SCM 3690 exam 1

Reasons why companies outsource

(Financial) Improve return on assets by reducing inventory and selling unnecessary assets, Turn fixed costs into variable costs, (Operational) Shorten cycle time, Obtain expertise, skills and technologies that are otherwise unavailable (Organizational) Increase flexibility to meet changing demand for products and services (Volatile Demand)

how does logistics add value to supply chains?

*expand product offering- *get product shelf ready *It enhance customisation capability. *It manages inventory more efficiently

Centralized Advantages

-concentrated volume -avoid duplication -specialization -lower transportation costs -common supply base -no competition with in units

How to solve the bullwhip effect

1. Collaborate with customers and suppliers 2. Improve forecast accuracy 3. Enable fast decisions with visibility and insight 4. Adopt a demand driven supply chain management approach

Partnership

A business in which two or more persons combine their assets and skills

Total Cost of Ownership (TCO)

A financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system

3. Know how to set-up and compute decision trees

A schematic representation of the available alternatives and their possible consequences Useful for analyzing sequential decisions

Centralized purchasing

A single department controls and manages the purchasing for the whole organization. Aids finding the best deals with local vendors for the corresponding location of the company department.

. What is a single market, such as the EU and how is this different than bilateral and multilateral trade agreements like NAFTA?

A single market such as the EU allows freedom of people, who can live/work in various places. NAFTA is between the United States, Canada and Mexico. Its secondary purpose was to make these countries more competitive in the global marketplace. It has been wildly successful in achieving both goals. NAFTA is now the largest free trade agreement in the world.

How can you identify a business cluster

All cluster analysis relies on evaluation of local and regional employment patterns, based on industrial categorizations such as NAICS or the increasingly obsolete SIC codes

Why are trade agreements useful

Allows for globalization and cost effective

What are business clusters

Are a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field

Economy

Assesses the economic output of the country, its potential for future growth, ability to attract foreign direct investment, and how well it can generate a steady return on investments made in the growth

Politics

Assesses the political landscape with respect to how well it nurtures supply chain activity

What is the difference between bilateral and multilateral trade agreements

Bilateral trade agreements are between two countries. Both countries agree to loosen trade restrictions to expand business opportunities between them. Multilateral trade agreements are the most difficult to negotiate. These are among three countries or more. The greater the number of participants, the more difficult the negotiations are.

Reasons that companies go global in the first place

Capturing Value and Competitiveness Government Policy and Regulation Ease of doing business Tariffs and Duties Trade Barriers Infrastructure Technology, e-Commerce, Communication Air and Marine Transport and Ports Utilities Market Forces Empowered Customer Knowledge Population-Emerging Markets Social Media

Decentralized Advantages

Closer knowledge of requirements Local sourcing Less bureaucracy

Logistician duties

Ensure accurate shipment Shipments are completed Shipments are on time PAPERWORK Efficient and good packaging Meet security requirements Deal with different currencies Choose right mode of transportation Insure goods

Form Utility and what functional department is responsible for this?

Form utility is the process of increasing the attractiveness of product to consumer. it involves getting the product ready for consumption . attractiveness of product can increase by altering its physical appearance.

What has allowed supply chains to go global in the first place

Government Policy and Regulation, Infrastructure, and Market Forces

What are business clusters benefits

Increase the productivity with which companies can compete, nationally and globally.

Culture

Influences business and negotiation styles, holidays and vacations

Infrastructure

Influences how supply chains in the country are managed and operated and represents the potential for leveraging

Competence

Influences the speed with which supply chain activities take place in the country

What is the Harmonized Tariff Code and what is it used for, difference between columns

Is a 10-digit import classification system that is specific to the United States, it classifies traded products.

Bullwhip Effect

Is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.

Vertical Integration/Relationship

Is a strategy where a company expands its business operations into different steps on the same production path, such as when a manufacturer owns its supplier and/or distributor.

What does the OECD provide that is useful

Is a unique forum where the governments of 34 democracies with market economies work with each other, as well as with more than 70 non-member economies to promote economic growth, prosperity, and sustainable development.

Horizontal Integration/Relationship

Is the acquisition of additional business activities that are at the same level of the value chain in similar or different industries. This can be achieved by internal expansion through a reinvestment of operating profits or by external expansion through a merger or acquisition

Lead time

Latency between the initiation and execution of a process. Want a short lead time

Time utility and what functional department is responsible for this?

