BUAD 331 Exam 3
What is the recipe for Competitive Advantage?
- concept based continual learning in addition to experience - internal and external relationships - information visibility to maximize communication and effectiveness - integrate demand and supply as tightly as possible
Competitive Advantage in global supply chain management is gained through:
- configuration (what, where, when, why) - coordination (staying on the same page/goals)
What are the best practices for supply chain security?
- establish a standard for all transactions - preventive in nature - comprehensive - reward good performance - monitor compliance - keep freight moving - require driver sign-off and monitor - escalate issues of non-compliance
What are the global supply chain network strategies?
- focused factories - inventory centralization - postponement and localization - end-to-end visibility - global planning and control, local implementation
What are some major reasons why companies globalize?
- increases revenue through expansion to new markets - decreases costs through global supply chain management techniques
Yesterday's model:
- independent entities - inventory based - low cost production
Mitigate through redundancy:
- inventory and capacity - multiple factories/suppliers - pooled demand
Explain the business transformation from 'trucks and sheds' to end-to-end pipeline management:
- leads to a wider definition of supply chain cost - skills required: understanding of the 'cost-to-serve' and time-based performance indicators
Explain the business transformation from inventory to information:
- leads to capturing and sharing information on real demand - skills required: information systems and information technology expertise
Explain the business transformation from transactions to relationships:
- leads to focus on service and responsiveness as the basis for customer retention - skills required: ability to define, measure, and manage service requirements by market segement
Explain the business transformation from push to pull:
- leads to higher levels of agility and flexibility - skills required: management of complexity and change
Explain the business transformation from stand-alone competition to network rivalry:
- leads to more collaborative working with supply chain partners - skills required: relationship management and 'win-win' orientation
Explain the business transformation from functions to processes:
- leads to the creation of cross-functional teams focused on value creation - skills required: specific functional excellence with cross-functional understanding; team working capabilities
Explain the business transformation from supplier-centric to customer-centric:
- leads to the design of customer driven supply chains - skills required: market understanding / consumer insight
What are the symptoms of the extended global supply chain?
- offshore contract manufacturing - outsourced customer service - long lead times - supply chain disruptions
What are the distinguishing characteristics of horizontal, market-facing organizations?
- organized around processes - flat and de-layered - built upon multi-functional teams - guided by market-based performance metrics
What are some factors that make global supply chain management so different?
- people are extremely different across nations/markets (EX: CAGE) - companies sometimes abandon basic decision making processes and underestimate differences (EX: strategy, cost/benefit analysis) - partnerships are necessary, but difficult - complexity is exponentially higher due to differences (EX: # of competitors, markets, customers, distances, languages, time zones, cultures, customs)
Manage through resilience:
- postponement - lean processes (speed and reliability) - improve visibility - leverage supplier relationships - control complexity and variability
What are some of the purposes of benchmarking?
- to answer the question, "are we competitive" - to establish the ground for creative breakthroughs and move away from tradition - to provide externally-oriented performance input that is forward looking as opposed to financially-oriented historical input
Tomorrow's model:
- virtual networks - information based - customer value oriented
Risk Profiling
1) How vulnerable is the business to disruptions in supply? 2) How volatile is demand? 3) How resilient are our processes? 4) How likely are disturbances and distortions to be caused by our own internal control system? 5) Where across the supply chain are we vulnerable to external forces?
Requirements for success:
1) collective strategy development 2) win-win thinking 3) open communication
Why do firms go global?
1) increase revenue 2) decrease costs
What are the three types of benchmarking?
1) internal 2) competitive 3) best in class/process
What are several major trends that have led to major changes in companies' supply chains?
1) the decline of economic protectionism 2) an increase in economic integration and free trade (NAFTA, EU, ASEAN, MERCOSUR) 3) global competition among global companies for global consumers 4) technological advances that ease and lessen the cost of communication
What are the twin challenges for global supply chain management?
1) world markets are not homogeneous, so variety is still very much required - (heterogeneous markets - consumer preference) 2) requirement for exceptional coordination to offset potentially higher costs in global supply chains - (exceptional coordination required to succeed)
Which of the following does NOT make a supply chain more vulnerable to risk of disruption?
