Exam 3 B

When does competitive bidding occur?

When companies offer concealed bids to the customer for a product or service.

What is backward integration?

Wholesales Purchasing A Manufacturer (moving left in the SC)

Incentives

________ push merchandise into the chain for sales that have not occurred. This generate fluctuations that are ultimately expensive to all member of the chain.

keiretsu

a Japanese term that describes suppliers who become part of a company coalition

An unfilled order with a vendor that is a contract to purchase items but not an authorization to ship anything is known as

a blanket order

make or buy decision

a choice between producing a component or service in house or purchasing it from an outside source

The profit leverage effect states _______.

a decrease in spending is more advantageous that an equivalent percentage increase in revenue.

many suppliers, few suppliers, vertical integration, joint ventures, keiretsu networks, virtual companies

six sourcing strategies

The vendor selection stage that requires the development of evaluation criteria and the importance of each is

vendor evaluation

A lawnmower assembly plant uses a variety of nuts, bolts, screws, and other fasteners in their operation. Their supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of

vendor-managed inventory

Wamba Juice is a company that purchases a $5 lemonade mix from Publix, prepares the drink and sells the lemonade to customers as $60 a drink. According to the purchase portfolio matrix, which category does this lemonade mix fall under?

Leverage Items

What is the component of the SCOR Model that includes managing production execution and packaging?

Make

Toilet's R' Us is a company that produces toilet paper. It produces an average of 100,000 rolls of toilet paper every month of the year. Which type of supply chain does Toilets R' Us most likely use?

Make To Stock (Efficient)

What is the best definition for strategic sourcing?

Managing a business's external resources to match the business's long-term goals.

Which distribution network is best for items with high variety, high value and low and unpredictable demand?

Manufacturer Storage with Drop Shipping

What distribution network is optimal for high value items with low to medium demand and four to five sources?

Manufacturing Storage with Direct Shipping and In-Transit Merge Network

Six Sourcing Strategies

Many suppliers Few suppliers Vertical Integration Joint Ventures Keiretsu Networks Virtual Companies

Center of gravity method

Mathematical technique used for finding the location of a distribution center that will minimize distribution costs. -Locations of markets (x,y) -Volume of goods shipped. -Shipping costs

Casey is determining the impact of her company's conveyor belt malfunctioning. This malfunction does not occur often, but does occur every two to three years. When the conveyor belt malfunctions, she must stop production for one day to fix it. Which category should Casey place this risk?

Medium Risk (Low Frequency & Medium Severity)

Local optimization

Members of the chain are inclined to focus on maximizing local profit or minimizing immediate cost based on their limited knowledge.

tangible costs

readily identifiable and precisely measure costs. includes: utilities, labor, material, taxes, deprication

drop shipping

shipping directly from the supplier to the end consumer rather than from the seller, saving both time and reshipping costs

supply chain management

the coordination of all supply chain activities involved in enhancing customer value

bullwhip effect

the increasing fluctuation in orders that often occurs as orders move through the supply chain

outsourcing

transferring a firm's activities that have traditionally been internal to external suppliers

Managing supply chain risks

1. Understand the supply chain 2. Identify the critical paths 3. Manage the critical paths 4. Improve network visibility 5. Establish a supply chain continuity team and or business continuity plan.

The bullwhip effect occurs because of ______.

A lack of communication throughout the supply chain

What is an example of forward integration?

A supplier purchasing a retailer (moving right in the SC)

Pull data

Accurate sales data that initiate transactions to "pull" product through the supply chain. Generated by sharing (1) point of sales information and (2) computer assisted ordering.

Pete's company orders numerous sandwiches from Martha's shop throughout the year. To make the ordering process easier on his company. Pete set up a purchasing agreement where he just has to tell Martha how many sandwiches he wants and she will deliver them. Which purchasing strategy is he using?

Blanket Purchasing Order

intangible costs

Cannot be easily quanitifed. Includes: quality of education, pubic transportation facilities, community attitudes toward the industry and the company, and quality and attitude of prospective employees.

Which of the following performance indicators describes the average number of days between paying for materials and being paid by SC partners?

Cash-To-Cash

Steven decided to purchase US dollars from Bill instead of Susan, as he has better prices. He is confident this is the right choice because Bill has the same US dollars as Susan. Which procurement strategy is the using?