Making the products ready and available at the time these are required by customers.sales team, supply, and transport departments are responsible for this

Supplier Weighted- Scorecard

Most supply chain organizations use a weighted point system that includes a variety of performance categories, provides weights for each category, and defines the scales used for scoring within each category

What is the OECD

OECD is for exports research OECD = Organization for Economic Co-operation and Development

What is a location weighted- average table and how would you apply it, how do you calculate the total score?

One can use the score to optimize your supply chain for high- volume, high- priority products

Difference between supply chain management and operations management

One distinct difference between supply chain management and operations management is that supply chain management is focused externally, whereas OM is focused internally Supply chain management is the integration of key business processes from initial raw material extraction to the final or end customer, including all intermediate processing. transportation, storage activities , along with the final sale to the end product customer and eventually product returns. Logistics and operations management involves the process of integrating the movement and maintenance of goods in and out of the organization. Logistics is a part of supply chain management.

Logistic Functions

Order processing Inventory control Warehousing Transportation Material handling and storage Logistical packaging Information

Quality

Performance, features, conformance, reliability, durability

Cost

Price, transaction costs, maintenance/repair, operating cost, salvage disposal

Risks associated with global supply chains and logistics

Quality problems, the requirement for increased inventory due to a longer global supply chain, natural disasters,

Decentralized purchasing

Rather than leaving the purchasing control with a single department, it is granted to local branches or departments. They have the authority to purchase items necessary as per their requirements.

Service

Response, flexibility, communication

What is the purpose of logistics

The coordinated planning and execution of the following: preparation of packaged product, movement itinerary (transport), storage itinerary (warehousing), product distribution throughout the supply chain. The purpose of logistics management is to plan and coordinate all those activities necessary to achieve desired levels of delivered service and quality at lowest possible cost.

Opportunism

The taking of opportunities as and when they arise, regardless of planning or principle.

Quantity utility and what functional department is responsible for this?

The volume or quantity of the specific product that is required is made available to the customer.the transport and supply departments are responsible for this

Value Proposition terms

Through quality, timeliness, cost, service

Describe free trade agreements

Trade that takes place between countries without any barriers (such as tariffs, quotas, or subsidies) put in place by governments or international organizations. Goods and services are allowed to move freely between countries

Differences and Challenges between global and domestic supply chains & logistics

Transportation costs, risks, time, culture

Risk Evaluation and Mitigation Process

Value of Risk Factor (Risk Exposure) = Impact Severity Index * Risk Probability Index

2. C-TPAT: Customs-Trade Partnership Against Terrorism

Volunteer partnership program to ensure increased cargo security into the US some benefits include Reduced number of CBP examinations, Front of the line inspections, Possible exemption from Stratified Exams, Shorter wait times at the border

1. CSI: Container Security Initiative

Was launched in 2002 by the Customs and Boarder Protection Agency (CBP) its purpose to increase security for container cargo shipped to the US

What is the WTO do and how can the WTO be useful

World Trade Organization is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. Ensures that trade flows as smoothly, predictably, and freely as possible. Helps developing countries and with trade resolution

An export management company earns its revenue through Select one: a. sales commissions. b. receiving quantity discounts by buying in bulk and reselling products at a higher price. c. charging fixed fees to exporters. d. commissions paid by the importing country's customs office. e. fees paid by the International Chamber of Commerce.

a

An exporter has the most control over its foreign sales through a(n) Select one: a. sales or marketing subsidiary. b. export trading company. c. export management company. d. agent. e. distributor

a

Another name for sea-going containers is Select one: a. boxes. b. cans. c. tubs. d. tins. e. crates.

a

Because some countries have poor traditional telephone services, they resorted to ______________ to develop their communication infrastructure. Select one: a. leap frogging. b. express package services. c. satellite telephones. d. fiber-optic telephones. e. voice over internet protocol (VOIP) services.

a

Efforts by corporations to reduce the vulnerability of their international supply chain to traditional criminal activities (theft) is called Select one: a. security management. b. supply chain management. c. security studies. d. C-TPAT. e. safety management

a

Factors contributing to the rise of U. S. freight railroads since about 1980 are Select one: a. road congestion, concerns about pollution and noise, and development of the multi-modal container. b. higher train speeds, development of more custom service by railroads, and concerns about terrorism. c. increased shipments of high-value goods like computers d. the building of new railroads. e. the unreliability of air freight.

