Chapter 15: Supply Chain Management

What are some of the challenges in creating (managing) an effective supply chain?

1. Barriers to integration of organizations 2. Getting top management on board 3. Dealing with trade-offs 4. Small businesses 5. Variability and uncertainty 6. Response time

What are the key aspects of supplier management?

1. Choosing suppliers 2. Supplier audits 3. Supplier certification 4. Supplier relationship management 5. Supplier partnerships

What are the key aspects of supply chain management relative to matching supply and demand?

1. Determining the appropriate level of outsourcing 2. Managing procurement 3. Managing suppliers 4. Managing customer relationships 5. Being able to quickly identify problems and respond to them

What are some of the key steps companies can take to reduce the risk of damages due to unethical supplier behavior?

1. Develop an ethical supply chain code of behavior 2. Monitor supply chain activities 3. Choose suppliers that have a reputation for good ethical behavior 4. Incorporate compliance with labor standards in supplier contracts 5. Address any ethical problems that arise swiftly

What are the 3 elements of integration of all aspects of the supply chain?

1. Effective Communication 2. Information Velocity 3. Performance Metrics

What are some common approaches to order fulfillment?

1. Engineer to Order (ETO) 2. Make to Order (MTO) 3. Assemble to Order (ATO) 4. Make to Stock (MTS)

What are some of the supply chain functions and activities?

1. Forecasting 2. Purchasing 3. Inventory Management 4. Information Management 5. Quality Assurance 6. Scheduling 7. Production 8. Distribution 9. Delivery 10. Customer Service

What are several key tactical responsibilities related to managing the supply chain?

1. Forecasting 2. Sourcing 3. Operations Planning 4. Managing Inventory 5. Transportation Planning 6. Collaborating

What are 2 key elements of managing returns?

1. Gatekeeping 2. Avoidance

Movement Within A Facility

1. Incoming vehicles to Receiving 2. Receiving to Storage 3. Storage to the Point of Use ( Work Center) 4. Work center to the next or temporary storage 5. Last Operation to Final Storage 6. Storage to Packaging/ Shipping 7. Shipping to Outgoing Vehicles

What are some of the risk of outsourcing?

1. Inflexibility due to longer lead times 2. Increased transportation costs 3. Language and cultural differences 4. Loss of jobs 5. Loss of control 6. Lower productivity 7. Loss of business knowledge 8. Knowledge transfer and intellectual property concerns 9. Increased effort required to manage the supply chain

What are 3 aspects of Supply Chain Management that often concerns small businesses?

1. Inventory Management 2. Reducing Risks 3. International Trade

What are the key elements of successful risk management?

1. Know your suppliers 2. Provide supply chain visibility 3. Develop event-response capability

What are some of the complexities related to global supply chains?

1. Language and cultural differences 2. Currency fluctuations 3. Political instability 4. Increasing transportation costs and lead times 5. Increased need for trust amongst supply chain partners

What are the 3 aspects of corporate management responsibility?

1. Legal 2. Economic 3. Ethical

What are several of the trade-off considerations in supply chain management?

1. Lot-size-inventory trade-off 2. Inventory-transportation cost trade-off 3. Lead time-transportation costs trade-off 4. Product variety-inventory trade-off 5. Cost-customer service trade-off

What are some of the benefits of outsourcing?

1. Lower prices may result from lower labor costs 2. The ability of the organization to focus on its core strengths 3. Permits the conversion of some fixed costs to variable costs 4. It can free up capital to address other needs 5. Some risks can be shifted to the supplier 6. The ability to take advantage of a supplier's expertise 7. Makes it easier to expand outside of the home country

What are some current trends in supply chain management?

1. Measuring Supply Chain ROI 2. Greening the supply chain 3. Reevaluating outsourcing 4. Integrating IT 5. Adopting lean principles 6. Managing risks

Event Management System Capabilities

1. Monitoring the system 2. Notifying when certain planned or unplanned events occur 3. Simulating potential solutions when unplanned events occur 4. Measuring Long term performance of suppliers, transporters and other supply chain partners

What are the 5 purchasing interfaces?

1. Operations 2. Accounting 3. Design and Engineering 4. Receiving 5. Suppliers

What are the 5 SCOR (Supply Chain Operations Reference) steps for creating an effective supply chain?

1. Plan 2. Source 3. Make 4. Deliver 5. Manage Returns

What are the main steps in the purchasing cycle?

1. Purchasing receives the requisition 2. Purchasing selects a supplier 3. Purchasing places the order with a vendor 4. Monitoring the orders 5. Receiving orders

What are several key operational responsibilities related to managing the supply chain?

1. Scheduling 2. Receiving 3. Transforming 4. Order fulfilling 5. Managing Inventory 6. Shipping 7. Information Sharing 8. Controlling

What are the 3 types of flows that need to be managed in supply chain management?

1. Service flow 2. Information Flow 3. Financial Flow

What are the basic components of the supply chain?

1. Strategy 2. Procurement 3. Supply Management 4. Demand Management 5. Logistics

What are the major supply chain risks?

1. Supply chain disruption * Natural disasters * Supplier problems 2. Quality issues * Another form of disruption that may disrupt supplies and lead to product recalls, liability claims, and negative publicity 3. Loss of control of sensitive information * If suppliers divulge sensitive information to competitors, it can weaken a firm's competitive position

What are several key strategic responsibilities related to managing the supply chain?

