Supply Chain Management Overview

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Questions and Answers

What is the relationship between distance and demand?

Greater distance leads to increased demand.

Small distance results in low demand.

Distance has no effect on demand.

Shorter distance results in higher demand. (correct)

How do the internet and social media impact demand variability?

They reduce the number of online purchases.

They have no impact on demand.

They can lead to variability and surplus due to fake demand. (correct)

They stabilize demand by providing consistent information.

What usually happens to inventory after a promotion ends?

Demand plummets, but inventory remains stable.

There is often a surplus in inventory. (correct)

Inventory increases significantly.

All inventory sold out instantly.

What is the difference between failure costs and preventive costs?

Preventive costs prevent the occurrence of failure costs. Signup and view all the answers

During which phase of a product's life cycle is demand typically highest?

At the beginning of the life cycle. Signup and view all the answers

What generally affects the cost of a product the most according to its quality?

60% Signup and view all the answers

How does a high-quality supplier impact inventory management?

Decreases safety stock Signup and view all the answers

What happens to warehousing costs with shorter lead times?

Reduce warehousing costs Signup and view all the answers

Why is reliability in suppliers important?

It ensures exact delivery times Signup and view all the answers

What is the relationship between lead time and inventory turnover?

Short lead times increase inventory turnover Signup and view all the answers

What defines the flexibility of a supplier?

Ability to respond to changes quickly Signup and view all the answers

What benefit does an accurate lead time provide to a business?

Reduces safety stock needs Signup and view all the answers

Which of the following is considered an attractive feature of a supplier?

Discounts on early payments Signup and view all the answers

What is the main difference between a customer and a consumer?

A customer resells products, while a consumer uses them. Signup and view all the answers

What type of transaction involves direct sales between firms?

B2B Signup and view all the answers

What is the purpose of a pull strategy in marketing?

To generate demand by analyzing market segments. Signup and view all the answers

How does demand variability manifest in a supply chain?

Through discrepancies between demand and supply data. Signup and view all the answers

What factors contribute to increased demand variability in a competitive market?

Diverse competitive strategies such as price and flexibility. Signup and view all the answers

What is the consequence of increasing both demand visibility and demand velocity?

Decrease in demand variability. Signup and view all the answers

Which of the following does NOT represent a channel type in marketing?

Consumer engagement channel Signup and view all the answers

What does the term 'outsourcing' refer to in the context of supply chains?

Collaborating with external suppliers for production. Signup and view all the answers

What are the primary costs associated with materials in supply chain management?

Expenses of materials, packaging, handling, and transportation Signup and view all the answers

Which structure is more dependent on professional staff when there are alternates of suppliers?

Structure B Signup and view all the answers

In which scenario is Structure A more relied upon?

When the market is competitive and materials are expensive Signup and view all the answers

What does MRP stand for in web-enabled supplier systems?

Material Requirement Planning Signup and view all the answers

What factor would lead to a preference for Structure B in supply chain management?

Market monopoly conditions Signup and view all the answers

Which of the following is NOT a characteristic of Structure A?

Cost of Goods Sold primarily made up of ordinary materials Signup and view all the answers

Which process is associated with managing inventory levels effectively?

Just in Time Inventory (JIT) Signup and view all the answers

Which factor indicates that a professional approach is unnecessary in supply chain management?

Reliance on one supplier for raw materials Signup and view all the answers

Which of the following roles is primarily responsible for securing the quality and timely delivery of goods and components?

Expeditor Signup and view all the answers

What is the first plan to be made in the Manufacturing Planning and Control System (MPCS)?

Distribution Requirement Planning (DRP) Signup and view all the answers

How is Distribution Requirement Planning (DRP) typically characterized?

Hybrid system Signup and view all the answers

In the context of financial planning, what supports the Sales and Operations Plan (S&OP)?

Resource Planning (RP) Signup and view all the answers

What type of planning is used for operational activities in the short term within MPCS?

Material Requirement Planning (MRP) Signup and view all the answers

Which component of MPCS includes both marketing and finance aspects?

Long-term production planning Signup and view all the answers

What are the components of Production Planning in MPCS classified by?

Family and items Signup and view all the answers

Which planning approach is used in the mid-term for producing items?

Rough Cut Capacity Planning (RCCP) Signup and view all the answers

What is the primary focus of capacity planning?

Identifying necessary resources at all levels Signup and view all the answers

Which component focuses on balancing supply and demand at the family level?

Sales and Operations Plan (S&OP) Signup and view all the answers

What is the main purpose of Distribution Requirements Planning (DRP)?

To filter demand using a distribution plan Signup and view all the answers

What is the duration associated with the Master Production Schedule (MPS)?

Medium-range Signup and view all the answers

Which of the following statements is true regarding capacity control?

It involves monitoring input and output effectively. Signup and view all the answers

What is the relationship between S&OP and MPS?