A focus on supply chain effectiveness
Which type of accounting attempts to identify actual costs as they accrue to fulfilling customer and/or product orders and make the total process costs easier to identify?
Activity-based costing
You have just taken a job as manager of inbound flows of subcomponent product for a large US based electronics manufacturer. All of your products are produced by firms located in Asia-Pacific and transported from the port of Hong Kong to the port of Long Beach and then moves to your US based assembly facility by truck. Which of the following global trends would have you most concerned?
All of the above
All of the following are trends in global supply chain management EXCEPT...
An increase in economic protectionism
What is the practice of measuring performance in terms relative to the competition or "best in class" firms?
Benchmarking
You plan to sell products over the internet and become the world's best at providing in-home delivery services. Which type of benchmarking makes the most sense?
Best in Class/Process
If a firm was attempting to radically change the way it performs a key supply chain process to create competitive advantage, which of the below would represent the best target for performance benchmarking?
Best in class firms in that process regardless
Using MapQuest to generate the quickest route from Knoxville to Los Angeles is an example of what type of benchmarking?
Best in-class performance
Your firm has decided to expand globally by adding the UK to your delivery area. You are attempting to decide what services will make you successful in this market. Which type of benchmarking makes the most sense?
Competitive
What does CAGE stand for?
Cultural Administrative Geographical Economic
Which of the following strategies is an example of using redundancy to mitigate risk?
Establishing multiple inventory stockpiles
True or False? With regards to benchmarking, the best practice is to focus on the internal systems and processes of other firms in the industry as they are the ones with whom a firm competes for business.
False, the study should include best practices regardless of industry
War, terrorism, and natural disasters are considered to be drivers of risk. While these drives would ultimately impact all risk categories, upon what category of risk would these events have the greatest immediate impact?
Forecasts
What are some potential pressure points from global infrastructure?
Foreign intermodal capacity Foreign port capacity Vessel capacity Panama Canal capacity US port capacity US intermodal capacity Network imbalance
As discussed in class, which automotive company is NOT known for its positive partnerships with suppliers?
GM
What are the results of firms going global and increasing revenue?
If a company can successfully expand into a foreign market, it can increase revenue. When foreign competitors move into your market, competing with them in their home market may help level the playing field.
You are a divisional inventory manager at a company that has grown through the acquisition of 20 different smaller firms. You are completing an initial assessment of your inventory management principles. Which type of benchmarking makes the most sense?
Internal
Which of the following is false about the Six Sigma methodology?
It requires asking why five times to get at the root cause of a problem
What is so different about global supply chain management?
It's difficult to plan and execute.
You are responsible for global logistics for a multi national pharmaceutical Firm. You are shipping product from Toronto through the US to Mexico. Which of the following mitigation strategies is most likely to lower the risk of the product's theft?
Keeping the product moving. The more it is at rest, the more it is at risk.
If you were CEO of Abunga.com and you knew that the keys to creating value for your company were best in class customer service and last mile (home) delivery, which of the following firms would you choose to benchmark?
LL Bean and FedEx
Which technique below would most reduce the risk of disruption to the Zula Surf Shop Chain?
Maintain some capacity for supply with the Denver Supplier
Which of the following is not an effort that a company would likely take in transitioning from a budget driven company to a customer value driven company?
Make purchases in large lot sized to reduce unit purchasing cost
What are the results of firms going global and decreasing costs?
Marketing and selling more units typically lowers your cost per unit (economy of scale). Moving some business functions (EX: manufacturing) to lower cost regions may lower overall cost.
What are some of the biggest cargo theft hotspots in the world?
Mexico Europe Brazil Somalia Malaysia
Which of the following factors contribute to delays and variability of lead times in the global supply chain?
Multiple transportation modes, border crossing, and port capacity inadequacies
Jon is a company CFO who wants to get a better picture of the budgets of his operations. He mandates that the Purchasing, Production, Distribution and Sales functional departments each optimize their individual function cost. He informs the CEO that he has done so, gives himself a bonus, and sets up a celebration to mark the achievement. Is this a good decision?
