Marketing 411 Exam
reverse channels
channels used to retrieve products that customers no longer want (returns or damaged goods)
Supply Base
list of suppliers a firm uses to acquire its materials, services, supplies, and equipment
Profit
-Growing revenues-Reducing costs-Managing risk, including brand and reputation-Building intangible assets
triple bottom line
A broad term that includes protecting the environment and some aspects of social responsibility, as well as financial performance.
strategic partnerships
A close working relationship that develops among trading partner relationships.
second-tier customers
A customer's customers.
profit-leverage effect
A purchasing performance measure that calculates the impact of a change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged.
ISO 9000
A series of management and quality assurance standards in design, development, production, installation and service developed by the International Organization for Standardization (ISO).
forward vertical integration
Acquiring downstream customers.
Backward vertical integration
Acquiring upstream suppliers
When a particular item is in short supply accompanied by rising prices, a firm might find it beneficial to:
Align itself with one of the suppliers to ensure a continued supply of the scarce item.
It is illegal for corporations to provide their suppliers appreciation banquets to award performance.
False
The use of environmental supplier certification programs assists companies by which of the following?
Identifying strategic alliance candidates
Decentralized purchasing
Individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.
Which of the following is NOT a form of countertrade?
Kaizen blitz
Sustainability reporting is ______________ for American companies:
Largely a voluntary effort
three P's
Refers to people, planet, and profit.
sole sourcing
Refers to the situation when the supplier is the only available source.
When a product is purchased which is complicated or highly technical a ______________may be issued instead of a request for quotation.
Request for proposal
According to the text, one of the most basic and successful approaches to protecting trade secrets is:
Requiring employees and vendors to sign non-disclosure agreements
Streamlining the processes and communications between the buyer and supplier using software applications that enable these processes to be managed more efficiently and effectively can be referred to as:
SRM
An internal or external event that causes a disruption or failure of supply chain operations is an example of
Supply Chain Risk
According to the text, the FOUR important elements of the supply chain are:
Supply, operations, logistics, integration
Convincing your supplier to cutting back on packaging, fuel, or electricity is an example of:
Sustainable sourcing
process integration
The sharing of information and coordinating resources to jointly manage a process.
One standard which is measured in environmental supplier certification is:
The suppliers' recycled content
Which of the following is a reason that single sourcing is considered risky/bad?
There could be supplier interruptions due to political instability
Why do firms assess their sourcing capabilities?
They can gauge their success in improving their own value-enhancing contributions to the firm
Which of the following is NOT a reason for supplier recognition programs?
To select the best suppliers
Lean production is typically associated with which of the following company's production systems?
Toyota
Which of the following is an advantage of a centralized purchasing department?
Specialization
The total cost of ownership for Supplier A is $2,670,000. The total cost of ownership for Supplier B is $1,750,000. The total cost of ownership for Supplier C is $2,990,000. Using Total Cost Analysis, it will be more cost-effective to use
Supplier B
Which of the following acronyms is NOT paired with its correct "translation?"
TLS - Third-party Logistics Services
inventory visibility
The ability of supply chain companies to see inventory quantities of the various members, typically using the Internet.
supply management
The identification, acquisition, access, positioning and management of resources the organization needs or potentially needs in the attainment of its strategic objective
According to the textbook, Supplier Recognition Programs:
Encourage suppliers to keep their performance high
The primary goals of purchasing include all EXCEPT:
Ensure the highest quality raw materials are purchased
The purchasing department at Big Horn Sheep Corporation decided to intentionally increase purchases from small, underdeveloped nations. This decision can be considered:
Ethical Sourcing
______________ considers the public consequences of organizational buying.
Ethical sourcing
Which of the following can happen as a result of the bullwhip effect?
Excess costs for each firm in a supply chain
Trends in supply chain management include expansion of the supply chain and decreasing supply chain visibility.
