Podcast
Questions and Answers
What percentage of a year’s profits can supply chain disruptions cost an average organization over a decade?
What percentage of a year’s profits can supply chain disruptions cost an average organization over a decade?
Which major recent event led to significant supply chain disruptions in multiple sectors?
Which major recent event led to significant supply chain disruptions in multiple sectors?
What was classified as the worst humanitarian crisis in Europe since World War II?
What was classified as the worst humanitarian crisis in Europe since World War II?
What are the three new priorities organizations need to focus on in addition to cost, service, and quality?
What are the three new priorities organizations need to focus on in addition to cost, service, and quality?
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Which of the following events disrupted US oil refineries and petrochemical plants?
Which of the following events disrupted US oil refineries and petrochemical plants?
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How can inflation negatively affect companies' profits?
How can inflation negatively affect companies' profits?
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What method can organizations use to assess their exposure to market forces during inflation?
What method can organizations use to assess their exposure to market forces during inflation?
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What is one consequence of organizations focusing solely on cost management?
What is one consequence of organizations focusing solely on cost management?
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What is the primary focus of a supply chain?
What is the primary focus of a supply chain?
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Which of the following best describes the function of a value chain?
Which of the following best describes the function of a value chain?
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What does supply chain disruption refer to?
What does supply chain disruption refer to?
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How often do supply chain disruptions lasting a month or longer occur on average?
How often do supply chain disruptions lasting a month or longer occur on average?
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Which of the following is an example of a factor that can cause supply chain disruptions?
Which of the following is an example of a factor that can cause supply chain disruptions?
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What is the role of supply chain stakeholders in the automobile manufacturing process?
What is the role of supply chain stakeholders in the automobile manufacturing process?
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Which of the following activities is part of the knowledge economy classified in a value chain?
Which of the following activities is part of the knowledge economy classified in a value chain?
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What can result from labor market mismatches in supply chains?
What can result from labor market mismatches in supply chains?
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Study Notes
Supply Chain Overview
- A supply chain is a network of interconnected parts leading to finished products purchased by consumers.
- Example: Manufacturing automobiles involves extracting iron ore, producing steel, and assembling various components like engines, batteries, and tires.
Difference Between Supply Chains and Value Chains
- Supply chains consist of raw materials and parts that transform into products for manufacture and distribution.
- Value chains encompass all steps taken to create a marketable product, including innovation, design, marketing, and sales.
Supply Chain Disruption
- Occurs when any link in the supply chain is not functioning optimally.
- Disruptions can arise from increased material costs, labor shortages, or operational inefficiencies.
- Common vulnerabilities in supply chains can lead to serious financial repercussions.
Frequency of Disruptions
- Research indicates supply chain disruptions lasting one month or more occur every 3.7 years on average.
- Such disruptions may cost organizations approximately 45% of a year’s profits over a decade.
Supply Chain Risks
- The COVID-19 pandemic has highlighted significant vulnerabilities in supply chains globally.
- Other crises, like the Russian invasion of Ukraine and natural disasters (e.g., 2011 earthquake in Japan, Hurricane Harvey in 2017), have led to substantial supply chain disruptions.
- McKinsey categorizes supply chain shocks into four types based on their impact, lead time, and frequency.
Strategic Focus for Organizations
- Organizations typically manage frequent shocks but must also prepare for rare but significant disruptions.
- Strategic priorities should expand to include resilience, agility, and sustainability, in addition to cost, service, and quality management.
Impact of Inflation on Supply Chains
- Inflation increases costs for input materials, affecting company profitability.
- Organizations may respond by adjusting consumer prices and using an exposure matrix to evaluate product vulnerability to market fluctuations.
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Description
This quiz explores the fundamentals of supply chain management, including its structure, differences from value chains, and the impact of disruptions. Learn how various components work together and the common challenges faced in maintaining an efficient supply chain.
