SCM Exam 1
How does logistics add value to supply chains?
*expand product offering- *get product shelf ready* It enhance customization capability.* It manages inventory more efficiently
Intermediaries - types, differences, what each is used for
-Customs Brokers- Move goods through customs and handle documentation. -Ship Broker- intermediary between shipper and ship owner -International Freight Forwarders- consolidate LTL shipments into FTL, move goods to foreign destination. -Shippers Associations- nonprofit cooperatives which arrange for members shipping. -Intermodal Marketing Companies- purchase blocks of rail capacity and sell it to shippers
International Methods of Entry: know the differences between them and when you might use each of them, what do they do. (ETC, EMC, piggy back, agent, distributor, contract man., licensing, franchise, JV, strategic alliance, parallel imports)
-Export Trading Company (Title Transfers) -Export Management Corporation (No Title Transfer) -Piggy Back -Agent (Manufacturer representative) -Distributor (Buys goods and resells them) -Licensing = Grants right for free -Franchising= bundled business licensing - Joint Venture= A company is owned by 2 other companies - Strategic Alliance= Revenue sharing, one company works on behalf of another company - Subsidiary= 100% ownership on behalf of another company
What are two reasons that you outsource to intermediaries? What are you paying them for?
-Reliable and timely delivery
Why are global supply chains and global logistics more challenging than domestic supply chains and logistics? What are some of the differences between global and domestic supply chains and logistics?
-Transportation Cost -Risk-Cost of Quality and Obsolescence-Payment and Working Capital-Responsiveness-Time-Culture
Purchase Portfolio Matrix a. How to use it b. What purchasing strategies would you use given the quadrant
1. high profit impact / low supply risk: Leverage items = standard, substitutable, alternative suppliers, high volume and cost 2. high profit/high supply risk: strategic items = strategically important, substitution difficult, no alternative suppliers 3. low profit impact / low supply risk: non-critical items = standard, substitutable, alternative suppliers, low volume 4. low profit impact / high supply risk: bottleneck items = substitution difficult, monopolistic market, critical items
Logistics Intermediaries - types, differences, what each is used for (3pl, 4pl, customs broker, ship broker, (International) freight forwarder, shipper's association)
3pl- A third party logistics firm provides total management of a firm's activities in an area in which the provider has expertise and efficiency. Freight Forwarder- an organization that puts many small shipments together to create a single large shipment that can be transported cost-effectively to the final destination. Become experts of logistics in the channel of transaction, transportation and documentation. NVOCC- private companies that sell space for LCL shipper and consolidates them. They issue the bill of landing Customs broker- An individual or company which provides customs clearing services to shippers of goods to and from another country. Export Trading Company (ETC)- buys the manufacturers products, takes ownership, sell these in the export market. Roles of freight forwarder- Preparing and filing documentation, Determining most appropriate mode/carrier, Reserving space for cargo, Making arrangements with customs broker to clear goods
Know how to set-up and compute decision trees
A schematic representation of the available alternatives and their possible consequencesUseful for analyzing sequential decisions https://www.mindtools.com/dectree.html
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.
What is the difference between bilateral and multilateral trade agreements?
Bi = 2 , Multi = multiple countries
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.
What does the WTO do and how can the WTO be useful?
Ensures that trade flows as smoothly, predictably, and freely as possible. Helps developing countries and with trade resolution
Describe free trade agreements and why they are useful
FTA's reduce barriers in exporting goods and protect economic interests/relationships between countries. They eliminate tariffs between countries that are a part of the agreement which is useful for exporting companies
What is total cost of ownership and how would you apply TCO?
Financial estimate intended to help owners understand direct, indirect, and incurred costs involved with ownership of a product
What is 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 are business clusters, how can you identify a cluster, what are their characteristics and what are their benefits?
Geographic concentrations of interconnected companies & institutions
What are business clusters, how can you identify a cluster, and what are their benefits?
Geographic concentrations on interconnected companies. Their benefits include close coordination & trust among companies, competition among rival companies, recruitment of locally skilled workers
What are the reasons that companies go global in the first place?
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 KnowledgePopulation-Emerging Markets Social Media
What are the reasons that companies go global in the first place?
Growing economies across the globe, culture assimilation, competition forces global movement, cheaper (taxes, labor, production)
What is the Bullwhip effect and how do you solve it?
Increase in inventory inefficiencies and demand as one moves further down the supply chain line they can solve it by: collaborate with customers and suppliers (communication), improve forecast accuracy, demand driven supply chain management approach
What is the most popular risk mitigation technique among companies?
Insurance
What is the Harmonized Tariff Code and Schedule, what is it used for, and what is the difference between the columns?
Is a 10-digit import classification system that is specific to the United States, it classifies traded products. Classify goods (materials, etc.) Over 200 countries have one - they centralize shipping, payment, regulation makes it easier for customs
Know where Foreign Trade Zones are located, reasons to use them, and their benefits.
Located near ports of entry, goods can be shipped there and avoid duty, quota. The goods have to be legal to the host country of the FTZ
What is 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
What is the OECD and what does it provide that is useful?
OECD is for exports research OECD = Organization for Economic Co-operation and Development
What is the difference between supply chain management and logistics?
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.
. 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 important
Productivity = Outputs/Inputs or GDP. It is important to know a nations productivity to see how their economy is doing and whether or not to do business with them
Explain the terms in the value proposition and how you would use the value proposition.
Quality: performance, features, conformance, reliability, durability Timeliness: reliability, speed, availability Cost: price, transaction costs, maintenance/repair, operating cost, salvage disposal Service: response, flexibility, communication
What has allowed supply chains to go global in the first place?
Quicker transportation, trade agreements, global work around the clock
What is a single market, such as the EU and how is this different than bilateral and multilateral trade agreements like NAFTA?
Single market (EU) has centralized currency and someone working within the EU can do work in any country that is a part of that. NAFTA allows for free trade but there is still separation in currency and travel limits
Explain the reasons why companies outsource.
Specializing companies can do it better and cheaper (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)
What is 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
What is 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
What is the purpose of logistics?
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.
What is 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
Name various logistics functions
Transportation, Storage, Packaging, Materials Handling, Inventory Control, Order Fulfillment, Demand Forecasting, Production Planning and Scheduling, Procurement, Customer Service, Plant and Warehouse Site Location
Risk Evaluation and Mitigation Process
Value of Risk Factor (Risk Exposure) =Impact Severity Index * Risk Probability Index
Know the difference between vertical and horizontal integration and why companies might conduct them in the first place.
Vertical integration occurs when a company owns all parts of the industrial process. Horizontal integration occurs when a company grows by buying its competitors.
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
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 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
What does lead-time mean? Do we strive to reduce or increase lead-time? Why?
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
Know how to calculate productivity and know why productivity among nations is important?
productivity = units produced/ inputs used