False
While most public procurement is focused on goals like those of purchasing departments in the private sector, U.S. federal government purchases must comply with the:
Federal Acquisition Regulation
third-party logistics providers
For-hire outside agents that provide transportation and other services including warehousing, document preparation, customs clearance, packaging, labeling and freight bill auditing.
Which of the following is NOT a typical strategy for firms to obtain benchmarking data about other companies?
Hiring former employees from other companies and assessing their knowledge
According to the text, which of the following is considered a current trend in supply chain management?
Both "Using supply chain analytics" and "Increasing supply chain visibility"
The continuing cycle of erratic demand causing forecasts to include safety stock which in turn magnify supplier forecasts and cause production planning problems is known as:
Bullwhip effect
Developed in the 1990's as a popular way of developing radically new business processes in an effort to reduce waste and increase performance is referred to as:
Business process reengineering
SRM software can automate procurement activities that lead to significant cost savings as purchasing professionals move toward:
Collaborative planning
Total cost of ownership
Considers the unit price of the material, payment terms, cash discount, ordering cost, carrying cost, logistical costs, maintenance costs and other more qualitative costs that may not be easy to assess.
According to the textbook, conditions which must be present for successful supply chain management include:
Cooperation among firms
Supply chain management includes the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It also includes:
Coordination and collaboration with channel partners
For a large company with many strategic supplier alliances, what would be the best way to manage them?
Create an alliance board to oversee alliances
supplier certification
Defined by the Institute of Supply Management as "an organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections
Which of the following activities would fall under the foundational element of operation?
Demand management
Which of the following is NOT important in developing a successful strategic alliance?
Developing efficient processes that will remain unchanged for the duration of the partnership
Petty cash is being phased out in favor of:
P-card
Some businesses refer to sustainability in terms of supporting the three P's. This stands for:
People, planet, profit
An organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections can be referred to as:
Supplier Certification
Which of the following activities allows buyers to assume the supplier will meet certain product quality and service requirements?
Supplier certification
ISO 14000 may play a role in a firm's.
Supplier certification program
Criteria to evaluate a purchasing department's performance should include both quantitative and qualitative assessments.
True
Decentralized purchasing is the practice where individual, local purchasing departments throughout a single corporation make their own, individual purchasing decisions to fulfill their individual local needs.
True
Demands by customers for companies to become more ethically and environmentally focused have placed added pressures on firms to improve their performance in supply chain management.
True
The bullwhip effect causes an amplification of the variation in the demand pattern along the supply chain.
True
According to the text, the goal of a good performance evaluation system is to provide metrics that are:
Understandable, easy to measure, focused on value-added results
Which of the following terms refers to an act that creates the greatest good for the greatest number of people:
Utilitarianism
-The combination in one company of two or more stages of production normally operated by separate companies · Manufacturing everything in one space rather than different companies
What is vertical integration
ethical and environmental certifications
certifying companies according to ethical and environmental requirements. A number of certifying agencies can be used, such as the New York-based Rainforest Alliance and Trans-Fair USA.
Radio frequency identification (RFID)
systems scan cartons describing contents of the packages
single sourcing
"Refers to the deliberate practice of concentrating purchases of an item with one source from a pool of viable suppliers."
Before supplier relationship management (SRM), buyers typically spent 40% of their time on expediting orders. After SRM implementation buyers spent about:
10% of their time on expediting orders
The Buy American Act and its implications
(1933) - US government purchases and 3rd party purchases using federal funds must buy if the US good is not more than a certain differential above the foreign good
People
-Employment freely chosen -Free association and collective bargaining -Safe working conditions -No child labor -Living wages -Working hours not excessive-No discrimination -Regular employment provided -No harsh or inhumane treatment
Supplier relationship management (SRM)
Accenture defines SRM as "the systematic management of supplier relationships to optimize the value delivered through the relationship over their life cycle."
The following is an example of the bullwhip effect:
Barkley's incorrectly anticipates consumer demand resulting in stockouts at several popular retailers
Which of the following statements is FALSE?
Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.
Sourcing Strategy Framework?
Certify suppliers as ISO 9001 compliant
third-party logistics services
For-profit logistics companies.
Sustainable sourcing policies should include which of the following?
Use of renewable energy
rights and duties
A theory stating that some actions are right in themselves without regard for the consequences.
utilitarianism
A theory that maintains an ethical act creates the greatest good for the greatest number of people.
The Supplier Ethical Data Exchange (Sedex)
- Focuses on responsible and ethical business practices- Helps reduce risks associated with outsourcing
supplier management
One of the most crucial issues within the topic of supply management— getting suppliers to do what the buyer's firm wants them to do.
Preferred suppliers provide
-Product and process technology & expertise to support buyer's operations-Information on latest trends in materials, processes, designs, and the supply market-Capacity for meeting an unexpected demand-Cost savings due to economies of scale
Planet
-Reduce waste-Eliminate hazardous materials-Recycling-Remanufacturing-Reusing materials Do this all the way from product and process design to disposal
second-tier suppliers
A supplier's suppliers.
bullwhip effect
A term referring to ineffective communication between buyers and suppliers and infrequent delivery of materials, combined with production based on poor forecasts along a supply chain that results in either too little or too much inventory at various points of storage and consumption. Simply, it causes an amplification of the variation in the demand pattern along the supply chain.
Given the following make-buy information, what would be the break-even point?Make OptionBuy OptionFixed Costs$5,500$1,500Variable Costs$4$9
800 Units
A company using a weighted-criteria evaluation system has established these 5 categories and the appropriate weight in parentheses:Quality (0.25)Responsiveness (0.10)Delivery (0.15)Cost (0.15)Technology (0.30)Company X received the following ratings in each of the five categories: Quality(90), Responsiveness(90), Delivery(80), Cost(80), Technology(85). What is its total score?
81.0
_______ refers to one that is manufactured or grown by a disadvantaged producer in a developing country that receives for its goods.
A fair trade product
ISO 14000
A family of international standards for environmental management developed by the International Organization for Standardization (ISO).
Which of the following would be a good reason to outsource (buy) versus making?
A firm lacks the technology or expertise to produce an item
Which of the following would be considered a third party provider?
A firm that leases storage warehousing
hybrid purchasing organization
A firm that uses either a centralized-decentralized or decentralized-centralized purchasing structure.
centralized/decentralized purchasing structure
A hybrid purchasing structure that is centralized at the corporate level but decentralized at the individual business unit level
decentralized/centralized purchasing structure
A hybrid purchasing structure that is decentralized at the corporate level but centralized at the individual business unit level.
sustainable sourcing
A process of purchasing goods and services that takes into account the long-term impact on people, profits, and the planet.
Centralized purchasing
A single purchasing department, usually located at the firm's corporate office, makes all the purchasing decisions, including order quantity, pricing policy, contracting, negotiations, and supplier selection and evaluation.
Petty cash
A small cash reserve maintained by a midlevel manager or clerk.
make or buy decision
A strategic one that can impact an organization's competitive position. It is obvious that most organizations buy their MRO and office supplies rather than make the items themselves.
break-even analysis
A tool for computing the cost-effectiveness of sourcing decisions when cost is the most important criterion. Several assumptions underlie the analysis: (1) all costs involved can be classified as either fixed or variable cost, (2) fixed cost remains the same within the range of analysis, (3) a linear variable cost relationship exists, (4) fixed cost of the make option is higher because of initial capital investment in equipment, and (5) variable cost of the buy option is higher due to supplier profits.
incoterms
A uniform set of rules created by the International Chamber of Commerce to simplify international transactions of goods with respect to shipping costs, risks and responsibilities of the buyer, seller and shipper.
Which of the following can be used as a punishment for suppliers that perform poorly? a. Elimination of future business with the focal firm b. Billback penalty c. Downgrade the supplier's status d. All of these choices are correct.
