Supply Chain Management Concepts

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Questions and Answers

Why did the paint supply chain restructure in the 1990s?

  • To meet customer demand more easily by allowing for a wider variety of colors. (correct)
  • To increase the efficiency of paint production and reduce labor costs.
  • To reduce the cost of shipping paint to retail stores.
  • To reduce the amount of paint that was wasted due to unsold inventory.

What was the primary change made to the paint supply chain in the 1990s?

  • Increasing the volume of paint produced to meet rising demand.
  • Reducing the number of paint colors offered to customers.
  • Shifting the color mixing process from the manufacturer to retailers. (correct)
  • Introducing new technologies for mixing paint colors more efficiently.

Which of the following is NOT a benefit of the paint supply chain restructuring in the 1990s?

  • Improved efficiency of the supply chain.
  • Reduced inventory levels.
  • Increased environmental impact. (correct)
  • Increased customer satisfaction.

Which of the following aspects of the paint supply chain remained in the 'push' phase after the restructuring in the 1990s?

<p>Both B and C (B)</p> Signup and view all the answers

What is the main purpose of the "Customer Relationship Management (CRM)" process in a supply chain?

<p>To enhance the interactions between a company and its customers. (B)</p> Signup and view all the answers

Which of the following is NOT a macro process within the firm, according to the text?

<p>Customer Invoice Management (CIM) (C)</p> Signup and view all the answers

What is the primary goal of the CRM macro process?

<p>To generate customer demand and facilitate order placement and tracking. (D)</p> Signup and view all the answers

Which of the following activities is NOT part of the CRM macro process, as described in the text?

<p>Demand planning (D)</p> Signup and view all the answers

Which of the following exemplifies an activity typically undertaken within the ISCM macro process at W.W.Grainger?

<p>Planning for the location and size of warehouses (D)</p> Signup and view all the answers

What is the significance of integration among CRM, ISCM, and SRM, as highlighted in the text?

<p>It ensures smooth and efficient flow of information, product, and funds across the supply chain. (C)</p> Signup and view all the answers

How does the ISCM macro process contribute to fulfilling customer demand?

<p>By planning and optimizing internal production and logistics to meet demand. (D)</p> Signup and view all the answers

Which of the following is a key benefit of effective SRM, as implied in the text?

<p>Ensuring timely and cost-efficient procurement of materials and resources. (A)</p> Signup and view all the answers

What is a key factor contributing to Zara's ability to match customer preferences?

<p>Introducing new designs every week (A)</p> Signup and view all the answers

How does Zara's cycle time for design-to-sales compare with the traditional apparel industry?

<p>Zara's cycle time is four to six weeks (B)</p> Signup and view all the answers

What percentage of Zara's merchandise display is typically changed every three to four weeks?

<p>75 percent (C)</p> Signup and view all the answers

What proportion of Zara's finished goods purchases occurs after the sales season starts?

<p>40 percent (D)</p> Signup and view all the answers

Which statement best describes Zara's manufacturing strategy?

<p>It uses a combination of flexible sources in Europe and low-cost sources in Asia (C)</p> Signup and view all the answers

What is a major consequence of Zara's approach to inventory and demand forecasting?

<p>Reduced inventories and forecast errors (A)</p> Signup and view all the answers

How does Zara’s markdown rate compare to its competitors?

<p>Zara's markdown rates are less than half of its competition (D)</p> Signup and view all the answers

What sales strategy does Zara employ to maximize full-price sales?

<p>Frequent introduction of new designs (A)</p> Signup and view all the answers

What is a significant factor in the success of Grainger?

<p>Supply chain management ability (A)</p> Signup and view all the answers

How many stock-keeping units (SKUs) does Grainger stock approximately?

<p>200,000 (C)</p> Signup and view all the answers

Which issue is NOT one faced by both Grainger and McMaster?

<p>Number of retail stores to open (D)</p> Signup and view all the answers

What was a major change Toyota made to its factories after the Asian financial crisis?

<p>Enabled plants to export to other markets (D)</p> Signup and view all the answers

What challenge pertains to how markets should be allocated to distribution centers (DCs) for order fulfillment?

<p>Identifying backup locations (C)</p> Signup and view all the answers

Which statement about Toyota's global auto manufacturing strategy is correct?

