Operations and Value Chain Quiz

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Questions and Answers

What are two key areas where supplier relationship management (SRM) aids companies?

Cost management and product development.

How does facility location impact a firm's supply chain design?

It influences logistics, costs, and access to suppliers and customers.

What is the role of key performance indicators (KPIs) in supplier relationship management?

KPIs measure supplier performance in critical areas.

What is one benefit of collaboration in the supply chain?

Improved inventory management. Signup and view all the answers

What factors can influence a firm's choice of facility location in a global economy?

Input costs and quality of services/products offered by suppliers. Signup and view all the answers

What tools does SRM use to maintain supplier relationships?

SRM software and interpersonal communications. Signup and view all the answers

Name one innovation made possible through improved supply chain collaboration.

Product and process innovation. Signup and view all the answers

What might be a consequence of poor supplier relationship management?

Increased costs and inefficiencies in the supply chain. Signup and view all the answers

What are the primary impacts of a business's facility location on its operations?

A business's facility location affects its operating costs, pricing for services and goods, and competitive ability in the market. Signup and view all the answers

How can offshore manufacturing affect transportation and coordination?

Offshore manufacturing can lead to increased transportation costs and coordination difficulties if located far from suppliers. Signup and view all the answers

What is the effect of customer contact type on location decisions?

If customer contact requires physical presence, location becomes more critical; otherwise, it may be less significant. Signup and view all the answers

What should managers consider when assessing location desirability?

Managers should consider proximity to customers and suppliers, labor costs, and transportation costs. Signup and view all the answers

What distinguishes dominant factors from secondary factors in location decisions?

Dominant factors, derived from competitive priorities, significantly influence sales or costs, while secondary factors are also important but have less impact. Signup and view all the answers

What constitutes a favorable labor climate, and why is it important?

A favorable labor climate includes wage rates, training needs, work attitudes, productivity, and union strength, as it affects workforce attraction and retention. Signup and view all the answers

Why is proximity to markets a critical factor in deciding facility location?

Proximity to markets ensures the facility can meet the demand for services and goods effectively. Signup and view all the answers

How can the internet mitigate location disadvantages for companies?

The internet can help companies connect with customers and suppliers, reducing the impact of physical distance. Signup and view all the answers

What is the significance of proximity to customers for service providers?

Proximity to customers is crucial as it affects how conveniently they can access services, impacting revenues and profitability. Signup and view all the answers

How do transportation costs influence warehousing and distribution operations?

Transportation costs significantly impact warehousing as holding inventory closer to markets reduces delivery time and enhances sales. Signup and view all the answers

What role do local ordinances play in business location decisions?

Local ordinances, such as pollution or noise control regulations, can affect operational feasibility and costs when choosing a business location. Signup and view all the answers

What secondary factors should firms consider when planning global operations?

Firms should consider factors like local infrastructure, employee skills, construction costs, and community attitudes in their global operations. Signup and view all the answers

How does competition affect the choice of business location?

Management must evaluate competitor locations and anticipate their reactions, as clustering with competitors can either be beneficial or detrimental. Signup and view all the answers

Discuss the advantage of locating near competitors in some industries.

In industries like fast-food and car sales, locating near competitors can create a critical mass that attracts more customers due to increased choice. Signup and view all the answers

Why is the education and skill level of local employees important for global firms?

Educated and skilled local employees are essential for ensuring effective operations and high service levels in global business environments. Signup and view all the answers

What is implied by the concept of 'follow-the-leader' strategy in location selection?

'Follow-the-leader' strategy involves choosing new sites based on the successful locations of competitors to capitalize on existing customer bases. Signup and view all the answers

What are the five basic components of the supply chain management process?

Plan, Source, Execute (Make), Deliver, and Return. Signup and view all the answers

Why is the planning stage critical in the supply chain management process?

The planning stage is critical because it develops a strategy to meet customer demands and maximize profits. Signup and view all the answers

What is the primary focus during the Source stage of supply chain management?