a

Many of the developing countries of the world experience traffic gridlock. Select one: a. True b. False

a

Mercosur is a trade bloc that includes countries located in South America. Select one: a. True b. False

a

Of the following, the best definition of a logistics infrastructure would be that it consists of Select one: a. all of the elements in place to facilitate transportation, communication, and business exchanges. b. a country's electrical supply and road network. c. the amount of computerization a country has. d. a developed banking system. e. the level of development of a country

a

The individuals who are handling goods in the ports, loading and unloading merchandise, are called Select one: a. stevedores. b. marksmen. c. mercadores. d. julinators. e. porters.

a

The international environment presents challenges for the international logistician. Which aspect of the international business environment is most likely to create frustrations? Select one: a. cultural differences. b. economic issues. c. currency differences. d. infrastructure constraints. e. socio-economic constraints.

a

Which international organization(s) was(were) involved with developing security measures? Select one: a. International Maritime Organization. b. Customs Alliance. c. NAFTA. d. International Monetary Fund. e. SWIFT.

a

Which of the following group of countries is more likely to lag in terms of green practices, according to the IBM study mentioned in the text? Select one: a. North America. b. Western Europe. c. Asia Pacific. d. All are at about the same level. e. Eastern Europe.

a

Which of the following is an emerging element of international logistics, according to the author, although it is fully part of domestic logistics, according to the CSCMP? Select one: a. reverse logistics. b. the management of transportation. c. the management of inventories. d. the management of paperwork

a

Arm's Length Transaction

a transaction between two parties that have no relationship with each other and who are negotiating on behalf of their own best interests. A fairly negotiated transaction and reasonably representative of market value.

What are the types supply chain relationships and what are the differences between them, and when might you chose one over the other?

a). Contract b). Outsourcing c). Management d). Strategic alliance e). Enterprise extension

A German corporation is involved in the Grüne Punkt program and recycles its final consumer packaging after the consumer has used the product. How are these types of activities called? Select one: a. cycling logistics. b. reverse logistics. c. recycling logistics. d. return logistics. e. inverse logistics.

b

Historical exchange rate data can easily be obtained from Select one: a. the Friday Wall Street Journal. b. the Federal Reserve System. c. the Sunday New York Times. d. the January edition of Forbes. e. the weekly edition of the Financial Times.

b

In valuing a currency, the direct quote is Select one: a. the traditional way of expressing the value of a currency like the Canadian dollar. b. the value of the foreign currency expressed in units of the domestic currency. c. the traditional way of expressing the value of a currency like the Japanese yen. d. the value of the domestic currency expressed in units of foreign currency. e. the value of the foreign currency in Special Drawing Rights

b

The North American Free Trade Association (NAFTA) includes only the United States and Mexico. Select one: a. True b. False

b

The United States governmental agency that has primary responsibility for security issues in air transportation (whether passenger or cargo) is Select one: a. International Air Transport Association. b. Transportation Security Administration. c. International Civil Aviation Organization. d. Customs and Border Protection. e. Immigration and Customs Enforcement.

b

Usually, a distributor is located Select one: a. near the exporter. b. in the importing country. c. near the capital city of the importing country. d. in a neighboring country. e. in the economic capital of the importing country

b

When a company is engaged in an international transaction and agrees to use a foreign currency to conduct the transaction Select one: a. it will use SDRs to mitigate its risks. b. it is exposed to a certain amount of risk. c. it will use the services of the Ex-Im Bank. d. it must use a letter of credit. e. it pays hefty fees to its bank for the privilege.

b

C-TPAT program offer companies the following advantages: Select one: a. higher probability of Customs' inspections at the port of entry. b. first-come-first-serve scheduling of inspections when they are deemed necessary. c. assistance from Customs' Supply Chain Security Specialists. d. faster shipping times. e. an assigned Customs official for each shipment.

c

Certified Cargo Screening Facilities are charged with Select one: a. randomly selecting about twenty percent of all air cargo, and inspect these shipments before they are loaded on any aircraft. b. conducting background checks for all airlines and airport employees who are in contact with international cargo air shipments. c. conducting one-hundred-percent inspections of all shipments that will eventually travel on passenger aircraft. d. reporting on suspicious cargo shipments originating from abroad, through a program called "Automated Targeting System. " e. reporting and isnpecting cargo that fall outside of weight-volume parameters that are kept secret.

c

One of the first problems faced by an international logistics manager has to do with Select one: a. air transport availability. b. weather. c. infrastructure. d. customs. e. labor training.