<p>Factories are opened in every market Toyota serves. (D)</p> Signup and view all the answers

Which area is included in the management challenges for Grainger and McMaster?

<p>Deciding on product inventory levels (A)</p> Signup and view all the answers

What approach did Toyota take prior to 1996 regarding its factory operations?

<p>Specialized local factories for each market (D)</p> Signup and view all the answers

What is the primary purpose of any supply chain?

<p>To satisfy customer needs and generate profit. (B)</p> Signup and view all the answers

What is a key characteristic of a supply chain that sets it apart from a simple linear chain?

<p>The involvement of multiple players at each stage. (A)</p> Signup and view all the answers

Which of these is NOT a stage typically involved in a supply chain?

<p>Marketing and advertising agencies. (C)</p> Signup and view all the answers

What is the role of a customer in the supply chain?

<p>To contribute information and funds for the product. (A)</p> Signup and view all the answers

How does information flow in a supply chain?

<p>In both directions, between all stages. (D)</p> Signup and view all the answers

What is the reason for using the term 'supply network' instead of 'supply chain'?

<p>It accurately describes the interconnectedness of multiple players. (D)</p> Signup and view all the answers

Which of these is an example of the flow of funds in a supply chain?

<p>A customer making a purchase on a website. (C)</p> Signup and view all the answers

What differentiates the flow of products in a supply chain from the flow of information?

<p>The products are physical objects whereas the information is digital. (D)</p> Signup and view all the answers

What is a key factor contributing to the difference in supply chain structure between the United States and India for fast-moving consumer goods?

<p>The size of the retail market in the respective country. (D)</p> Signup and view all the answers

What is a primary benefit of effective supply chain management, as discussed in the passage?

<p>Maximizing total supply chain surplus. (B)</p> Signup and view all the answers

What is the primary reason for the difference in the role of distributors in the United States and India, as explained in the passage?

<p>The consolidation of retail in the United States reduces the need for distributors. (D)</p> Signup and view all the answers

What does the passage suggest about the impact of distributors on supply chain surplus?

<p>Distributors can reduce costs and increase supply chain surplus in certain market conditions. (A)</p> Signup and view all the answers

How does the passage define "supply chain surplus"?

<p>The difference between the total value created by the supply chain and its total costs. (A)</p> Signup and view all the answers

Why is the introduction of a distributor in the US market for fast-moving consumer goods likely to lead to increased costs?

<p>Distributors add an extra layer of handling and transportation costs. (D)</p> Signup and view all the answers

What does the passage suggest about the role of information flows in supply chain management?

<p>Information flows are essential for managing the flow of both products and funds. (C)</p> Signup and view all the answers

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Flashcards

Supply Chain

A network of entities involved in delivering products from suppliers to customers, including information and funds flow.

Supply Chain Demand Uncertainty

The difficulty faced by supply chains in aligning supply with fluctuating demand.

Push vs Pull Supply Chain

Push is pre-planned supply; pull is demand-driven supply from customers.

Customer Role

The customer is integral to the supply chain, driving demand and influencing all subsequent processes.

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Information Flow

The exchange of data, such as order details and product availability, across various supply chain stages.

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Color Mixing in Supply Chain

Color mixing in paint supply chains was shifted to retail stores post-order.

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Stages of Supply Chain

Elements in the supply chain including customers, retailers, wholesalers, manufacturers, and suppliers.

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Customer Relationship Management (CRM)

Processes focusing on managing and improving customer interactions.

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Internal Supply Chain Management (ISCM)

Processes that handle internal operations within a firm.

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Supply Network

A more accurate representation of the supply chain that highlights multiple players at each stage.

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Order Fulfillment Process

The procedure following a customer order that includes processing, information flows, and product delivery.

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Flow of Funds

The monetary transactions that occur during the purchase and supply processes in the supply chain.

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Supply Chain Purpose

To satisfy customer needs while generating profit for the involved entities.

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Supply Chain Surplus

The total profit generated by all members of the supply chain.

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Flow Management

Managing the movement of products, information, and funds within the supply chain.

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Retail Structure Impact

How the organization of retailers affects supply chain efficiency.

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Distributor Role

The part distributors play in moving goods from suppliers to retailers.

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Consolidation Effect

When larger retailers dominate the market, it changes supply chain roles.

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Local Distribution

Using smaller vehicles to deliver products locally after transportation to market.

