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Questions and Answers
What is Supply Chain?
What is Supply Chain?
All stages involved directly, or indirectly, in fulfilling a customer request.
Customers are not an integral part of the supply chain.
Customers are not an integral part of the supply chain.
False
What are the three main categories of Supply Chain decisions?
What are the three main categories of Supply Chain decisions?
The primary purpose of any Supply Chain is to generate profit for itself.
The primary purpose of any Supply Chain is to generate profit for itself.
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Which of these options are NOT a category of the Push/Pull view of processes in a Supply Chain?
Which of these options are NOT a category of the Push/Pull view of processes in a Supply Chain?
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Study Notes
Introduction to Supply Chain Management
- Supply chain encompasses all stages involved, directly or indirectly, in fulfilling a customer request.
- Stages include: supplier, manufacturer, distribution center, retailer, and customer.
- Information, products, and funds flow amongst the stages.
- Not all stages are present in every supply chain.
Supply Chain Management Objectives
- Primary purpose of a supply chain is to satisfy customer needs.
- Secondary purpose is to generate profit for itself.
- Surplus = customer value - supply chain cost
- Customer value is the value of the final product to the customer, which may vary.
Importance of Supply Chain Decisions
- The management and design of supply chain flows (products, information, and funds) are crucial to a company's success.
- Decisions must be adapted to a changing business environment.
- Decisions related to flows (products, information, and funds) are needed to improve supply chain surplus.
- Frequency and time frame of decision making influence the strategy.
Supply Chain Decision Categories
- Strategy: decisions for the next 1-5 years, anticipating market conditions, network configuration, and process execution by stages.
- Tactics (Planning): decisions for quarters to years, using information from previous periods, anticipating performance improvements through flexibility in strategy.
- Tactics (Operations): daily decisions for optimizing performance, managing customer orders, and inventory allocation.
Supply Chain Processes: Push/Pull and Cycle views
- Push: processes initiated in anticipation of customer orders based on forecasts; speculative.
- Pull: processes initiated in response to customer orders; constrained by inventory and capacity.
- Cycle: processes at the interface between successive stages; used for operational decisions.
Sourcing Decisions (In-House vs. Outsource)
- Outsourcing decisions focus on whether to perform supply chain activities in-house or by a third party.
- Third parties can aggregate capacity, inventory, and other resources to improve a business' capabilities.
- Specialization or learning may lead to lower costs for a third party in certain cases, justifying outsourcing.
- Potential risks of outsourcing include increased risks and dependence for certain functions.
Factors Influencing Third-Party Sourcing
- Firm Scale: Larger firms are less likely to gain scale economies from outsourcing, making increased surplus less probable.
- Uncertainty: Highly variable requirements make outsourcing less likely to increase surplus.
- Asset Specificity: If specific assets are needed, outsourcing is less likely to improve the surplus.
Supplier Selection Decisions
- Auctions are best when acquisition cost is primary - but not useful if post-ownership costs are major.
- Quality and performance expectations are essential to consider.
- Bargaining surplus is the difference between buyer and seller values, and is ideally divided equitably.
- Independent actions can decrease profitability compared to collaborative ones.
Risk Sharing and Reward in Supply Chain
- Risk can be pushed to other parties in the supply chain.
- Performance improvements can be incentivized using "shared-savings contracts".
- Effective collaboration aligns supplier and buyer incentives.
Different Sourcing Strategies
- Options regarding sourcing include in-house production, outsourcing to third parties, or a mix of both.
- Sourcing strategies can be tailored to various product and market characteristics.
- Combining responsive onshore/near-shore sources, with low-cost offshore sources, provides a balanced approach for firms.
Operational Excellence in Supply Chain
- Processes like Lean principles, Total Productive Maintenance (TPM), Six Sigma principles, waste reduction, and continuous improvement aim for increased cost-efficiency, operational efficiency and business culture.
Business Analytics/Data Integration
- Use cases demonstrate how AI, through platforms like Hubble or Garvis, can enhance visibility and streamline information flows in the supply chain.
Chat GPT, AI, and Supply Chain
- AI-driven software tools can forecast demand, optimize pricing, manage vendor relationships, and improve predictive maintenance.
Inventory Management
- Inventory policies often focus on balancing holding costs (stock-outs) associated with carrying inventory, and replenishment costs with periodic or continuous models
- The optimal quantity to order (economic order quantity, or EOQ), balances the costs of holding inventory and frequently placing orders.
- Key cost components and considerations include order costs, carrying costs, penalties if stock outs are not allowed, and demand variability
Operational Excellence Models
- Using structured methodology like DMAIC (Define, Measure, Analyze, Improve, Control).
- Identifying critical features of business processes using different mapping & analysis methods
- Focusing on problem solving using teams and collaboration
Operational Excellence in Specific Context
- Case studies demonstrate effective implementation of operational excellence principles in different contexts: • Manufacturing: reducing waste and improving efficiency in production processes. • Logistics: optimizing transportation and delivery routes, improving warehouse systems. • Service Companies: improving processes related to customer service.
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Description
Explore the fundamental concepts of supply chain management, including its stages, objectives, and the importance of effective decision-making. Understand how supply chain dynamics directly affect customer satisfaction and profitability. This quiz will enhance your knowledge about managing the flow of products, information, and funds in a supply chain.