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Questions and Answers
Which of the following is a concern associated with electronic procurement?
Which of the following is a concern associated with electronic procurement?
What is one of the advantages of electronic procurement?
What is one of the advantages of electronic procurement?
Which of the following is NOT one of the four basic types of e-commerce business models?
Which of the following is NOT one of the four basic types of e-commerce business models?
An example of a business operating on a sell-side system is?
An example of a business operating on a sell-side system is?
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Which type of e-commerce model involves multiple third parties providing information about products or services?
Which type of e-commerce model involves multiple third parties providing information about products or services?
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What strategy classifies products/services based on both risk and profit potential?
What strategy classifies products/services based on both risk and profit potential?
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Which of these platforms is an example of an Online trading community?
Which of these platforms is an example of an Online trading community?
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What is a key issue related to technology in electronic procurement?
What is a key issue related to technology in electronic procurement?
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What is the primary differentiator of Just-In-Time (JIT) compared to traditional approaches?
What is the primary differentiator of Just-In-Time (JIT) compared to traditional approaches?
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What is a key advantage of Materials Requirement Planning (MRP) systems?
What is a key advantage of Materials Requirement Planning (MRP) systems?
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Which statement best describes the shortcomings of MRP-based systems?
Which statement best describes the shortcomings of MRP-based systems?
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What is the main goal of MRP systems in regard to inventory levels?
What is the main goal of MRP systems in regard to inventory levels?
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What does Distribution Requirements Planning (DRP) primarily address?
What does Distribution Requirements Planning (DRP) primarily address?
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Which of the following is NOT a requirement for successful JIT applications?
Which of the following is NOT a requirement for successful JIT applications?
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How does JIT reduce costs compared to traditional inventory methods?
How does JIT reduce costs compared to traditional inventory methods?
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Which is a noted limitation of MRP systems in relation to demand sensitivity?
Which is a noted limitation of MRP systems in relation to demand sensitivity?
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What method is primarily used for the long-distance movement of low-value goods?
What method is primarily used for the long-distance movement of low-value goods?
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Which transportation challenge faced by the industry had the highest percentage of concern in 2018?
Which transportation challenge faced by the industry had the highest percentage of concern in 2018?
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Which factor is NOT listed as a role inhibitor for transportation?
Which factor is NOT listed as a role inhibitor for transportation?
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What characteristic is true about motor carriers in the US domestic supply chain?
What characteristic is true about motor carriers in the US domestic supply chain?
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By 2023, what was considered the single most important transportation challenge?
By 2023, what was considered the single most important transportation challenge?
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What percentage of the trucking industry consists of for-hire carriers?
What percentage of the trucking industry consists of for-hire carriers?
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What is a key challenge faced by the trucking industry?
What is a key challenge faced by the trucking industry?
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What is the average shipment length for railroads in the US?
What is the average shipment length for railroads in the US?
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What is the main purpose of Demand Replenishment Planning (DRP)?
What is the main purpose of Demand Replenishment Planning (DRP)?
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Which of the following describes how Vendor-Managed Inventory (VMI) operates?
Which of the following describes how Vendor-Managed Inventory (VMI) operates?
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What is a principal advantage of Vendor-Managed Inventory (VMI) systems?
What is a principal advantage of Vendor-Managed Inventory (VMI) systems?
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What is a common shortcoming of VMI systems?
What is a common shortcoming of VMI systems?
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In the ABC analysis, what category do A items fall into?
In the ABC analysis, what category do A items fall into?
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According to Pareto's Law, what does the '80-20' rule imply about inventory?
According to Pareto's Law, what does the '80-20' rule imply about inventory?
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What does the quadrant model for inventory classify primarily?
What does the quadrant model for inventory classify primarily?
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Which type of inventory is characterized as safety stock?
Which type of inventory is characterized as safety stock?
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Which of the following is NOT considered a principal type of inventory?
Which of the following is NOT considered a principal type of inventory?
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What is the primary focus of sophisticated inventory management approaches like ABC analysis?
What is the primary focus of sophisticated inventory management approaches like ABC analysis?
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Which of the following factors is NOT typically considered in carrier selection?
Which of the following factors is NOT typically considered in carrier selection?
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What is a main advantage of a core carrier strategy?
What is a main advantage of a core carrier strategy?
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In the context of rate negotiations, which issue is primarily a concern for carriers?
In the context of rate negotiations, which issue is primarily a concern for carriers?
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What approach focuses on minimizing transportation costs without concern for the carrier's viability?
What approach focuses on minimizing transportation costs without concern for the carrier's viability?
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Which of the following is NOT a component of transportation execution and control?
Which of the following is NOT a component of transportation execution and control?
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Which of the following statements about modal selection vs carrier selection is true?
Which of the following statements about modal selection vs carrier selection is true?
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What factor is essential for ensuring product protection during transportation?