Commodity Purchasing

Virtual Companies

Companies that rely on a variety of supplier relationships to provide services on demand. Also known as hollow corporations or network companies. Advantages: specialized management expertise, low capital investment, flexibility and speed.

What is the component of the SCOR Model that includes warehouse management and transportation?

Deliver

What supply chain will most likely be affected by a natural disaster?

Efficient Supply Chains

Altec is a company that will design any type of produce it for a customer. Which of the following supply chains would Altec use?

Engineer To Order

Paula had to decide if she would place her factory in Florida, Germany or South Africa. She eventually chose the option that had the highest average return. She did not have access to the probabilities of certain events occurring. Which decision method did she utilize?

Equally likely approach with a payoff table

What is a description of exempt carriers?

Exempt carriers are not subject to the regulatory laws of the Interstate Commerce Act.

Joint Ventures

Firms may engage in collaboration to enhance their new product prowess or technological skills

Few Suppliers

Forms a long term relationship with dedicated supplies. More likely to understand the broad objectives of the procuring firm and the end customer.

Bob's airplane business believes gas prices will rise significantly in the future. To counteract this change in price, his company stocks up on gas. Which strategic procurement strategy is he using?

Forward Purchasing

Keiretsu Networks

Part collaboration, part purchasing from few suppliers and part vertical integration. The supplier becomes part of the company coalition. Members are assured long term relationships and are therefore expected to collaborate as partners.

What is the cheapest transportation models and the only transportation model that can transport liquids?

Pipelines

What is a component of the SCOR Model that includes demand planning and management?

Plan

Many suppliers

Plays on supplier against the others and places the burden of meeting the buyers demands on the supplier. Long term partnering are not the goal.

With regard to the cost-based price model of negotiation strategy, which of the following is true?

Prices are based upon vendor costs

When optimizing the supply chain, a manager should ________.

Reduce the number of suppliers to those who contribute toward the business's strategic objective.

Typical Cell Phone Inc. is a cell phone company that need Snapdragon Processors to power its phones. These processors generates a high amount of profit for the company's business; however, they can can only receive these processors from two supplies. According to the purchase portfolio matrix, which category do these processors fall under?

Strategic Items

What is a method of calculating a company's return on net worth through data found on its income statement and balance sheet?

The DuPont Model

What describes common carriers?

These carriers transport goods or people for any person or company and are responsible for any possible loss of goods during the transport.

Outsourcing

Transferring a firms activities that have traditionally been internal to external suppliers.

Risk measurement

Trivial- high frequency, low impact, high predictability small- high frequency, low impact, reasonable predictability medium- low frequency, medium impact, reasonable predictability long- very low frequency, high impact, minimal predicatibilty

Which of the following is a reason for making a component rather than buying it?

obtain desired quality

plan, source, make, deliver, return

parts of scor

Large Lots

-tend to reduce unit costs.

factor rating method steps

1. Develop a list of relevant factors called key success factors. 2. Assign a weight to each factor to reflect its relative importance in the companies objectives. 3. Develop a scale for each factor 4. Have management score each location for each factor, using the scale in Step 3. 5. Multiply the score by the weights for each factor and total the score for each location. 6. Make a recommendation based on the maximum point score, considering the results of other quantitative approaches as well.

opportunities for effective management

1. accurate pull data 2. lot size reduction 3. single stage control of replenishment 4. vendor managed inventory 5. collaborative planning, forecasting and replenishment 6. blanket orders 7. standardization 8. Postponement 9. Electronic ordering and funds transfer 10. drop shipping and special packaging

Transportation Model

A technique for solving a class of linear programming problems. Determines the best pattern of shipments from several points of supply (sources) to several points of demand (destinations) so as to minimize total productions and transportation costs. Similar to linear programming.

Make or buy decisions

A between producing a component or service in hour or purchasing it from an outside source.

Vendor managed inventory (VMI)

A system in which a supplier maintains material for the buyer, often delivering directly to the buyers using department.

Geographic information system

A system that stores and displays information that be linked to a geographic location.

