent on each other as the number of suppliers
used decreases
-risk is compounded by globalization and logistical complexity
-types of risk - -Traditional Concerns:
, -vender reliability
-vendor quality
Concerns Due To Globalization:
-increase shipping times =>less reliable logistics
-tariffs and quotas impacting companies ability to do business
-more complex information flows
-greater political/currency risks
-Mitigation Tactic (supplier fails to deliver/supplier with quality problems) - --use
multiple suppliers, contract with penalties, subcontractors on retainer, pre-planning
-improver supplier selection process, require supplier certification, train and monitor
suppliers
-Mitigation Tactic (logistic delays or damage/distribution) - --have redundant
transportation modes and warehouses, improve packaging design, contracts with penalties
- careful partner selection, contracts with penalties, monitoring of partners
-Mitigation Tactic (political/economic) - --political risk insurance, diversify across
multiple countries, use franchising and licensing agreements
-hedge to combat exchange rate risk, purchase contracts that address price fluctuations
-Mitigation Tactic (natural catastrophes/theft, vandalism, terrorism) - --insurance,
diversify across multiple countries, alternate sourcing
-insurance, patent protection, security measures (RFID & GPS)
-local optimization - -focusing on local profit or cost minimization based on limited
knowledge
-Incentives (sales incentives, quantity discounts, quotas, and promotions) - --push
merchandise in to the system prior to occurrence of actual sales
-large lots - -low unit cost with respect to production and shipping, but results in larger
holding costs and does not reflect actual sales
-bullwhip effect - --stable demand becomes lumpy orders through the supply chain
-describes variation in replenishment orders at different supply chain levels with no
apparent link to final demand
-Bullwhip Effect Causes - --poor demand forecasting at each level, waiting to batch orders,
price fluctuations & promotions, rationing
-Counteracting the Bullwhip Effect - --collaborate forecast at all levels, share real demand
information (POS terminals)
-order based on demand rates, not batching
-stabilize pricing
