Chapter 15: Supply Chain Management

At $100 billion a year in value, US companies want to recover value from returned products instead of discarding them. What are some of the ways this can be accomplished?

- Repairing defective products to resell as reconditioned. - Disassembling obsolete parts and harvesting for re-use. - Recycling the materials of returned products.

What are the main factors involved in choosing a supplier?

- Reputation and financial stability - Quality and quality assurance - Flexibility and lead times - Price

Which of the following are duties associated with Procurement?

- Sourcing materials, parts, or finished goods. - Managing vendors' quality and timeliness of delivery. - Negotiating contracts with suppliers.

What is the supplier relationship like when the vendor is viewed as an adversary?

- There are many suppliers who are pitted against one another. - Cost is the primary driver and quality inspection is performed by buyer.

An important aspect of supply chain management is flow management. What are the three types of flow?

1. Goods/services 2. Information 3. Financial

Which of the following best describes the two parts of the value chain - the supply and demand components?

1. The supply component starts at raw material and ends in the organization. 2. The demand component is from delivery of output to the final customer.

For wholesalers and retailers what approximate percentage of finished goods is procured in the form of purchased inventories?

90%

Which functional group is responsible for handling payments to suppliers and must be notified promptly when goods are received.

Accounting

All of the following are true about strategic sourcing except which?

Focuses on purchase price instead of total cost. Strategic sourcing: - Seeks to maximize value-added activities. - Focuses on risk reduction. - Employs cross-functional teams to reduce process waste. - Ties payments to supplier performance.

The _____________ the inventory velocity, the _____________ the holding costs.

Greater/lower

What is meant by the term bullwhip effect in inventory management?

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

How are Assemble-to-Order and Make-to-Order different order fulfillment types?

Make-to-Order requires a long time to manufacture Assemble-to-Order is relatively short using in-stock components.

Often members of a supply chain have conflicting objectives which can be a barrier to effective supply chain integration. Which of the following is an example of this?

One company insists on frequent low volume deliveries from a supplier, transferring inventory holding costs to the vendor.

What is meant by the supply chain management practice of measuring ROI along the supply chain?

ROI stands for Return on Investment and is a financial basis for decision making, e.g., outsourcing.

What does the acronym RFID stand for?

Radio Frequency Identification

Choose the correct example of tactical versus operational inventory management - one of the responsibilities of supply chain managers.

Tactical: Deciding where in the supply chain to hold inventory. Operational: Replenishing inventory when depleted.

What is a positive factor related to globalization of supply chains?

Technological advances in communications linking operations world-wide.

What is meant by the term "reverse logistics?"

The return of goods from customers. The process of physically retrieving and transporting returned items back to the company or a third-party handler.

What is a broad definition of e-Business?

The use of electronic technology to facilitate business transactions.

What are the various functions of traffic management?

- Ensure compliance with government regulations. - Monitor external factors which might cause potential delays. - Make decisions on shipping methods and times.

What elements should a company consider when developing a supply chain code of ethics?

- Environmental issues - Customer, supplier, and company behaviors - Human relations and recruitment policies

What are the main factors contributing to supply chain success?

- Integration of all aspects of the supply chain viewing it as a system. - Collaboration and joint planning across the supply chain members. - Development and maintenance of effective supplier relationships.

In what ways can ERP (Enterprise Resource Planning) software effectively assist supply chain managers?

- Inventory replenishing - Production tracking - Transportation managing - Demand planning

What are some of the potential downsides of outsourcing?

- Language and cultural differences - Increased transportation costs - Loss of jobs

Supply chains make use of various forms of facilities. Select all the examples of facilities from the list below.

- Distribution centers - Factories - Retail outlets - Warehouses

The back end of e-Commerce, order fulfillment, involves what activities?

- Order processing & billing - Warehousing & inventory management - Packing, shipping, & delivering

Which of the following factors contribute to the inventory bullwhip effect?

- Overreaction to stockouts - Forecast inaccuracies - Order batching to save on costs

What are some ways that companies can avoid product returns?

- Quality assurance to minimize defective products. - Improved product design for customer satisfaction purposes.

Put the production control logistical steps in sequential order with 1 being the start of the process and 6 being the last.

1. From incoming vehicles to receiving/storage. 2. From storage to point of use. 3. From one work center to the next storage. 4. From the last operation to final storage. 5. From storage to packing/shipping. 6. From shipping to outgoing vehicles.

Put the main steps of the purchasing cycle in order from 1 to 5 with 1 being the first step and 5 being the last.

1. Receive the requisition. 2. Select a supplier. 3. Place an order. 4. Monitor the order. 5. Receive the order.

The activities that supply chain managers are involved with planning and coordinating are all of the following except which?

Financial accounting

What is the difference between centralized and decentralized purchasing?

Centralized purchasing handles all orders from one special department. Decentralized purchasing is done by each individual department separately.

In order to minimize warehousing costs, some companies such as Walmart unload goods from a supplier and immediately load the items onto a truck headed to a retail outlet. This technique is known as what?

Cross-docking

A top management strategic responsibility with respect to supply chains is network configuration. What does this area of responsibility entail?

Determining the number and location of suppliers, warehouses, production/operations facilities, and distribution centers.

One approach to reducing lead times for customer is to ship direct from the factory to the end user. Reducing one or more steps in the supply chain is known as what?

Disintermediation

All of the following are support items usually required to perform Logistics operations except which?

Marketing brochures Support items usually required to perform Logistics operations: - Tools & lubricants - Equipment & parts - Fuel

In evaluating shipping alternatives, operation using a low-cost strategy choose _____________ methods, while operations using a responsive strategy more often opt for _____________, higher-cost carriers.

Slower/quicker

True or false: Purchasing agents should be concerned about the perception of wrongdoing when conducting business on behalf of their employer even when they have done nothing unethical.

True

True or false: Sometimes if a buyer does not want to develop its own supplier certification program, it will accept standard industry certifications such as ISO 9000.

True

Why are supplier audits conducted periodically by the buyer?

To keep current on vendor capabilities, quality, performance, problems, and their resolutions.

Which of the below is the goal of supply chain management?

To match supply and demand as efficiently as possible.

Select the best definition of strategic partnering.

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

A supply chain is alternatively referred to by what name?

Value chain

Select the best definition of supply chain visibility.

When a major trading partner can connect to any part of its supply chain to access data on inventory, shipment status, etc.

What is the definition of a closed-loop supply chain?

When a manufacturer controls both the forward and reverse logistics.