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What is the primary objective of logistics management?
What is the primary objective of logistics management?
Which of the following is a benefit of centralized purchasing?
Which of the following is a benefit of centralized purchasing?
What is a common sourcing strategy in purchasing management?
What is a common sourcing strategy in purchasing management?
What is a key aspect of supplier development in building the supply base?
What is a key aspect of supplier development in building the supply base?
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What is a benefit of outsourcing logistics management?
What is a benefit of outsourcing logistics management?
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What is the primary objective of supply chain management?
What is the primary objective of supply chain management?
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What is outsourcing in the context of supply chain management?
What is outsourcing in the context of supply chain management?
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What is a key aspect of supplier relationships in supply chain management?
What is a key aspect of supplier relationships in supply chain management?
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What is a sourcing strategy that involves obtaining products and services from a single supplier?
What is a sourcing strategy that involves obtaining products and services from a single supplier?
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What is a key benefit of purchasing management in supply chain management?
What is a key benefit of purchasing management in supply chain management?
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What is one benefit of Vendor Managed Inventory (VMI)?
What is one benefit of Vendor Managed Inventory (VMI)?
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What is the purpose of supplier evaluation?
What is the purpose of supplier evaluation?
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What is an advantage of collaborative planning, forecasting, and replenishment (CPFR)?
What is an advantage of collaborative planning, forecasting, and replenishment (CPFR)?
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What is the main goal of postponement in supply chain management?
What is the main goal of postponement in supply chain management?
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What is the purpose of blockchain in supply chain management?
What is the purpose of blockchain in supply chain management?
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In a single sourcing strategy, the buyer forms long-term relationships with multiple suppliers.
In a single sourcing strategy, the buyer forms long-term relationships with multiple suppliers.
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In a vertical integration strategy, the company produces goods or services previously outsourced.
In a vertical integration strategy, the company produces goods or services previously outsourced.
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Outsourcing logistics management always leads to cost improvement.
Outsourcing logistics management always leads to cost improvement.
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In a many suppliers sourcing strategy, suppliers compete with each other based on price.
In a many suppliers sourcing strategy, suppliers compete with each other based on price.
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Vertical integration can be risky in industries with rapid technological change.
Vertical integration can be risky in industries with rapid technological change.
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A joint venture involves a formal collaboration between two companies to enhance skills and reduce costs.
A joint venture involves a formal collaboration between two companies to enhance skills and reduce costs.
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Keiretsu networks involve a few suppliers and vertical integration.
Keiretsu networks involve a few suppliers and vertical integration.
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Virtual companies rely on a single supplier relationship to provide services on demand.
Virtual companies rely on a single supplier relationship to provide services on demand.
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Technological innovations can improve security and inventory management in JIT systems.
Technological innovations can improve security and inventory management in JIT systems.
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Outsourcing logistics management always involves vertical integration.
Outsourcing logistics management always involves vertical integration.
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Vendor Managed Inventory (VMI) is a sourcing strategy that involves obtaining products and services from a single supplier.
Vendor Managed Inventory (VMI) is a sourcing strategy that involves obtaining products and services from a single supplier.
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Blanket orders are used in collaborative planning, forecasting, and replenishment (CPFR) throughout the supply chain.
Blanket orders are used in collaborative planning, forecasting, and replenishment (CPFR) throughout the supply chain.
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Postponement involves modifying products as early as possible in the supply chain.
Postponement involves modifying products as early as possible in the supply chain.
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Supplier evaluation involves determining the likelihood of a supplier becoming a good supplier.
Supplier evaluation involves determining the likelihood of a supplier becoming a good supplier.
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Drop shipping bypasses the buyer and reduces costs.
Drop shipping bypasses the buyer and reduces costs.
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Study Notes
Building the Supply Base
- Supplier development involves integrating the supplier into the system, including quality requirements, product specifications, schedules and delivery, procurement policies, training, and information transfer procedures.
Negotiation
- Negotiation is a significant element in purchasing, requiring highly valued skills.
- Cost-based price models involve suppliers opening their books, while market-based price models are based on published, auction, or indexed prices.
- Competitive bidding is a common policy for many purchases, but does not generally foster long-term relationships.
Contracting
- Contracting involves sharing risks and benefits, and creating incentives.
- Centralized purchasing allows for leverage of volume, development of specialized staff, and maintenance of professional control.
- It also reduces duplication of tasks and promotes standardization.