c

Which of the following is NOT among the challenges of international logistics? Select one: a. infrastructure differences b. insurance complexities c. superstructure differences d. paperwork requirements e. customs clearance

c

International freight forwarder

consolidate LTL shipments into FTL, move goods to foreign destination

As a company grows in exporting sophistication, it should not become involved with an export trading company because Select one: a. fixed costs are too high. b. variable costs are too high. c. it is a violation of international law. d. customers abroad are customers of the export trading company, not the exporter. e. it would have to pay a commission on all transastions to the export trading company.

d

Information on foreign countries, including their economic environment, their political environment, and their geography, can easily be found in several publications. Which is NOT one of the organizations that publishes background information on countries? Select one: a. The Economist's Intelligence Unit. b. The Central Intelligence Agency. c. The U.S. Department of Commerce. d. The United Nations' UNICEF. e. Wikipedia.

d

Porter's Cluster Theory holds that geographical areas with a large concentration of a certain type of companies allow that area to obtain an absolute or comparative advantage. How do those companies benefit from the presence of other companies like them in the same area? Select one: a. they can attract talented employees b. such concentration fosters creativity as employees' know-how travels from employer to employer c. the concentration of talent fosters innovation d. All of the answers listed here have an impact on the development of an area's economic advantage. e. None of the answers listed here have an impact on the development of an area's economic advantage.

d

The European Union is an economic community that comprises how many countries? Select one: a. 15 b. 25 c. 18 d. 28 e. 30

d

The common currency of most of the countries of the European Union is called Select one: a. the euro-dollar. b. the European currency unit (ECU). c. the thaler. d. the euro. e. the eural.

d

When manufacturing costs are lower abroad, when shipping costs are prohibitive, when domestic manufacturing capacity is reached, or when the product has significant intangible content, such as services, a company may consider Select one: a. indirect exporting. b. piggy-backing. c. using a foreign trade zone. d. production abroad. e. subcontracting.

d

Which one was NOT one of the characteristics of the "early days" of logistics? Select one: a. an emphasis on making sure that the goods arrived in good condition b. an emphasis on low-cost transportation c. long transit times d. an emphasis on customer satisfaction

d

An intermediary that purchases goods in the exporting country and resells them to a customer in a foreign country is called a(n) Select one: a. agent. b. export management corporation. c. principal. d. contract manufacturer. e. export trading comany.

e

The European Union based their security initiatives on which international organization's guidelines? Select one: a. World Trade Organization. b. the United Nations. c. the International Chamber of Commerce. d. the International Security Organization. e. the International Maritime Organization.

e

The policy of a one-hundred-percent inspection is considered flawed because Select one: a. the costs are staggering. b. the amount of room it requires is greater than what is normally available. c. the personnel needed is very large. d. it is ineffective. e. the policy is considered flawed for all of the reasons mentioned in this set of responses

e

Which of the following companies are exposed to the risk of currency fluctuations? Select one: a. firms that do not evaluate international currency transaction risks clearly. b. firms that do not follow a specific policy on currency exchange. c. firms that have management that is not well-versed in the intricacies of international trade. d. firms that do not hedge their foreign receivables. e. all answers in this response set illustrate companies exposed to the risk of currency fluctuations.

e

A distributor takes much less risk in its relationship with an exporter than does an agent and experiences much lower costs. Select one: True False

false

A security policy that emphasizes 100-percent inspection is the best method for detecting explosives. Select one: True False

false

An advantage of gray markets is the increased amount of control that a company has over a product after it has been sold. Select one: True False

false

If it is agreed that an international exchange will be in the currency of the exporter's country, then there is no exchange rate fluctuation risk for the importer. Select one: True False

false

If the exporter and the importer agree that a transaction will be in the currency of the exporter's country, the exporter then bears all the risks of exchange rate fluctuation. Select one: True False

false

Importers generally prefer quotes that are written in the currency of the exporter's country. Select one: True False

false

Insurance issues in international logistics are thankfully similar in complexity to insurance issues in domestic logistics. Select one: True False

false

Intellectual property protection is well protected worldwide. Select one: True False

false

Inventory reduction was a major goal of companies in the 1980s; this change was due to the increasing costs of oil and of products manufactured with oil. Select one: True False

false

MRP, MRP II, and DRP are inventory management techniques that allow manufacturers to reduce their shipment times (the time that goods spend in transit). Select one: True False

false

The Customs-Trade Partnership Against Terrorism (C-TPAT) is a program developed by the World Customs Organization for the prevention of terrorism acts against airfreighters. Select one: True False

false

The International Chamber of Commerce is not involved in security initiatives. Select one: True False

false

The United States and the European Union approach security issues in more or less the same way. Select one: True False

false

The globalization of markets is a recent phenomenon. Select one: True False

false

Unlike other industries, ports in the developed world have managed to avoid strong unions. Select one: True False

false

World trade in services represents a higher percentage of total world trade than does world trade in merchandise. Select one: a. True b. False

false

What is the No. 1 strategy used to mitigate supply chain risk

insurance or Is to choose financially strong, competent world-class suppliers.