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Frequent Replenishment

Regularly restocking inventory to meet demand, especially in small outlets.

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Inventory Limitations

Constraints on how much stock small retailers can hold.

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Supplier Relationship Management (SRM)

Processes focused on the interface between the firm and its suppliers.

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Integrated Supply Chain Management (ISCM)

Processes that fulfill demand and manage internal production and supply.

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Macro Processes

Three main processes in supply chain management: SRM, ISCM, CRM.

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Demand Planning

Part of ISCM that forecasts customer demand to ensure supply readiness.

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Order Management

Process in CRM to track and fulfill customer orders efficiently.

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Fulfillment

Part of ISCM that ensures customer demand is met promptly.

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Supply Collaboration

Joint effort between firms and suppliers to improve supply chain efficiency.

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Grainger's Role

Grainger operates primarily as a distributor and retailer of products.

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Stock-Keeping Units (SKU)

SKU refers to unique identifiers for each product stored in inventory.

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Distribution Centers (DCs)

Facilities used to store products and fulfill customer orders.

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Product Stocking Management

Strategies on how to manage product availability at DCs.

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Inventory Allocation

Deciding what products to keep in stock or source directly from suppliers.

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Web Order Integration

The approach on handling online orders alongside existing business operations.

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Transportation Modes

Different methods used for delivering products and replenishing stock.

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Toyota's Global Strategy

Toyota's approach to opening factories in every market for localized production.

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Zara

A fashion retail chain owned by Inditex, known for fast response to trends.

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Design-to-sales cycle time

The time taken from designing a product to it being available for sale.

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Zara's cycle time

Zara's design-to-sales cycle time is four to six weeks.

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Product display turnover

Zara changes 75% of its merchandise display every 3-4 weeks.

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Markdowns

Discounts applied to merchandise when it doesn't sell at full price.

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Manufacturing sources

Zara uses a mix of European and Asian manufacturers.

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Postponement strategy

Zara waits to produce products until trends are evident.

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Inventory reduction

Zara reduces excess inventory and forecasting errors through their strategy.

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Study Notes

Supply Chain Management Concepts

  • Supply chains are networks, not linear chains, involving flows of information, products, and funds in both directions.
  • A supply chain's purpose is fulfilling customer needs and generating profit.
  • Customer is an integral part of the supply chain.
  • Supply chain macro processes: Customer Relationship Management (CRM), Internal Supply Chain Management (ISCM), and Supplier Relationship Management (SRM).
  • CRM focuses on customer interface, including marketing, sales, order management, and call centers.
  • ISCM focuses on fulfilling demand efficiently and cost-effectively, covering production planning, inventory management, and order fulfillment.
  • SRM focuses on interactions with suppliers such as buying, negotiating, and design collaboration.
  • Supply chain decisions have impacts on overall supply chain surplus, which should be considered.
  • Supply chain structure differs based on factors such as market consolidation and retailer size/availability.
  • Supply chain management effectiveness depends heavily on efficient management of product, information, and fund flows.

Supply Chain Examples

  • Dell's online supply chain: Includes customers, website, assembly plant, and various suppliers.
  • Wal-Mart's supply chain: Funds flow from customers to suppliers through Wal-Mart.
  • Paint supply chain restructuring: Shifting color mixing to retail stores reduced inventory and satisfied customer color choices.
  • Zara's supply chain: Achieving quick design-to-sales cycles, flexible sourcing in Europe/Asia, and postponement of production decisions until trends are confirmed, allowed them to reduce inventories, and accurately forecast demand. This allows Zara to respond to trends quickly and reduce markdowns by matching products more closely with consumer preferences.

Supply Chain Examples & Issues

  • Direct selling vs. retail-based supply chains: Direct selling might be cheaper but a retail presence can offer greater access to consumers and market coverage.
  • Apple retail stores vs. Gateway country stores: Factors influencing the success of Apple's retail strategy were not detailed.
  • W.W. Grainger and McMaster-Carr supply chain issues: Both face challenges in deciding how many DCs to build, how to stock products, and what products to carry. Key questions include DC locations and sizes, inventory management policies, order fulfillment methods, web order integration, and transportation methods.
  • Toyota's global production and distribution network: Toyota's global strategy involves opening factories in every market served, deciding production levels for each factory, and adapting its distribution systems to changing market conditions.

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