Supply Chain Management (OM Ch15)

Major risk of unethical behavior*

When such behavior is exposed in the media, consumers tend to blame the major company or brand in the supply chain associated with the ethical infractions that were actually committed by legally independent companies in the supply chain. Even harder to manage if SC = global

Examples of unethical behaviors involving supply chains (7)*

1) Bribing government or company officials to secure permits or favorable status; 2) "Exporting smoke-stacks" to developing countries; 3) Claiming a "green" supply chain when in reality the level of "green" is only minimal; 4) Ignoring health, safety, and environmental standards 5) Violating basic rights of workers 6) Mislabeling country of origin 7) Selling goods abroad that are banned at home.

Key steps companies can take to reduce the risk of damage due to unethical supplier behavior (4)*

1) Choose those that have a reputation for good ethical behavior 2) Incorporate compliance with labor standards in supplier contracts 3) Develop direct, long-term relationships with ethical suppliers 4) Quickly address any problems that occur.

Key aspects of Supplier management (6)*

1) Choosing suppliers 2) Supplier audits 3) Supplier certification 4) Supplier relationship management 5) Supplier partnerships 6) Strategic Partnering

Reasons for products being returned (7)*

1) Defective products 2) Recalled products 3) Obsolete products 4) Unsold products returned from retailers. 5) Parts replaced in the field. 6) Items for recycling. 7) Waste.

Key aspects of supply chain*

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.

Categories of supply chain risk (4)*

1) Disruptions from natural disasters: can impact directly (damage production) or indirectly (impact access to facilities) 2) Disruptions from supplier issues: labor strife, production problem, bankruptcy, etc 3) Quality issues: can disrupt suppliers and lead to product recalls, liability claims, negative publicity 4) Potential for suppliers divulging sensitive information to competitors that weakens a competitive advantage

3 important aspects of achieving an effective SC*

1) Effective communication 2) Information velocity 3) Performance metrics

Risks of outsourcing (9)*

1) Inflexibility due to longer lead times for delivery of goods w/ distant suppliers 2)Increased transportation costs 3) Language and cultural differences 4) Loss of jobs 5) Loss of control 6) Lower productivity 7) Loss of ability to work internally & business knowledge 8) Knowledge transfer and intellectual property concerns 9) Increased effort required to manage the supply chain

Key elements of risk management*

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

Complexities related to global supply chains (5)*

1) Language and cultural differences 2) Currency fluctuations 3) Armed conflicts 4) Increased transportations costs and lead times 5) Increased need for trust and cooperation among SC partners

Trade offs in SCM (5)*

1) Lot size-inventory trade-off (carrying cost) 2) Inventory-transportation cost trade-off (customer holding costs) 3) Lead time-transportation cost trade-off 4) Product variety-inventory trade-of 5) Cost-customer service trade-off *Look at book for further details

benefits of outsourcing (6)*

1) Lower labor costs 2) the ability to focus on core strengths 3) Converting FC to VC 4) Freeing up capital to devote to other needs 5) Shifting some risks to suppliers, taking advantage of supplier expertise 6) Ease of expansion outside the home country.

Factors covered by a supplier audit*

1) Management style 2) Quality assurance 2) Materials management 4) Design process used 5) Process improvement policies 6) Procedures for corrective action and follow-up

Trends in Supply Chain Management (6)*

1) Measuring supply chain ROI 2) "Greening" the supply chain 3) Reevaluating outsourcing 4) Integrating IT 5) Adopting lean principles 6) Managing risks *look at note for further details

Closed-loop supply chain

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

Advantages of E-Business (10*

Companies can: 1) Have a global presence 2) Improve competitiveness and quality of service 3) Analyze customer interests 4) Collect detailed information about clients' preferences 5) Shorten supply chain response times 6) Reduce or eliminate the role of 'traditional' retailers and/or intermediaries 7) Realize substantial cost savings Also allows the: 8) Creation of virtual companies 9) Leveling of the playing field for small companies

Ethical code*

Guides behavior, a code should cover behaviors that involve customers, suppliers, suppliers' behaviors, contract negotiation, recruiting, and the environmental issues.

Typical Manufacturing Supply Chain

Supplier (x3) --> storage --> manufacturer --> storage --> distributor --> retailer --> customer

Third Party Logistics (3PL)

The outsourcing of logistics management.

Logistics

The part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information The movement of goods, services, cash, and information in a supply chain.

Supply Chain Management (SCM)

The strategic coordination of the supply chain for the purpose of integrating supply and demand management *SC managers are responsible for managing S&D both within and across business orgs

Flow management*

The three types of flow that need to be managed are product and service flow, information flow, and financial flow.

Vendor-managed inventory (VMI)

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

Risk management*

involves identifying risks, assessing their likelihood of occurring and their potential impact, and then developing strategies for addressing those risks

E-business

the use of electronic technology to facilitate business transactions *2 essential features of e-business: the Web site and order fulfillment. *Many of the problems that occur with Internet selling are supply related.