Locational Cost Volume Analysis

A technique for making an economic comparison of location alternatives. 1. Determine the fixed and variable cost for each location. 2. Plot the costs for each location, with costs on the vertical axis of the graph and annual volume on the horizontal axis. 3. Select the location that has the lowest total cost for the expected production volume.

What are private carriers?

Are owned by companies that use the carriers to transport the companies' own goods.

What performance indicator determines the average percent of orders filled by the requested delivery date?

Delivery Performance

Vertical Integration

Developing the ability to produce goods or services previously purchased or to actually buy a supplier or a distributor. Can take the form of forward or backward. Very dangerous

What distribution network is optimal for fast moving items with a large customer demand?

Distributor Storage with Last Mile Delivery

A company can be described as _______ if it can provide the product or service to the customer at a consistent speed.

Responsive

What distribution networks has the highest facility and handling costs?

Retail storage with customer pickup has the most expensive facility and handling costs.

How can a manager mitigate quality failure?

Selecting and monitoring suppliers well.

Ali is only purchasing what she immediately needs for her business. Which procurement strategy is she using?

Spot Buying

blanket order

a long term purchase commitment to a supplier for items that are to be delivered against short term releases to ship

supply chain operations reference model scor

a set or processes, metrics, and best practices

collaborative planning, forecasting, and replenishment

a system in which members of a supply chain share information in a joint effort to reduce supply chain costs

logistics management

an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities

In order to avoid the bullwhip effect, companies should _____.

base their orders on the actual consumer demand.

virtual companies

companies that rely on a variety of supplier relationships to provide services on demand. Also know as hollow corporations or network companies

postponement

delaying any modifications or customizations to a product as long as possible in the production process

vertical integration

developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor

A producer decides to implement new quality procedures and send their engineers and production personnel to a supplier's plant in order to train them on these new procedures. This activity takes place in the _________ stage of vendor selection.

development

Lot size reduction

done through aggressive management, Includes: 1. developing economical shipments of less than truckloads lots 2. Providing discounts based on total annual volume rather than size of individual shipments 3. Reducing the cost of ordering through techniques such as standing orders and various forms of electronic purchasing.

The focal firm in the supply chain is the _____.

end-product manufacturer

methods used for solving location problems

factor rating method location cost-volume analysis the center of gravity method transportation model

Forward integration

firms establishing its own revolutionary retail stores

Backward Integration

firms purchases its suppliers.

Single stage control of replenishment

fixing responsibility for monitoring and managing inventory for the retailer. removes distorted information and multiple forecasts that create the bullwhip effect.

Supply chain risks

focus on efficiency rather than effectiveness lean supply chains globalization of supply chains focused factories and centralization reduction of supplier base

Trucking

is increasingly using computers to manage its operations

Airfreight

is the fastest-growing mode of shipping

local optimization, incentives, large lots

issues in managing the integrated supply chain

Factors affecting location decision

labor productivity foreign exchange culture changing attitudes towards the industry proximity to markets, suppliers and competitors

The advantage of many potential suppliers is their willingness to

lower prices in the short term

clustering

manufacturers and service organizations like to locate, surprisingly, near competitors.

The negotiation strategy that bases price on a published, auction, or index price is the

market-based price model

e procurement

purchasing facilitated through the internet

accurate pull data, lot size reduction, single stage control of replenishment, vendor managed inventory, cpfr, blanket orders, standardization, postponement, electronic ordering and funds transfer, drop shipping and special packaging

opportunities in managing the integrated supply chain

The do-it-yourselfer plucked a gallon can of base paint from the shelf of the local hardware store and handed it to Keith, the cheerful clerk at the paint counter. Their eyes met briefly and the do-it-yourselfer silently handed over sample 150C-1, Musical Mist, to the clerk. It was impractical to keep several gallons of every possible color on the shelves at the hardware store so the paint manufacturer had created clever workaround. The workaround was a computer based system that added predetermined quantities of pigments to a gallon can of base paint depending on the desired shade, in this case, Musical Mist. The hardware store now needed to stock only the base paint, this machine, and a small supply of paint pigments in order to create the thousands of colors in their catalog.

postponement

channel assembly

postpones final assembly of a product so the distribution channel can assemble it

The term vertical integration means to

produce goods or services previously purchased

cross sourcing

using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other