All of these choices are correct
SRM software should be capable of: a. Making information flow between partners more visible b. Integration of the supply chain making it possible to monitor multiple departments and processes both internally and externally c. Automating transactional processes d. All of these choices are correct.
All of these choices are correct.
Which of the following is important in developing successful relationships in a partnership? a. Interpersonal business relationships between employees of the companies b. Commitment by top management c. Mutual/compatible needs that result in a win-win situation for the partners d. All of these choices are correct.
All of these choices are correct.
The main benefit(s) from benchmarking sourcing practices is/are:
Allows firms to leapfrog the experience-gaining stage by trying things that have worked well for other companies.
lean production system
Also known as a pull system, where parts are placed in standardized containers, and kanbans exist for each container.
Which company is experimenting with the management of the final mile of delivery in some markets, using small aerial drones to deliver shoebox-size packages from fulfillment centers?
Amazon
Ethical Trading Initiative (ETI)
An alliance of organizations seeking to take responsibility for improving working conditions and agreeing to implement the ETI Base Code, a standard for ethical practices for the firms and its suppliers.
According to the text, key ingredients for developing successful supply partnerships include all of the following EXCEPT:
Individualized objectives
Which of the following is NOT a key tenant of an SRM system?
Lean operations
Which of the following NOT a reason firms are expanding their supply bases to include foreign suppliers?
Lower shipping rates due to lower tariffs
Blanket or open-end purchase orders are suitable for buying
Office supplies
Which of the following is TRUE? a. ISO 75000 is the supplier award given to the highest rated supplier in Japan. b. SRM software modules are very affordable (less than $50,000) and can be implemented with a week. c. Performance metrics and personal business relationships are both keys to building successful partnerships. d. The key to successful partnerships is developing performance measures with weights greater than 3.50.
Performance metrics and personal business relationships are both keys to building successful partnerships.
Vertical Integration
Practice where a single entity controls the entire process of a product, from the raw materials to distribution
Which of the following refers to the measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged?
Profit-Leverage Effect
Total Cost of Ownership does NOT consider which of the following factors?
Purchase order costs
global sourcing
Purchasing from non-domestic suppliers.
ethical and sustainable sourcing
Purchasing from suppliers that are governed by environmental sustainability and social and ethical practices.
Inventory Turnover can be calculated by:
Ratio of cost of goods sold over average inventory cost
Which of the following is a reverse logistics activity:
Recycling products and components
When using a Weighted Criteria Evaluation System to evaluate suppliers, all of the following are true EXCEPT:
Select the key dimensions of performance based on what is important to the end consumer
Firms can use total cost analysis to:
Select the most cost-effective supplier
The following strategy is usually employed by lean organizations in an effort to ensure continued quality compliance among suppliers and with internal production facilities:
Six Sigma
What type of major cost category is considered in the cost associated with placing and receiving the order?
Transaction Cost
Which type of requisition is used for materials and standard parts that are requested on a recurring basis?
Traveling requisition
A reason for making items instead of buying them would include better quality control.
True
Automating procurement activities can lead to significant cost savings as buyers move toward managing processes by exception.
True
In general, European companies prefer suppliers:
Who have ISO 9001 certifications
A negotiation where both sides work together to maximize the joint outcome or to create a joint optimal result is referred to as:
Win-win negotiations
o Evaluation using "scorecards" and weighted-criteria calculations
· 1. Select key dimensions of performance mutually acceptable to both customer & supplier. · 2. Monitor & collect performance data. · 3. Assign weights to each of the dimensions. · 4. Evaluate performance measures between 0 & 100. · 5. Multiply dimension rating by weight & sum of overall score. · 6. Classify vendors based on their overall score: Unacceptable, Conditional, Certified, & Preferred · 7. Audit & perform ongoing certification review.