No, buffer inventories will likely increase at the boundaries between departments, increasing total operating costs
All of the following are examples of issues that impact global supply chains EXCEPT...
Predominant use of a single mode of transportation
What type of risk is concerned with questions about the ability of operations to carry out planned activities?
Process Risk
One key element of risk management is improving network visibility. Which of the following provides an example of this?
Providing immediate information about an inventory shortage to a downstream operation
Hewlett-Packard utilized postponement of final assembly of printers by delaying insertion of power supplies until order were received from individual country markets. The benefit of this technique is:
Reduced inventory requirements due to improved forecast accuracy
The UT College of BA is currently organized in six academic departments. The best way for it to reorganize around horizontal processes would be to do which of the following?
Reorganize based upon cross-disciplinary program offerings such as MBA, undergrad, etc.
The Adventa Company is reviewing its current organization and is considering making a change. Currently, Adventa is organized as a functional organization. You are a consultant hired to help with this decision. Based on what you learned about overcoming barriers to supply chain integration, what is your recommendation?
Restructure into a horizontal organization that is flat and focused around processes.
What do we call the process that involves asking, "why something happened?" 5 times to get at underlying process errors?
Root cause analysis
Which type of risk is concerned with questions about the ability to replenish our raw materials and sub-components?
Supply Risk
Which of the following statements is true based on the above scenario?
Supply lead-times and variance will likely increase
Which of the following is an example of risk mitigation through redundancy?
The Builder Buddy Tool Company maintains two production facilities, one in Topeka and one in Pittsburg, in case one has to close down.
Which of the following actions presents an increase in risk to a supply chain?
The North Face Co. moves all production of its backpacks from Canada to India
P&G has just completed a risk profile assessment. What is the purpose of a risk profile?
To determine the area of greatest vulnerability to disruption in the Supply Chain
Which of the following costs increase due to the trend toward global focused factories?
Transportation cost
Which type of organization below focuses mainly on optimizing function performance while keeping within allotted functional budgets?
Vertical
Your boss just walked in the door and stated: "Our global supply chain faces the challenge of serving heterogeneous market segments as well as coordination operations to avoid potentially higher costs." Do you agree and why?
Yes, consumer product preferences vary greatly by country and operation costs need to be controlled due to higher risk and complexity of the supply-chain
Which type of manager should you strive to be?
a T manager
What is the main problem with the traditional order process (see figure above)?
activities are sequential and thrown "over the wall" to the downstream functional area
We learned that risk sometimes manifests itself in ways that seem pretty farfetched prior to their occurrence - a particular example we discussed involved Nestle's KitKat bars. Which of the following best describes the key players from this example?
an oil supplier, orangutans, and Greenpeace
Why is cargo theft so attractive to criminals?
because citizens don't often complain about cargo theft, and so these issues are given little attention
What are the 4 different objectives that go along with KPI?
better faster cheaper closer
Which of the following is a component of creating a supply chain risk management culture?
board-led responsibility and leadership
Global (BLANK) force supply chains to deliver on their promises.
brands
According to the video "Mast Store - Sustainability", what is one of the ways Mast Store practices sustainability?
by breaking down boxes and sending them back to the distribution center (DC) for re-use
Which of the following is true about cargo theft?
cargo theft is considered a low risk, high reward opportunity
Which of the following represents a set of KPI's that would best help achieve a strategic goal of earning an "A" grade in BUAD 331?
class attendance, time spent studying, and % of time you are able to answer classmate's questions
What percent of US firms do not have a supply chain risk management strategy?
close to 50%
What are the 4 different processes or drivers that go along with KPI?
cost relationships service quality time
The (BLANK) of an order moving through the pipeline is not (BLANK).
cost visible
What are the 4 different KPI's?
customer retention end-to-end pipeline time total cost-to-serve perfect order achievement
What is the first step in the benchmarking process?
define scope and objectives
The McDowell's Soda Company predicts they will sell 100 cases of soda in Knoxville in December, but they keep 120 cases at their Knoxville distribution center just in case sales are higher than expected. Which type of risk is McDowell's responding to with their additional inventory?
demand risk
"Producing more value in terms of products/services with less resources, waste, and pollution" is called:
eco-efficiency
Consumers expect a global brand to provide (BLANK) levels of value in all of their markets.