The primary focus is to build strong relationships with dependable suppliers of raw materials. Signup and view all the answers

How can effective supply chain management reduce legal liabilities?

Effective supply chain management can reduce legal liabilities by ensuring compliance with regulations and preventing errors. Signup and view all the answers

In what ways does supply chain management improve cash flow?

Supply chain management improves cash flow by optimizing inventory levels and reducing delays. Signup and view all the answers

What benefits do technologies bring to supply chain management?

Technologies enhance efficiency, visibility, and communication within the supply chain. Signup and view all the answers

What is meant by 'qualitative improvements' in supply chain management?

Qualitative improvements refer to enhancements in relationships, service quality, and supplier performance. Signup and view all the answers

Describe one strategy companies may use during the planning stage of supply chain management.

Companies may use demand forecasting to better align their production and inventory strategies with customer needs. Signup and view all the answers

What is the main objective of Supply Chain Management (SCM)?

The main objective of SCM is to monitor and relate production, distribution, and shipment of products and services. Signup and view all the answers

How does SCM aim to create value for stakeholders?

SCM aims to create value by minimizing costs and improving long-term performance for companies and their customers. Signup and view all the answers

List one qualitative factor and one quantitative factor used in site selection.

Qualitative factor: community attitudes; Quantitative factor: annual transportation costs. Signup and view all the answers

What does a preference matrix do in site selection?

A preference matrix calculates a weighted score for each site to determine the best option. Signup and view all the answers

What are two key strategies employed in SCM?

Merging supply and demand management, and using different strategies to enhance efficiency at each step. Signup and view all the answers

In what way can SCM minimize costs?

SCM can minimize costs by eradicating unnecessary expenses and movements within the supply chain. Signup and view all the answers

What aspect of SCM contributes to better risk management?

SCM contributes to better risk management by maintaining a tight hold over internal inventories and production processes. Signup and view all the answers

Why is it important for every unit in the supply chain to minimize costs?

It is important to minimize costs to enhance long-term performance and create value for customers and stakeholders. Signup and view all the answers

What is the primary role of supply chain managers in the initial stages of the supply chain management process?

Supply chain managers are responsible for selecting suppliers and establishing processes for pricing, delivery, and payment. Signup and view all the answers

What are the key activities involved in the manufacturing stage of the supply chain?

Activities include designing, producing, testing, packaging, and preparing products for delivery. Signup and view all the answers

Why is the manufacturing stage considered the most metric-intensive unit of the supply chain?

It allows firms to gauge quality levels, production output, and worker productivity. Signup and view all the answers

Describe the primary focus during the delivery stage of the supply chain management process.

The focus is on logistics, which includes planning the delivery of products and managing customer orders. Signup and view all the answers

What four logistics activities are essential in the delivery stage of the supply chain?

Essential activities include receiving orders, establishing a network of warehouses, selecting carriers, and invoicing for payments. Signup and view all the answers

What is the final stage of the supply chain management process, and what does it involve?

The final stage is the return, which involves managing the reverse logistics and processing returned goods. Signup and view all the answers

How do supply chain managers improve relationships with suppliers?

They create metrics to control and improve these relationships through ongoing assessment and communication. Signup and view all the answers

What processes do supply chain managers create to handle inventory effectively?

They develop processes for receiving, examining, transferring, and authorizing payments for shipments. Signup and view all the answers