o The profit/leverage effect (be prepared to evaluate a simple example with numbers)
· A decrease in purchase spend directly increases profits before taxes (assuming no decrease in quality or other expenditures)
Supplier recognition programs: why do them; common principles; keys to success; areas that could cause problems
· Areas that could cause problems · Product complexity - more complex products give suppliers more opportunity for failure
A partnership approach, and its potential benefits to both suppliers and the sponsoring company
· Benefits of a partnerships to sponsoring company: · Incentives for better supplier performance · Sets the stage for suppliers "managing themselves" · A more vibrant set of Preferred Suppliers, for better innovation · Greater loyalty, less turnover of suppliers, fewer disruptions
o Size of a supplier base: why companies would lean toward either a larger or smaller base, and the benefits/risks of both
· Benefits of having a single supplier · Establish a good relationship between your firm and the supplier · More consistent quality between different orders of product from the supplier · Lower cost · Transportation economies - Single sourcing concentrates the volume so that the firm can use full truckload (TL) shipments which are cheaper than less-than-truckload (LTL) shipments. · Proprietary product or process purchases · Proprietary: supplier holds the patents to the product or the process meaning that nobody else can use it Volume too small to split- if the order is too small, it is not worth it to split the order between multiple suppliers
Single sourcing: risks and benefits
· Benefits of having a single supplier · Establish a good relationship between your firm and the supplier · More consistent quality between different orders of product from the supplier · Lower cost · Transportation economies - Single sourcing concentrates the volume so that the firm can use full truckload (TL) shipments which are cheaper than less-than-truckload (LTL) shipments. · Proprietary product or process purchases · Proprietary: supplier holds the patents to the product or the process meaning that nobody else can use it · Volume too small to split - if the order is too small, it is not worth it to split the order between multiple suppliers
Centralized, decentralized, and hybrid purchasing models
· Centralized purchasing model: single purchasing department located at the firm's corporate office makes all the purchasing decisions · Advantages: concentrated volumes, avoids duplication, specialization, lower transportation costs, no competition between units, common supply base · Decentralized purchasing model: individual, local purchasing departments, such as plant level, make their own purchasing decisions · Advantages: better knowledge of requirements, local sourcing, less bureaucracy · Hybrid-purchasing organization model: · Decentralized-centralized (large multi-unit organization) - decentralized corporate and centralized at business unit · Centralized-decentralized (large organization with centralized control) - centralized large national contracts at corporate level and decentralized items specific to business
Supplier recognition programs: why do them; common principles; keys to success; areas that could cause problems
· Common principles: · Companies should recognize and celebrate the achievements of their best suppliers · Award winners exemplify true partnerships, continuous improvement, organizational commitment, and excellence · Award-winning suppliers serve as role models for other suppliers
The bullwhip effect, and how to lessen it
· Erratic demand forecasts causing excess safety stocks, which cause production and planning problems · Supply chain management helps to lessen the bullwhip effect because it reduces safety stocks and costs due to coordinated planning and better sharing of information· Erratic demand forecasts causing excess safety stocks, which cause production and planning problems · Supply chain management helps to lessen the bullwhip effect because it reduces safety stocks and costs due to coordinated planning and better sharing of information
Ethical Trading Initiative: what it is and its role
· Ethical Trading Initiative (ETI): an alliance of organizations seeking to take responsibility for improving working conditions and agreeing to implement the ETI Base Code
o How COVID has affected decisions about single sourcing
· Firms have been forced to use multiple suppliers for goods because of how COVID has shown that the supply chain can easily be disrupted due to lack of employees and ability to keep companies afloat. If a firm was single sourcing and the company that they were sourcing from had issues, it would disrupt the entire supply chain. Sourcing from multiple suppliers gives a backup plan in the event of an issue with one company.