Logistics Management
- The objective of logistics management is to obtain efficient operations through the integration of all material acquisition, movement, and storage activities.
- Logistics management is a frequent candidate for outsourcing and can provide a competitive advantage through reduced costs and improved customer service.
Managing the Integrated Supply Chain
- Opportunities in managing the integrated supply chain include:
- Accurate "pull" data and shared information
- Lot size reduction, shipping discounts, and reduced ordering costs
- Single stage control of replenishment
- Vendor managed inventory (VMI)
- Collaborative planning, forecasting, and replenishment throughout the supply chain
- Blanket orders against which actual orders are released
- Standardization
- Postponement
- Electronic ordering and funds transfer
- Drop shipping and special packaging
- Blockchain aids tracking and verification
Supplier Evaluation
- Supplier evaluation involves finding potential suppliers, determining their likelihood of becoming good suppliers, and certification through qualification, education, and certification.
Supply-Chain Management
- The objective of supply chain management is to structure the supply chain to maximize its competitive advantage and benefits to the ultimate consumer.
The Supply Chain's Strategic Importance
- The supply chain includes suppliers, manufacturers and/or service providers, distributors, wholesalers, retailers, and final customers.
- A large portion of sales dollars is spent on purchases, and supplier relationships are increasingly integrated and long-term.
- Managing supplier relationships has added emphasis, and can improve innovation, speed design, and reduce costs.
Sourcing Issues
- Make-or-buy decisions involve choosing between obtaining products and services externally or producing them internally.
- Outsourcing involves transferring traditional internal activities and resources to outside vendors, allowing for efficiency in specialization and focus on core competencies.
Sourcing Strategies
- Six sourcing strategies include using many suppliers, few suppliers, vertical integration, joint ventures, keiretsu networks, and virtual companies.
Many Suppliers
- Used for commodity products
- Purchasing is based on price
- Suppliers compete with each other
- Supplier is responsible for technology, expertise, forecasting, cost, quality, and delivery
Few Suppliers
- Buyer forms long-term relationships with fewer suppliers
- Creates value through economies of scale and learning curve improvements
- Suppliers are more willing to participate in JIT programs and contribute design and technological expertise
- Cost of changing suppliers is high
- Trade secrets and other alliances may be at risk
Vertical Integration
- Developing the ability to produce goods or services previously purchased
- Integration can be forward (towards the customer) or backward (towards suppliers)
- Improves cost, quality, delivery, and inventory
- Requires capital, managerial skills, and demand
- Risky in industries with rapid technological change
Joint Ventures
- Formal collaboration to enhance skills, secure supply, and reduce costs
- The challenge is to cooperate without diluting brand or conceding competitive advantage
Keiretsu Networks
- A middle ground between few suppliers and vertical integration
- Supplier becomes part of the company coalition
- Often provides financial support for suppliers through ownership or loans
- Members expect long-term relationships and provide technical expertise and stable deliveries
- May extend through several levels of the supply chain
Virtual Companies
- Rely on a variety of supplier relationships to provide services on demand
- Fluid organizational boundaries that allow the creation of unique enterprises to meet changing market demands
- Relationships may be short- or long-term
- Exceptionally lean performance, low capital investment, flexibility, and speed
Security and JIT
- Shipments can get misrouted, stolen, damaged, or excessively delayed
- Technological innovations are improving security and inventory management
- Location, motion sensors, broken seals, temperature, and radioactivity tracking can help expedite shipments
Managing the Integrated Supply Chain
- Opportunities:
- Accurate "pull" data, shared information
- Lot size reduction, shipping, discounts, reduced ordering costs
- Single stage control of replenishment
- Vendor managed inventory (VMI)
- Collaborative planning, forecasting, and replenishment (CPFR) throughout the supply chain
- Blanket orders against which actual orders are released
- Standardization
- Postponement withholds modification as long as possible
- Electronic ordering and funds transfer speed transactions and reduce paperwork
- Drop shipping and special packaging bypasses the seller and reduces costs
- Blockchain aids tracking and verification
Building the Supply Base
- Supplier evaluation:
- Finding potential suppliers
- Determining likelihood of their becoming good suppliers
- Supplier certification:
- Qualification
- Education
- Certification
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Description
This quiz covers the process of building a strong supply base, including supplier development, integration, and negotiation. It encompasses quality requirements, product specifications, delivery schedules, and procurement policies.