Ship Broker

intermediary between shipper and ship owner

What is working capital, where does it come from,

lead time is the time taken of order is placed till the time order is completed. increasing order frequency /ordering more frequently on small quantities can help to reduce lead time. we want to decrease lead time to be more efficient

Customs Broker

move goods through customs & handle documentation

Shipper's associations

nonprofit cooperatives which arrange for members shipping

Non-Vessel-Operating Common Carriers-

operate like freight forwarders but use scheduled ocean liners

Supply Chain managers manage the flow of what three things

product flow information flow finances flow

Know how to calculate productivity and know why productivity among nations is important?

productivity = units produced/ inputs used

intermodal marketing companies

purchase blocks of rail capacity and sell it to shippers

Timeliness

reliability, speed, availability

Possession utility and what functional department is responsible for this?

the benefit a customer is endowed after owning a product. servicing and customer care departments are responsible for this

Place utility and what functional department is responsible for this?

the ensuring of availability of products at the location where they are needed for consumption by the users. So, they are supposed to be moved to the most appropriate place from the less utility area.Sales team and supply department responsible for this

"Reverse logistics" deals with the activities involved in the return of products to the manufacturer, including the return of used packaging. Select one: True False

true

"Supply chain management" is now considered to include not only the management of all of the activities that are part of "logistics," but also the management of the relationships of a company with its suppliers and customers. Select one: True False

true

A country enjoys an absolute advantage in the production of a particular good when it can produce it at a lower price than another country. Select one: a. True b. False

true

A country's court system is part of its infrastructure. Select one: True False

true

According to the author, "supply chain management" includes both domestic and international logistics activities; there is no practical way of distinguishing between domestic supply chain management and international supply chain management. Select one: True False

true

An export trading company is an intermediary which will purchase goods in the exporting country and will resell them to a customer in a foreign country. Select one: True False

true

Constant dollars are dollars whose value has been adjusted for inflation. Select one: a. True b. False

true

Customer service became the primary focus of logistics in the 2000s. Select one: True False

true

Early logisticians were international traders, and, although they used different techniques and means of transportation, they were concerned with the same issues that present-day logisticians are concerned about. Select one: True False

true

For an exporter, there is a strategic advantage in quoting prices in the importer's currency and reducing the currency fluctuation risk with a forward market hedge or a money market hedge. Select one: True False

true

International logistics costs (transportation and inventory costs) represent about 15 percent of the total word-wide volume of trade. Select one: True False

true

Logistics is often defined as the activities that deal with the physical aspects of the movement of goods. Select one: True False

true

One of the first international organizations to implement enhanced security measures was the International Maritime Organization. Select one: True False

true

Parallel imports are sometimes called gray market goods. Select one: True False

true

Tamper-resistant seals are preferable over traditional seals. Select one: True False

true

The C-TPAT program operates very much within the guidelines established by the SAFE initiative. Select one: True False

true

The Certified Cargo Screening Program mandates that all cargo shipped on passenger aircrafts be 100-percent inspected before being loaded. Select one: True False

true

The United States' initial strategy to combat terrorism focused on interdiction. Select one: True False

true

The company that develops a business product or concept and grants rights to a large number of intellectual property items all bundled in a business package is called a franchisor. Select one: True False

true

The granting of rights to intellectual property owned by a company to another company for a fee is the definition of a licensing agreement between two corporations. Select one: True False

true

The productivity of a port is dependent upon the quality of the road and rail network to which it is connected. Select one: True False

true

The single most important development in international ocean shipping was the creation of containers. Select one: True False

true

The term "re-shoring" refers to a strategy whereby a company brings back to the United States production that had been outsourced abroad. Select one: a. True b. False

true

Transportation decisions are more complicated in international logistics than they are in domestic logistics. Select one: True False

true

When a successful exporter involves one of its suppliers-or a company that makes a complementary product-in the markets that this exporter has developed, it results in a form of piggy-backing sometimes called collaborative exporting. Select one: True False

true