Global sourcing considerations, including role of "Incoterms"
· Global sourcing provides an opportunity to improve quality, cost, and delivery performance and Incoterms allow for both firms to maintain the same trade rules globally · Incoterms: uniform rules that simplify international transactions of goods with respect to shipping costs, risks, and responsibilities of buyer, seller, and shipper
The Purchasing functions
· Goals of purchasing: · Ensure uninterrupted flow of raw materials at the lowest total cost · Improve quality of the finished goods produced · Maximize customer satisfaction · Purchasing contributes to these objectives by: · Seeking better materials and more reliable suppliers · Improving quality and materials by working with strategic suppliers · Involving suppliers and purchasing personnel in new product design and development efforts
What are ISO 9000 and 14000
· ISO 9000: series of management and quality standards in design, development, production, installation, and service · ISO 14000: family of standards for environmental management · Benefits: reduced energy consumption, environmental reliability, reduced waste and pollution, improved community goodwill
Breakeven analyses for make-or-buy decisions (be prepared to answer a question with numbers)
· If quantity needed is higher than the breakeven point, the make option is more cost-effective · If quantity needed it lower than the breakeven point, the buy option is more cost-effective
Supplier recognition programs: why do them; common principles; keys to success; areas that could cause problems
· Keys to success: · Have a Supplier Performance Management System in place first · Link your incentive tiers / levels are linked to performance bands · Build a cost / benefit analysis for the initiative, and make sure there is budget for the long term · Have internal buy-in from key stakeholders including Procurement, Supply Chain, Operations, and Finance · Choose the "currency" (incentive type and level) appropriate for each category line · Give the program continuity; suppliers working hard to hit the KPI targets and get the incentives may not get there in the first year · Encourage and promote competition among suppliers · Promote your supplier incentive initiatives and awards (everywhere appropriate)
What is the business-level benefits of effective supply chain management?
· Lower purchasing and carrying costs · Better product quality · Higher customer service levels · Increased sales and profits
o Size of a supplier base: why companies would lean toward either a larger or smaller base, and the benefits/risks of both
· Need capacity - if a single supplier is not able to fulfill the quantity requirement of the order, you would favor multiple suppliers · Spread risk of supply interruption - using multiple suppliers allows firms to reduce the risk of supply interruption due to strikes, quality issues, political instability, etc. · Create competition - using multiple suppliers encourages the suppliers to compete in terms of price and quality · Information - multiple suppliers have more information about market conditions, product developments, and new process technologies which is very important is a product has a short product life cycle · Dealing with special kinds of businesses - firms may be required to give portions of their purchases to small, local, or minority-owned businesses (voluntarily or required by law)
Cybersecurity implications today in the supplier base
· New layer of cybersecurity risks: · Greater number of suppliers = greater amount of risk · 74% of breaches in the past year are due to data shared with third-party vendors
Common certification criteria: company-specific thresholds; ISO; subjective judgments
· No incoming product lot rejections for a specified time period · No incoming non-product rejections for a specified time period · No significant supplier production-related negative incidents for a specified time period · ISO 9000/Q9000/14001 certified or successfully passing a recent, on-site quality system evaluation · Mutually agreed-upon set of clearly specified quality performance measures · Fully documented process and quality system with cost controls and continuous improvement capabilities · Supplier's processes stable and in control
A partnership approach, and its potential benefits to both suppliers and the sponsoring company
· Partnership approach: developing a close working relationship with trading partner(s) · Benefits of a partnership to suppliers: · Get extended/renewed/additional business rom the company · Be considered a Preferred Supplier · Use testimonial or award for promotional purposes (get more business from other companies) · Be part of a published case study or success story (also get more business from other companies)
How it applies to People, Profits, Planet and why those components are linked
· People - "people" concerns in sustainability · Employment freely chosen · Free association and collective bargaining · Safe working conditions · No child labor · Living wages · Working hours not excessive · No discrimination · Regular employment provided
How it applies to People, Profits, Planet and why those components are linked
· Planet - "planet" concerns in sustainability · Reduce waste · Eliminate hazardous materials · Recycling · Remanufacturing · Reusing materials · Do this all the way from product and process design to disposal
What a "preferred supplier" is, and the implications for both suppliers and buyers
· Preferred supplier: a list of agreed suppliers or vendors that your business will purchase goods and services from · Preferred suppliers imply that suppliers and buyers are in a working partnership and each partner must uphold that by doing the best for the other partner.