Factors that differ from country to country, which can affect the success of the supply chain (2)*

1) 1ocal capabilities; financial, transportation, and communication infrastructures 2) Governmental, environmental, and regulatory issues; and political issues.

Challenges of managing supply chains (6)*

1) Barriers to Integration of Separate Organizations. 2) Getting CEOs, Boards of Directors, Managers, and Employees "Onboard." 3) Dealing with Trade-offs 4) Small businesses 5) Variability and Uncertainty 6) Response time

Characteristics of supply chain*

1) Begins with basic suppliers of raw materials and extends all the way to the final customer 2) Facilities = warehouses, factories, processing centers, distribution centers, retail outlets, and offices 3) Functions and activities = forecasting, purchasing, inventory management, information management, quality assurance, scheduling, production, distribution, delivery, and customer service.

2 components of value chains*

1) Supply: starts at the beginning of the chain and ends with the internal operations of the organization. 2) Demand: starts at the point where the organization's output is delivered to its immediate customer and ends with the final customer in the chain.

Supplier code of conduct*

A document which translate the company's ethical stance to supplier requirements. *requires suppliers to maintain safe working conditions, treat workers with respect and dignity, and have production processes that do not harm workers, customers, or the environment

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.

Reevaluating outsourcing*

Companies are taking a second look at outsourcing, especially global suppliers.

Measuring Supply Chain ROI*

Enables managers to incorporate economics into outsourcing and other decisions, giving them a rational basis for managing their supply chains.

Vendor analysis

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

Managing risks*

For some businesses, the supply chain is a major source of risk, so it is essential to adopt procedures for managing risks.

Choosing suppliers*

Have important ramifications for the entire organization Factors BIZ take into account Quality and quality assurance // flexibility // location // price // product or service changes // reputation and financial stability // lead times and on-time delivery

Product and service flow*

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

Information flow*

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

Supplier audits*

Periodic audits of suppliers are a means of keeping current on suppliers' production (or service) capabilities, quality and delivery problems and resolutions, and suppliers' performance on other criteria

Integrating IT*

Produces real-time data that can enhance strategic planning and help businesses to control costs, measure quality and productivity, respond quickly to problems, and improve supply chain operations.

Disintermediation

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

Risk of Global SC

Risks can relate to supply (e.g., supplier failure), costs (e.g., increasing commodity costs), and demand (e.g., decreasing demand) Still other risks can involve intellectual rights issues, contract compliance issues, competitive pressure, forecasting errors, and inventory management.

Typical service supply chain*

Supplier (2x) --> storage --> service --> customer

Logistics

The movement of materials, services, cash, and information in a supply chain.

Supplier partnerships*

The commitment between firms and supply chain partners must be the same. *building relationships with other orgs in their SC implies fewer suppliers, LT relationships, sharing, and cooperation in planning

How managers have compensated for risk in global SC*

To compensate for this, some firms have increased the amount of inventory at various points in their supply chains, thereby losing some of the benefits of global sourcing

Strategic partnering

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

Supply chain visibility

a major trading partner can connect to its supply chain to access data in real time *the ability to view all areas up and down the supply chain in real time

Value chains

a term that reflects the concept that value is added as G/S progress through the chain *Another name for supply chains

Supplier Certification

an assessment that verifies effective procedures related to the buyer's requirements *Certified suppliers are sometimes referred to as world class suppliers. One advantage of using certified suppliers is that the buyer can eliminate much or all of the inspection and testing of delivered goods

Centralized inventory*

generally results in lower overall inventory than there would be if decentralized inventories were used

Adopting lean principles*

helps improve the performance of their supply chains.

Strategic buffering

holding inventory at a distribution center rather than at retail outlets *a way to overcome the bullwhip effect

Bullwhip effect

inventory oscillations become progressively larger looking backward through the supply chain *demand oscillations at the very end

What SCM involves*

involved with planning and coordinating activities that include sourcing and procurement of materials and services, transformation activities, and logistics.

Financial flow*

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

"Greening" the supply chain*

is generating interest for a variety of reasons, including corporate responsibility, regulations, and public pressure. Ex) Reducing packaging , near-sourcing to reduce pollution from transportation, etc

Decentralized inventory

one location may be understocked while another location is overstocked — can provide faster delivery and generally lower shipping costs

Traffic management

overseeing the shipment of incoming and outgoing goods

Supplier Relationship Management*

supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers

Resiliency

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

Event response capability

the ability to detect and respond to unplanned events *Can mean identifying alternate sources of supply *Deal w/ unknown disruptions

Fill rate

the percentage of demand filled by the stock on hand

Reverse logistics

the process of transporting returned items

Supply chain

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

Inventory velocity

the speed at which goods move through a supply chain *The greater the velocity, the lower the inventory holding costs and faster orders are filled and goods are turned into cash.

Information velocity

the speed at which information is communicated in a supply chain

Lead time

time interval between ordering and receiving the order