1. Supply chain strategy alignment 2. Network configuration 3. Information Technology 4. Products & Services 5. Capacity Planning 6. Strategic Partnerships 7. Distribution Strategy 8. Uncertainty & Risk Reduction

What are the important steps in risk management for small businesses?

1. Use only reliable suppliers 2. Determine which suppliers are critical; get to know them, and any challenges they have 3. Measure supplier performance (e.g., quality, reliability, flexibility) 4. Recognize warning signs of supplier issues (e.g., late deliveries, incomplete orders, quality problems) 5. Have plans in place to manage supply chain problems

What facilities are included in the supply chain?

1. Warehouses 2. Factories 3. Processing Centers 4. Distribution Centers 5. Retail Outlets 6. Offices

Supply Chain Visibility

A major trading partner can connect to its supply chain to access data in real time. - On inventory levels, shipment status, and similar key information. - This requires data sharing.

Closed-Loop Supply Chain

A manufacturer controls both the forward and reverse shipment of product.

Cross Docking

A technique whereby goods arriving at a warehouse from a supplier are unloaded from the supplier's truck and loaded onto outbound trucks, thereby avoiding warehouse storage.

Radio Frequency Identification (RFID)

A technology that uses radio waves to identify objects, such as goods in supply chains. - Similar to barcodes but * Are able to convey much more information * Do not require line-of-sight for reading * Do not need to be read one at a time

Resiliency

Ability of a business to recover from an event that negatively impacts the supply chain.

Event-Response Capability

Ability to detect and respond to unplanned events. - Such as delayed shipment or a warehouse running low on a certain item.

Strategic Sourcing

Analyzing the procurement process to lower costs by reducing waste and non-value-added activities, increase profits, reduce risks, and improve supplier performance.

Vendor Analysis

Evaluating the sources of supply in terms of price, quality, reputation and service

Avoidance

Finding ways to minimize the number of items that are returned.

Decentralized Purchasing

Individual departments or separate locations handle their own purchasing requirements

Bullwhip Effect

Inventory oscillations become progressively larger looking backward through the supply chain.

Supplier Certification

Involves a detailed examination of the policies and capabilities of supplier. - Conducted periodically, or whenever there is a significant change in the weighting assigned to the various factors. - The process verifies the supplier meets or exceeds the requirements of a buyer

Financial Flow

Involves credit terms, payments, and consignment and title ownership arrangements

Risk Management

Involves identifying risks, assessing their likelihood of occurring and their potential impact, and then developing strategies for addressing those risks. - Strategies for addressing risk include: 1. Risk avoidance 2. Risk reduction 3. Risk sharing (with supply chain partners)

Information Flow

Involves sharing forecast and sales data, transmitting orders, tracking shipments, and updating order status.

Product & Service Flow

Involves the movement of goods and services from suppliers to customers as well as handling customer service needs and product returns.

What is the purpose of a supplier audit?

It is a means of keeping current on suppliers' production (or service) capabilities, quality and delivery problems and resolutions, and performance on other criteria.

Traffic Management

Overseeing the shipment of incoming and outgoing goods.

Logistics

Part of supply chain involved with the forward and reverse flow of goods, services, cash and information.

Supply Chain Managers

People at various levels of the organization who are responsible for managing supply and demand both within and across business organizations. - Involved with planning and coordinating activities that include sourcing and procurement of materials and services, transformation activities and logistics.

Delayed Differentiation

Production of standard components and subassemblies, which are held until late in the process to add differentiating features.

Centralized Purchasing

Purchasing is handled by one special department

Disintermediation

Reducing one or more steps in a supply chain by cutting out one or more intermediaries

Gatekeeping

Screening returned goods to prevent incorrect acceptance of goods.

Supply Chain

Sequence of organizations-their facilities, functions. and activities-that are involved in producing and delivering a product or service.

Purchasing Cycle

Series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition

Information Velocity

Speed at which information is communicated through system.

Supply Component

Starts at the beginning of the chain and ends with the internal operations of the organization

Demand Component

Starts at the point where the organization's output is delivered to its immediate customer and ends with the final customer in the chain

Supply Chain Management

Strategic coordination of the supply chain for the purpose of integrating supply and demand management

Third Party logistics (3-PL)

The outsourcing of logistics management. - According to the website of the Council of Supply Chain Management Professionals, the legal definition is "A person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product."

Fill Rate

The percentage of demand filled from stock on hand.

Order fulfillment

The process involved in responding to customer orders.

Reverse Logistics

The process of transporting returned items

Inventory Velocity

The speed at which goods move through a supply chain

E-Business

The use of electronic technology to facilitate business transactions

What is the goal of supply chain management

To match supply to demand as effectively and efficiently as possible.

Strategic Partnering

Two or more business organizations that have complementary products or services join so that each may realize a strategic benefit

Supplier Relationship Management

Type of relationship is often governed by the duration of the trading relationship - Short-term * Oftentimes involves competitive bidding * Minimal interaction - Medium-term * Often involves an ongoing relationship - Long-term * Often involves greater cooperation that evolves into a partnership

Vendor-Managed Inventory (VMI)

Vendors monitor goods and replenish retail inventories when supplies are low.