equitable
Adam is the purchasing manager at Quick Kick shoes, so he focuses mainly on the Source component of the supply chain. Adam's goals include improving Quick Kick's social sustainability efforts. What is one area Adam can focus on to improve sustainability in sourcing?
examine societal and ethical issues
The trend in competition has shifted from (BLANK) to (BLANK).
firms supply chains
New business paradigm forces (BLANK).
globalization
Which of the following describes green supply chain management as opposed to sustainable supply chain management?
green supply chain management focuses on performing current business processes more efficiently
Markets are not (BLANK) and coordination requirements are (BLANK).
homogeneous high
Coordination
how dispersed activities, or activities performed in several different nations, are coordinated
Which of the following lowers the risk of supply chain vulnerability due to disruption or delay?
increasing supply chain flexibility
What is the traditional view of competition?
individual businesses compete as stand alone entities
Which type of comparison is examined with the question "Can we do it better?"
internal comparison
Inventory centralization
inventory consolidation substantially reduces total inventory holdings (square root rule)
In creating a sustainable supply chain, which of the following falls in the area of product development and stewardship?
lifecycle analysis
Globalization makes companies focus on (BLANK) and (BLANK).
logistics supply chain management
Which of the following is a component of the "Traditional view of competition"?
low-cost production
At which step in the process can a supply chain manager improve their resource footprint through reducing waste, rework, and scrappage?
make
What gets (BLANK), gets (BLANK).
measured managed
More "touch-points" =
more complexity, variability, and uncertainty
When does a company finish a benchmarking effort?
never, benchmarking should be an ongoing process
Horizontal organizations are...
output focused and market driven
The triple bottom line encompasses which three components?
people, planet, profit
Samantha's boss just told her that the company wants to improve their service quality. Which KPI should she focus on improving?
perfect order achievement
As discussed in class, Hewlett-Packard holds a large inventory of finished printers without power cables or documentation at their distribution centers. After receiving an order, the company then pairs power cable, printer, and documentation to match the printer's destination country. This is an example of...
postponement
Supply Chain Risk Profile =
probability of disruption * impact
What are some examples of offshoring?
production call centers back office (accounting/legal work) engineering design research and development
As supply chains increase their degree of globalization, which of the following trade offs occur?
production costs tend to decrease whereas transportation costs tend to increase
People are interested in (BLANK) and (BLANK) their own function.
protecting growing
Focused factories
provide economy of scale but increases lead time and variability
James has been reviewing his firm's performance and saw that their refunds are much higher than their main competitors'. As a result, he takes steps to lower that number. This is an example of which overall supply chain management goal?
reduce costs
Offshoring
relocating a function or a process to another country - it does not require that the control of the offshore functions be contracted to an external vendor
What are some of the principal security threats to the global supply chain?
smuggling cargo theft terrorism
What is the new paradigm of competition?
supply chains compete with one another
Which type of risk is concerned with questions about the ability to replenish our raw materials and sub-components?
supply risk
For Ford, the earthquake in Japan in March 2011 represented which kinds of risk?
supply risk demand risk
What are some types of supply chain risk?
supply risk process risk demand risk control risk environmental risk
As discussed in class, what allowed Nokia to remain relatively unaffected by the fire at a Philips microchip plant in New Mexico?
they utilized a flexible strategy that allowed them to switch suppliers quickly
What is the purpose of conducting risk profile assessments?
to determine the area of greatest vulnerability to disruption in the supply chain
What is the core objective of the Conventional Organization Structure?
to generate orders and fulfill those orders without regard to cost
What is the core objective of a horizontal organization?
to link demand and supply through Demand Supply Integration (DSI)
Goal:
to quickly respond to market changes effectively and efficiently - producing what your customer wants when they want it
Conventional Organization Structure
traditional functional vertical silo
Configuration
where, and in how many nations, each value chain activity is performed
Pay extra to a supplier to ensure higher quality service, resulting in a lower and total supply chain cost is an example of what kind of thinking?
win-win
Which of the following has the highest supply chain risk profile? (based on chart)
worker's strike