MPS breaks family volume into items based on S&OP data. Signup and view all the answers

In the context of capacity management, what does the acronym CRP stand for?

Capacity Requirement Planning Signup and view all the answers

How is the cost of the product on the production line characterized?

It relates to production line flow efficiencies. Signup and view all the answers

Study Notes

Supply Chain Management (SCM)

SCM is the process encompassing all activities facilitating the movement of goods and services from production to consumption.
Activities aim to maximize customer value and gain a competitive advantage.
Supply chains consist of three main nodes: Suppliers (S.S), Converters (C), and Distributors (D).

Supply Chain Structure

The structure of a supply chain is the arrangement of activities from suppliers to distributors .
A supply chain network is a complex system connecting various nodes for smooth material flow.
Intermediaries (e.g., wholesalers, retailers) play a critical role in moving products through the supply chain.

Supply Chain Nodes

Suppliers (S.S): Acquire raw materials, energy, and services. This includes importers, power providers, and other service suppliers.
Converters (C): Transform raw materials into semi-finished or finished components. Shops, SMEs (small and medium enterprises), and parent companies all play a part.
Distributors (D): These distribute the finished products to the end-consumers. This includes wholesalers and retailers.

Supply Chain Intermediaries

Intermediaries handle the distribution and logistics between producers and consumers.
They play a crucial role by storing and moving products between supply chain stages.
Intermediaries operate at various points throughout the supply chain.

Converters (Sub-topics)

They transform raw materials into finished components.
First party is a seller; the second is a buyer; and the third party is rare.
They include shops that convert raw materials into finished products.
They include small and medium enterprises (SMEs).

SCM vs Distribution Channel

Supply chain channel starts with the supplier and ends with the distributor.
Distributors start with the converter and end with the end consumer.
Supply chains cater to industrial buyers, and distribution channels involve consumers.

Demand Variability

Demand variability refers to the fluctuations in consumer demand for products or services.
Factors impacting demand variability include competition, distance, disasters, internet usage, after-promotion effect, and life cycle stages.
Seasonality, like Black Friday, leads to surges in demand and potential supply shortages (over-supply) at other times.

Failure and Preventive Costs

Failure costs result from products/services not meeting customer requirements (scrap, reworking, inspection failures) - more costly than preventative measures.
Preventive costs are incurred to prevent defects and improve product quality (e.g., training, quality control, inspection) - less costly than problems that would otherwise arise.

Purchasing and Supply Chain Management

Purchasing (or Procurement) is a profession involving the determination of an organization's requirements, opting for the best supplier options, settling on a price, and fostering strong relationships with supply sources.
Main objectives include keeping production running, avoiding production shutdowns, ensuring product availability, and managing costs.

Goals of Purchasing and Supply Management

High Product Quality
Cost-effectiveness
Short Lead time
Efficient Supply sources
Continuous improvements

Qualified Supplier

Suitable suppliers are characterized by robust quality, reasonable prices, reliability, and operational efficiency.
Quality is associated with lower maintenance/repair needs.
Quantity aspects include having sufficient materials, as better suppliers lead to decreased safety stocks.

Procurement Lead Time

Procurement lead time is the time between ordering and receiving materials.
Shorter lead times generally decrease safety stock and costs.
Reliable suppliers are vital for accurate delivery timeframes of materials to maintain smooth operations.

Flexible and Attractive Suppliers

Flexible suppliers adapt to changing needs/demands, and attractive suppliers offer deals.
Suppliers enhance competitiveness via measures like quantity discounts and timely payments.

Web-enabled Suppliers

Web-enabled suppliers prioritize online ordering, receiving, and communications.
Using technology like ERP (Enterprise Resource Planning) is critical.

SCM Structures

Structure A (decentralized): Purchasing department at the same level as marketing & manufacturing.
Structure B (centralized): Procurement as a division of manufacturing or marketing.
Structure selection depends on factors like material availability, cost, and competitiveness.

Material Costs

Materials with costs exceeding 40% of total inventory might warrant a dedicated purchasing function.
Materials that cost less than 40% might be managed by other departments.
Categorizing materials based on cost and necessity is crucial.

Master Production Schedule (MPS)

MPS is a detailed production schedule to meet specific consumer needs.
It involves producing items based on specific demands, such as product families.

MPCS (Manufacturing Planning Control Systems)

MPCS involves strategic, intermediate, & operational plans, coordinating with the entire SCM for effective and efficient production management.

Inventory Control

Inventory management involves balancing raw materials, work-in-process, and finished goods to meet demand.
Businesses may utilize methods like level, chase, hybrid, and zero inventory models.
Proper handling of materials, storage, and receipt of items from suppliers are essential components of inventory control.

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Description

This quiz covers the fundamentals of Supply Chain Management (SCM), focusing on the movement of goods and services from suppliers to consumers. It explores the roles of various nodes in the supply chain, including suppliers, converters, and distributors, while also highlighting the importance of supply chain structure and intermediaries.