What factor is essential for ensuring product protection during transportation?
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What is a primary characteristic of a collaborative negotiation approach?
What is a primary characteristic of a collaborative negotiation approach?
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Study Notes
Collaboration Tools
- Collaboration tools are often used in the areas of logistics procurement, project management, knowledge management, and contract management.
Advantages and Concerns of Electronic Procurement
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Concerns:
- Cybersecurity
- Lack of face-to-face contact between buyer and seller
- Technological limitations, including lack of standard protocols, system reliability, and the need for time and money investment
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Advantages:
- Lower operating costs: Reduced paperwork, sourcing time, improved control over inventory and spending.
- Improved procurement and sourcing efficiency: Finding new suppliers, better communication, improved personnel use, and shorter cycle times.
- Reduced procurement prices
- Improved communication
- Easier access to more suppliers
Four Basic Types of E-commerce Business Models
- Sell-side vs. buy-side system: Whether e-Commerce capabilities are seller-centric or buyer-centric.
- B2B and B2C: Online businesses selling to businesses or consumers, respectively. These are both "sell-side".
- Online marketplace: e-Commerce site where product or service information is provided by multiple third parties, whereas transactions are processed by the marketplace operator.
- Online trading community: A system maintained by a 3rd party technology supplier that provides buyers and sellers with a structured method for trading, bartering, or selling goods and services.
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Examples:
- Delta Air Lines, Barnes & Noble, Amazon, Office Depot, Expedia, Uber, eBay, Craigslist, NTE.
Sourcing Strategies
- Sourcing strategies depend on the risk and value or profit potential from needed products/services:
- Generics
- Commodities
- Distinctives
- Criticals
- The length of the lead time is less important than the reliability of the lead time.
Just-In-Time (JIT)
- JIT is a strategy that aims to minimize or eliminate inventories by relying on short, consistent lead times and improved responsiveness and flexibility.
- JIT saves money on downstream inventories.
- To be successful with JIT, organizations need:
- Efficient and dependable manufacturing processes.
- Effective and dependable communications & information systems
- High-quality, consistent transportation services.
Materials Requirement Planning (MRP)
- MRP focuses on providing materials and components necessary for end-product production, based on demand.
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Key Objectives:
- Ensure the availability of materials, components, and products for planned production and customer deliveries.
- Maintain the lowest possible inventory levels that support service objectives.
- Plan manufacturing activities, delivery schedules, and purchasing activities.
- An MRP system translates a master production schedule into time-phased net inventory requirements and planned coverage for each component item.
Principal Advantages of MRP-based Systems
- Maintenance of reasonable safety stock levels with minimization or elimination of inventories.
- Identification of process problems and potential supply chain disruptions prior to occurrence, allowing for corrective actions.
- Production scheduling based on actual demand and forecasts of independent demand items.
- Coordination of materials ordering across multiple points in a firm's logistics network.
- Suitability for batch, intermittent assembly, or project processes.
Principal Shortcomings of MRP-based Systems
- Computer-intensive applications, making changes difficult once the system is in operation.
- Potential for increased ordering and transportation costs as firms move towards a more coordinated system of ordering product in smaller amounts.
- Limited sensitivity to short-term fluctuations in demand compared to order point approaches.
- Complexity and occasional failure to function as intended.
Distribution Requirements Planning (DRP)
- DRP manages outbound shipments like MRP manages inbound shipments.
- DRP determines replenishment schedules between manufacturing facilities and distribution centers.
- DRP is usually coupled with MRP to manage the flow and timing of both inbound materials and outbound finished goods.
Vendor-Managed Inventory (VMI)
- VMI manages inventories outside a firm's logistics network, specifically inventories held in its customer's distribution centers.
How VMI Works
- The supplier and its customer agree on which products are to be managed using VMI in the customer's distribution centers.
- An agreement is made on reorder points and economic order quantities for each of these products.
- As products are shipped from the customer's distribution center, the customer notifies the supplier by SKU of the volumes shipped on a real-time basis.
- The supplier monitors on-hand inventories in the customer's distribution center, and when the on-hand inventory reaches the agreed-upon reorder point, the supplier creates an order for replenishment, notifies the customer's distribution center of quantity and time of arrival, and ships the order to replenish the distribution center.
Principal Advantages of VMI Systems
- The knowledge gained by the supplier of real-time inventory levels of its products at its customer locations allows the shipper more time to react to sudden swings in demand to assure that stockouts do not occur.
Principal Shortcomings of VMI Systems
- Suppliers' uses of VMI to push excess inventory to a customer distribution center at the end of the month in order to meet monthly sales quotas, resulting in the customer holding extra inventory, adding costs to its operations.
Inventory Classification
- Multiple product lines and inventory control require organizations to focus on more important inventory items and use more sophisticated and effective approaches to inventory management.