What is the reverse channel, and how it affects supply chain management?
· Products are moved from the consumer back to the producer via recalls and recycling · Primarily to increase the overall value of each delivery to increase customer satisfaction (through returning products, warranty repairs, and recycling)
How "supply chain" is related to "logistics"
· Products are moved from the producer to the consumer via products and service flow · From raw material suppliers/manufacturing to intermediate component manufacturing to end-product manufacturer to wholesalers and distributors to retailers to end-product consumers
How it applies to People, Profits, Planet and why those components are linked
· Profits - "profits" concerns in sustainability · Growing revenues · Reducing costs · Managing risk, including brand and reputation · Building intangible assets
What RFID is, and how its development has affected supply chains
· Radio Frequency identification · RFID systems scan cartons describing contents of the packages
Make-or-Buy (outsourcing) decisions: considerations and benefits of either approach
· Reasons for Buying/Outsourcing: Buying materials and components from suppliers instead of making them in-house. The trend has moved toward outsourcing. · Cost advantage - an outsourced company will save in costs if they increase their level of production (economies of scale) which will in turn cost you less for the product · Insufficient capacity - if your firm's facilities are at or near capacity you would outsource production to a company who has a larger capacity · Lack of expertise - your firm may not have the necessary technology or expertise · Quality - suppliers have better technology process, skilled labor, and the advantage of economy of scale (higher production = lesser cost)
Make-or-Buy (outsourcing) decisions: considerations and benefits of either approach
· Reasons for Making: in-house · Protect proprietary (company owned) technology · If there are no suppliers who are capable of making it for you · Better quality control · Use the extra capacity at your own facility · Control of lead-time, transportation, and warehousing costs
What is Sedex and how it can be used
· Sedex is the Supplier Ethical Data Exchange · Focuses on responsible and ethical business practices · Helps reduce risks associated with outsourcing
What is supplier certification
· Supplier Certification: an organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections
Size of a supplier base: why companies would lean toward either a larger or smaller base, and the benefits/risks of both
· Supply Base - the list of suppliers a firm uses to acquire its materials, services, supplies, and equipment
How it applies to People, Profits, Planet and why those components are linked
· The 3 P's are linked because together they sustain the world that we live in, and also sustain employees and the firm's balance sheet.
The Buy American Act and its implications
· The Buy American Act (1933)- US government purchases and 3rd party purchases using federal funds must buy if the US good is not more than a certain differential above the foreign good · Requires the US government prefer US-made products in its purchases if it is using federal funds
What 3PLs are, their role, and why companies might use them
· Third party logistics providers that are outsourced to another company to provide inventory management, warehousing, and fulfillment · For hire outside agencies providing transportations and services · Improve visibility, flexibility, and delivery performance while reducing risk in the company's supply chains
What is tier 1, tier 2, and tier 3 suppliers
· Tier 1: the direct suppliers and customers of the focal firm · Tier 2: the first-tier's suppliers' suppliers and the first-tier's customers' customers · Tier 3: supplier of all raw or close-to-raw materials to the first 2 tiers
Total Cost of Ownership (TCO): what it is, what might potentially be included
· Total cost of ownership: the purchase price of an asset plus the cost of operation · TCO includes: · Acquisition cost · Maintenance cost · Fuel consumption if the asset requires fuel · Safety · Useful life · Training requirements if the asset is a piece of equipment
Utilitarian and Rights/Duties concepts of sustainability
· Utilitarianism: an ethical act creates the greatest good for the greatest number of people · Rights and duties: a theory stating that some actions are right in themselves without regard for the consequences
What "visibility" means in supply chain management and why it is important
· Visibility means knowing exactly where products are at any point in the supply chain Important because it helps companies avoid inventory shortages and bottlenecks (point of congestions in a production system), and meet compliance directives