Supply Chain Management Overview

Questions and Answers

What percentage of a year’s profits can supply chain disruptions cost an average organization over a decade?

30 percent

45 percent (correct)

60 percent

25 percent

Which major recent event led to significant supply chain disruptions in multiple sectors?

2011 Japan earthquake

2008 financial crisis

2017 Hurricane Harvey

COVID-19 pandemic (correct)

What was classified as the worst humanitarian crisis in Europe since World War II?

Syrian civil war

COVID-19 pandemic

Russian invasion of Ukraine (correct)

Brexit repercussions

What are the three new priorities organizations need to focus on in addition to cost, service, and quality?

Resilience, agility, and sustainability Signup and view all the answers

Which of the following events disrupted US oil refineries and petrochemical plants?

Hurricane Harvey Signup and view all the answers

How can inflation negatively affect companies' profits?

By raising input material costs Signup and view all the answers

What method can organizations use to assess their exposure to market forces during inflation?

Exposure matrix Signup and view all the answers

What is one consequence of organizations focusing solely on cost management?

Neglect of potential supply chain shocks Signup and view all the answers

What is the primary focus of a supply chain?

Transforming raw materials into finished products Signup and view all the answers

Which of the following best describes the function of a value chain?

It encompasses all steps in creating a marketable product. Signup and view all the answers

What does supply chain disruption refer to?

Any malfunction or inefficiency in the supply chain. Signup and view all the answers

How often do supply chain disruptions lasting a month or longer occur on average?

Every 3.7 years Signup and view all the answers

Which of the following is an example of a factor that can cause supply chain disruptions?

Increases in inbound material costs Signup and view all the answers

What is the role of supply chain stakeholders in the automobile manufacturing process?

They include various parties contributing to the process of creating the final product. Signup and view all the answers

Which of the following activities is part of the knowledge economy classified in a value chain?

Product innovation Signup and view all the answers

What can result from labor market mismatches in supply chains?

Operational concerns for transport companies Signup and view all the answers

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.