Study Notes

Unit 2: Operations and Value Chain

Operations and Value Chain are discussed
Sourcing and Supply Management are key topics
Supplier Management is crucial for effective supply chain management
Globalisation, international markets, and cost management drive it
Complex global supplier networks are significant
Decisions must be made on which suppliers to use, when, their location, and how to manage them
Supplier selection, Make-versus-buy, Global sourcing, and Supplier relationship management (SRM) are key topics in supplier management
Supplier Selection is the first step in supplier management
Suppliers are critical to effective supply chain management
Flow chart represents supplier approval processes
Supplier selection process involves identifying key categories, weighting categories and subcategories, defining scoring systems, evaluating suppliers directly, reviewing evaluations for decisions, and reviewing performance continuously
Firms must control the supplier selection process
A preference matrix is used for selecting suppliers (e.g., total cost, delivery, quality, environment)
Weighted scores are used to evaluate suppliers
Make-versus-Buy and Outsourcing Decisions involve choosing whether to do something internally or externally
Outsourcing involves contracting with an outside provider
Offshore outsourcing uses companies in other countries
Reasons to outsource include lack of in-house expertise, less risk, sole source, no available technology internally, temporary requirements, customer needs, cost reduction, and core competencies
Global Sourcing is the search for and selection of suppliers globally
It's complex and challenging, especially when managing geographically distant suppliers
Sourcing involves identifying and selecting supply sources
Supply management's roles in global sourcing
Total cost of ownership (TCO) is the sum of all costs associated with acquisition, use, ownership, and disposal
TCO analysis validates or invalidates cost-saving assumptions
Offshore buying may not always result in predicted cost savings
Geographic factors, infrastructure, labor force characteristics, culture, and legal environment influence costs
Acquisition costs include supplier identification, evaluation, selection, sourcing administration, transportation, and regulatory compliance.
Use costs include setup, tooling, conversion, inventory, rework, scrap, warranty, installation, training, maintenance, warehousing, handling, and supplier noncompliance
Ownership costs include taxes, insurance, depreciation, shrinkage, obsolescence, cost of money, and opportunity costs
Disposal costs include environmental cleanup, salvage, and contract termination
Supplier Relationship Management (SRM) is a tool to manage supplier relationships to establish mutual expectations, facilitating regular communication, and resolving issues
A long-term strategic approach is typically cost-driven, unlike a tactical approach that's price-driven
SRM benefits include improved supply chain value through improved cost management
SRM benefits include product development, inventory management, transportation management, and product/process innovation
Key Performance Indicators (KPIs) monitor supplier performance
SRM software aids data assembly, analysis, and display
Interpersonal interactions with key suppliers are part of SRM
Understanding facility location is critical in supply chain management
Facility location is the process of determining geographic sites for operations
Location choices impact supply chains, providing access to suppliers and lower input costs or better product quality
Business facility location affects operating costs, pricing, and market participation
Offshoring can lead to higher transportation costs and coordination difficulties
Customer relationship processes are also impacted by location decisions
Location decisions sometimes improve efficiency for high-traffic areas versus locations further away
Managers consider factors like cost, quality, time, and flexibility when selecting locations and secondary factors like labor climate, proximity to markets, impact on the environment, quality of life, proximity to suppliers
Factors influencing location decisions in manufacturing include labor climate, proximity to markets, impact on the environment, and quality of life, proximity to suppliers
Secondary factors include utilities, taxes, real estate costs
Site-specific factors crucial for retailers include retail activity, residential density, traffic, and site visibility
A strategic process considers dominant and secondary factors to identify the best location
Supply Chain Management (SCM) manages the flow of products and services from origin to consumption
Its main objective is to monitor and relate production, distribution, and shipment of products to internal inventories, production, and sales
Supply Chain management merges supply and demand management to efficiently handle every step of the chain
Each participant strives to minimize costs, improve performance, and create value for stakeholders
SCM's objective is to optimize efficiency and cost-effectiveness of the supply chain, including material flow, information flow, and money flow
Supply chain management processes include plan, source, execute, deliver, and return stages
Planning involves designing product and service strategies to maximize profit
Sourcing involves supplier relationships, methods, shipping/delivery, and payment methods, and pricing, to meet the need of goods
Execution includes manufacturing goods demanded by customers and ensuring proper packaging and delivery
Delivery involves logistical planning, warehouse network establishment, and payment systems
Return Management involves handling customer queries, dealing with returned products (damaged/defective goods), and developing flexible customer return processes

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Test your knowledge on Operations and Value Chain principles in this Unit 2 quiz. Focus areas include sourcing, supply management, and supplier relationship management. Dive into the complexities of global supplier networks and decision-making in supplier selection.

Operations and Value Chain Quiz - Unit 2

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