Week 8 - Chapter 11 - Supply Chain Management

Logistics embodies two flows, what are they ?

Inbound - Physical Supply: Flows that provide raw materials, components, and supplies to the production processes Outbound - Physical Distribution: Flows that deliver completed products to customers and channel intermediaries.

What are the financial benefits of Supply Chain Management?

Lower costs Higher profits Enhanced cash flow Revenue growth Higher rates of return on assets

In high tech markets where obsolescence is a reality, close attention to inventory is an absolute must. Inventory management considers four factors that can reduce profits, what are they ?

Obsolescence Devaluation Price protection Return costs

List some downfalls to poor logistics management?

Poor logistics result in higher inventory carrying costs to distributors. Poor logistics implementation can result in inventory shortages which can lead to customer dissatisfaction. Weakens their competitive advantage

Successful SCM programs can improve overall company performance by ?

Revenue enhancement Cost reduction

CM and Logistics has risen in importance due to what ?

Time-based competition Improved communications and software technology Expanding globalization More attention to quality The changing face of inter-firm relationships

An efficient and effective supply chain can be a powerful competitive weapon providing: Waste reduction Time compression Flexible response Unit cost reduction Explain these in more detail.

Waste reduction - Minimizing duplication of efforts, harmonizing operations and systems, and enhancing quality Time compression - Compressing order-to-delivery cycle time Flexible response - Meeting customer's unique requirements in cost-effective manner Unit cost reduction - Reducing cost per unit to end users by determining performance levels that customers desire

What are 10 controllable elements in a logistics system ?

1. Customer services 2.Order processing 3. Logistics communication 4. Transportation 5. Warehousing 6. Inventory control 7. Packaging 8. Materials handling 9. Production planning 10. Plant & warehouse location

When managing the logistical system, two measurements need to be considered, what are they ?

1. Total distribution costs 2. Level of logistical services provided to customers

One approach is to outsource local warehousing. In fact, not only is warehousing often outsourced, but so is assembling, packaging, order processing and labeling. What are the advantages of third party warehousing ?

1. flexibility 2. reduced assets 3. professional management 4. enter or exit the market quickly

What are the 7 common elements of logistics service?

Delivery time Delivery reliability Order accuracy Information access Damage Ease of doing business Value-added service

What is supply chain management?

Encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and logistics. In essence, supply chain management integrates supply and demand across companies.

Whats the difference between functions & innovative products? And give examples.

Functional products: - Functional products include MRO, office furniture etc - They have a predictable demand pattern - Goal for functional products is to design an efficient physical distribution system that minimizes logistics and lowers inventory costs. Innovative products: - Innovative products include software, wireless products, and other high-tech products. - They have a less predictable demand. - They have short life cycles. - The focus is to have enough inventory to meet demand and maximize profits.

Inventory management is the buffer in the logistical system. Inventories are needed in business channels because?

Inventories are needed because: Production and demand are not perfectly matched. Production usually occurs in anticipation of demand. Operating deficiencies in logistical system often result in product unavailability. Business customers cannot predict their product needs with certainty.

Most companies are now outsourcing transportation, warehousing and information processing. The trend is continuing and is a form of specialization and division of labor. What is the main benefit of outsourcing and what is the downfall?

Outsourcing allows a company to concentrate on their core business while enjoying the third parties expertise. This usually includes benefits such as lower costs, better service, improved asset utilization , increased flexibility and access to leading technology. Outsourcing can lead to loss of control over a variety of product aspects including quality, service and delivery.

What is the just in time system ?

Suppliers carefully coordinate deliveries with the manufacturers production schedule, often delivering products just before they are used. The objective is to eliminate waste.

Whats the difference between logistics management & supply chain management?

Supply Chain Management looks at all the integration of all business processes that add value for customers. The focus of logistics in the supply chain is the flow of product through the supply chain, with timely information driving the process.

Three major areas are logistically intertwined. They are: Logistical facilities Transportation Inventory considerations What is the best approach to take for calculating logistic costs?

The best approach is to take the Total Cost view for these activities. It determines the total costs of acquiring and then using a given items from a particular supplier. It typically finds hidden costs of holding inventory, poor quality, and delivery failure.

Trying to reduce distribution costs, yet still providing good services to the customer is a balancing act. What approach can be used to tackle this?

Total-Cost or Trade-Off approach The total cost approach has generated the idea that all logistical activities need to be thought of as a whole, their total cost. It uses cost trade-offs, when logistics expenses may increase in one area while decreasing in others.

=Logistically located, proper facilities can reduce transportation costs, and or increase delivery service to customers. True or false?

True

Logistical service relates to the availability and delivery of products to the customer. Responsive logistical service advances customer satisfaction and develops buyer-seller relationships.Effective logistics reduces inventory, thus saving costs; consistent delivery leads to dependencies which leads to repeat business. True or false?

True

Many companies have now integrated SCM into all phases of their operation to include... Design Sourcing Manufacturing Distribution This has resulted in enhanced market position and added value for customers. True or False?

True

Once partners agree on establishing an integrated supply chain, performance metrics can be established to track its goals.The metrics must measure performance, and are tied to a financial system that rewards each participant fairly. True or false?

True

To make an SCM program work, there is a need to create an "overlap" among participants in the supply chain.There needs to be a long-term commitment and interwoven relationships. This includes sharing information about, well, everything. True or False?

True

Warehousing works around the need for expensive transportation (e.g., air transportation vs. trucking) and costly order processing by keeping products in local markets. True or false?

True

The objective of Total Quality Management and Just In Time principles is to eliminate excess inventory.Current thinking is that inefficiencies in the system results in excess/shortfall inventory.If there could be better forecasting, improved delivery and zero manufacturing defects, the possibility to eliminate the need for inventory is possible, especially due to certain advances. What new information technology elements has improved the inventory control ?

bar coding, scanner data, total quality processes, better transportation management and more effective information flow have helped reduce inventory costs.

Transportation is usually the most expensive part of the logistic process. There are various transportation choices. Cost, speed, reliability, and capability need to be considered when making the choice. Studies show that carrier performance improved when they were involved in strong buyer and seller relationships. Further, if carriers are integrated into the supply chain, overall competitive advantage increased. List some types of transport.

rail, truck, water, air or combination.