Podcast
Questions and Answers
What is the primary goal of Supply Chain Management (SCM)?
What is the primary goal of Supply Chain Management (SCM)?
Which cycle is NOT considered a type of supply chain cycle?
Which cycle is NOT considered a type of supply chain cycle?
What triggers the Bullwhip Effect in a supply chain?
What triggers the Bullwhip Effect in a supply chain?
What is a consequence of the Bullwhip Effect?
What is a consequence of the Bullwhip Effect?
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How does increasing the number of facilities in a distribution network typically impact response time?
How does increasing the number of facilities in a distribution network typically impact response time?
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What is meant by the term 'Fill Rate' in inventory management?
What is meant by the term 'Fill Rate' in inventory management?
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What is a key characteristic of Continuous Review inventory management?
What is a key characteristic of Continuous Review inventory management?
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Cross-Docking in distribution has which of the following benefits?
Cross-Docking in distribution has which of the following benefits?
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What is the primary goal of an efficient supply chain?
What is the primary goal of an efficient supply chain?
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Which product type is best suited for an efficient supply chain?
Which product type is best suited for an efficient supply chain?
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What defines a pull process in supply chain management?
What defines a pull process in supply chain management?
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What is a key advantage of frequent deliveries in supply chain management?
What is a key advantage of frequent deliveries in supply chain management?
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How does safety stock primarily function in inventory management?
How does safety stock primarily function in inventory management?
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What is the main purpose of aligning competitive strategy with supply chain strategy?
What is the main purpose of aligning competitive strategy with supply chain strategy?
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Which scenario best illustrates the push/pull boundary concept?
Which scenario best illustrates the push/pull boundary concept?
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Which of the following is a performance driver in supply chain management?
Which of the following is a performance driver in supply chain management?
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What effect do stable pricing strategies have on managing the bullwhip effect?
What effect do stable pricing strategies have on managing the bullwhip effect?
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What is the focus of a responsive supply chain?
What is the focus of a responsive supply chain?
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What is the primary function of the reorder point in inventory management?
What is the primary function of the reorder point in inventory management?
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Which strategy is typically utilized by a company like McMaster-Carr?
Which strategy is typically utilized by a company like McMaster-Carr?
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What happens when demand forecasting errors occur in the supply chain?
What happens when demand forecasting errors occur in the supply chain?
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What does the EOQ formula primarily help to minimize?
What does the EOQ formula primarily help to minimize?
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Study Notes
Supply Chain Management Concepts
- Supply Chain Management (SCM): Managing flows of products, information, and funds between stages in a supply chain to maximize profit. All stages involved in fulfilling a customer request are part of a supply chain.
Bullwhip Effect (BWE)
- Definition: Amplification of demand variability as it moves through the supply chain.
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Causes:
- Demand variations (order batching, price fluctuations).
- Long lead times.
- Inaccurate information sharing and forecasting.
- Consequences: Higher costs (inventory, transportation, production), longer lead times, poor supply chain relationships.
- Mitigation Strategies: Stable pricing policies (everyday low prices), shorter lead times (e.g., EDI), improved information sharing (POS data, vendor-managed inventory, collaborative planning, forecasting and replenishment).
Distribution Strategies and Network Design
- Customer Service Factors: Response time, product variety, availability, experience, returnability.
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Facility Impact:
- More facilities = faster response time but higher inventory and facility costs, with inbound transportation costs increasing & outbound decreasing.
- Distribution Network Options: Direct shipping, in-transit merge, distributor storage, last mile delivery, customer pickup, cross-docking.
- Cross-Docking: Reduces lead time and inventory costs; requires coordination and advanced systems.
Managing Product Availability
- Key Metrics: Fill rate (proportion of demand met), cycle service level (probability of no stockout).
- Costs: Holding costs (storage, capital, spoilage), ordering costs (transport, receiving), stockout costs (backorders, lost sales).
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Inventory Management Policies:
- Economic Order Quantity (EOQ): Balances ordering and holding costs.
- Continuous review: Order when inventory hits Reorder Point.
- Periodic review: Review inventory at fixed intervals, order to Base Stock Level.
- Reducing Safety Stock: Reduce demand variability, shorten lead times, and improve demand and information pooling.
Supply Chain Strategy
- Strategic Fit: Align competitive strategy and supply chain strategy.
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Supply Chain Types:
- Efficient Supply Chain: Minimize cost (low inventory, low lead times).
- Responsive Supply Chain: Quick response to demand (flexibility, high service levels).
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Product Types:
- Functional products: Stable demand, efficient supply chain.
- Innovative products: Uncertain demand, responsive supply chain.
- Achieving Strategic Fit: Match supply chain responsiveness with demand/supply uncertainty.
Push/Pull Processes
- Push Process: Anticipate demand (speculative).
- Pull Process: Respond to actual demand (reactive).
- Push/Pull Boundary: Determines inventory form (components vs. finished products) and forecast aggregation.
Supply Chain Decision Phases
- Strategic Decisions: Long-term (facility locations, product types).
- Planning Decisions: Medium-term (inventory policies, production plans).
- Operational Decisions: Short-term (order fulfillment, delivery scheduling).
Supply Chain Performance Drivers
- Facilities: Location, capacity, storage.
- Inventory: Amount, location, management policies.
- Transportation: Modes, routes, trade-offs.
- Information: Coordination, systems (ERP, RFID).
- Sourcing: In-house vs. outsourced.
- Pricing: Strategies to match supply with demand.
Key Formulas
- EOQ: Q* = √(2DK/H)
- Reorder Point (Continuous Review): R = μL + zασL
- Safety Stock: SS = zασL
- Base Stock Level (Periodic Review): S = μ(T+L) + zασ(T+L)
Real-World Supply Chain Cases
- Zara: Responsive supply chain for fast fashion; frequent deliveries, local sourcing, push/pull boundary.
- Reebok (NFL Jerseys): Push/pull process: blank jerseys are pushed; dressing is pulled based on demand.
- W.W. Grainger & McMaster-Carr: Grainger: hybrid distribution (stores & DCs); McMaster-Carr: centralized distribution.
- Reebok (Inventory Management): Combines push (bulk orders) and pull (customization) for minimizing stockouts.
- Strategic Fit (Zara & W.W. Grainger): Zara's fast fashion aligns with a responsive SC; Grainger's broad availability and convenience requires a hybrid approach.
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Description
Test your knowledge on the fundamental concepts of Supply Chain Management, including the Bullwhip Effect and distribution strategies. This quiz covers key causes, consequences, and mitigation strategies to optimize supply chain performance.