ABC Analysis
- ABC classification technique assigns inventory items to one of three groups according to the relative impact or value of the items that make up the group.
- A items: Most important
- B items: Lesser importance
- C items: Least important
Pareto's Law (The "80-20" Rule)
- The 80‑20 rule suggests that a relatively small percentage of inventory might account for a large percentage of the overall impact or value.
Quadrant Model
- Classifies finished goods inventories using value and risk to the firm as the criteria.
- Value: Measured as the value contribution to profit.
- Risk: The negative impact of not having the product available when it is needed.
Principal Types of Inventory
- Cycle stock: Inventory that is on hand to meet expected demand.
- Work-in-process: Inventory that is in the process of being produced.
- Inventory in transit: Inventory that is being transported from one location to another.
- Safety stock: Inventory that is held to buffer against unexpected demand.
- Seasonal stock: Inventory that is held to meet seasonal demand.
- Anticipatory stock: Inventory that is held in anticipation of future events, such as a price increase or a strike.
Role of Transportation in Supply Chain
- Transportation influences supply chain design, strategy development, and total cost management.
Transportation Inhibitors
- Offshore manufacturing
- Changing customer requirements
- Transportation capacity constraints
- Transportation rate variation
- Growing governmental requirements
Transportation Challenges
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2018 (Major transportation challenges):
- Qualified driver availability - 56%
- Rising customer expectations - 48%
- Managerial talent retention - 48%
- Service capacity availability - 45%
- Technology deployment cost - 42%
- Operating cost volatility - 34%
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2023 (The single most important challenge):
- Rising customer expectations - 23%
- Technology deployment cost - 16%
- Qualified driver availability - 13%
- Operating cost volatility - 13%
- Capacity availability - 10%
Modes of Transportation
- Motor carriers
- Railroads
- Water carriers
- Air carriers
- Pipelines
- Intermodal transportation
Motor Carriers
- Characteristics: Most widely used mode of transportation in the US domestic supply chain.
- Advantages: High level of flexibility, wide geographic coverage, relatively low cost.
- Disadvantages: Limited capacity, susceptibility to traffic congestion, high fuel costs.
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Key Challenges:
- Labor shortage
- Costs
- Competition
Railroads
- Characteristics: Used primarily for long-distance movement of low-value goods.
- Advantages: High capacity, low cost per ton-mile.
- Disadvantages: Slow transit times, limited accessibility.
Water Carriers
- Characteristics: Primarily used for bulk cargo and long-distance movement of goods.
- Advantages: Low cost per ton-mile, high capacity.
- Disadvantages: Slow transit times, limited accessibility.
Air Carriers
- Characteristics: Used for high-value goods, time-sensitive shipments and perishable goods.
- Advantages: Fast transit times, high reliability.
- Disadvantages: High cost, limited capacity.
Pipelines
- Characteristics: Used for transporting liquids and gases.
- Advantages: High capacity, low cost per ton-mile, high reliability.
- Disadvantages: Limited flexibility, limited access.
Intermodal Transportation
- Characteristics: Combines two or more different modes of transportation.
- Advantages: Flexibility, efficiency, cost savings.
- Disadvantages: Requires coordination among different carriers, potential for delays.
Carrier Selection
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Modal Selection vs Carrier Selection
- Modal selection: More options available, longer-term decisions.
- Carrier selection: Fewer options available, frequent and active decisions.
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Carrier Selection Factors
- Geographic coverage
- Transit time average and reliability
- Freight rates
- Equipment availability and capacity
- Product protection
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Core Carrier Strategy: Focusing on a limited number of quality carriers to leverage purchasing dollars for lower rates, promote strong relationships, and give priority access to limited capacity.
Rate Negotiations
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Buyers' Key Negotiation Issues
- Equipment availability
- Freight rates
- Service levels
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Carriers' Key Negotiation Issues:
- Volume commitments
- Shipment frequencies
- Origin-destination combinations
- Freight characteristics
- Related cost issues
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Negotiation Approaches:
- Adversarial: Minimizing transportation cost regardless of the impact on carrier financial performance or long-term viability.
- Collaborative: Developing contracts for tailored transportation services at rates that fairly compensate the carriers.
Transportation Execution and Control
- Shipment Preparation: Ensuring that shipments are properly packaged and labeled, and that all necessary documentation is in order.
- Freight Documentation: Creating and maintaining all necessary shipping documents, such as bills of lading, invoices, and insurance certificates.
- Maintaining In-Transit Visibility: Tracking the location and status of shipments in real-time to ensure timely delivery.
- Transportation Metrics: Tracking key metrics such as on-time delivery performance, cost per unit, and customer satisfaction to measure transportation efficiency.
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Description
This quiz explores the different collaboration tools used in various management fields and examines the advantages and concerns associated with electronic procurement. Additionally, it discusses the four basic types of e-commerce business models, highlighting the differences between sell-side and buy-side systems.
