Supply Chain Management Overview

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Questions and Answers

What is the main function of supply chain management?

To manage marketing strategies effectively

To handle customer service issues

To create a network for product distribution (correct)

To develop financial reports

Which step is NOT part of the order fulfillment process?

Receiving inventory shipments

Quality control (correct)

Shipping

Returns processing

What does FIFO stand for in inventory management?

Final in, final out

Fast in, fast out

First in, first out (correct)

First in, final out

Which statement about Just-in-time manufacturing is accurate?

It requires precise demand forecasting. Signup and view all the answers

What does back ordering involve?

Placing an order for a product that is temporarily out of stock Signup and view all the answers

How does LIFO differ from FIFO in terms of inventory sale processes?

LIFO sells the most recent purchases first. Signup and view all the answers

What does 'landed cost' include?

Cost price, shipping charges, custom duties, and taxes Signup and view all the answers

Which of the following best describes supply chain processes?

An interconnected series of activities involving various entities Signup and view all the answers

What is the primary function of a Bill of Lading in shipping?

To serve as a legal receipt and document the transaction Signup and view all the answers

Which Incoterm requires the seller to deliver goods at their premises for pickup by the buyer?

EXW - Ex Works Signup and view all the answers

What does the CPT Incoterm indicate about shipping responsibilities?

The seller must pay for transportation costs until the goods reach an agreed location. Signup and view all the answers

In which scenario does the seller provide insurance for goods during transit?

CIP - Carriage and Insurance Paid To Signup and view all the answers

Which of the following terms obligates the seller to deliver goods to an identified terminal?

DAT - Delivered At Terminal Signup and view all the answers

What distinguishes DAP from DAT in Incoterms?

DAP includes unloading the goods; DAT does not. Signup and view all the answers

Which Incoterm requires the seller to handle import duties and tariffs?

DDP - Delivered Duty Paid Signup and view all the answers

Which of the following is NOT a requirement of the Bill of Lading?

It must be issued only for maritime transport. Signup and view all the answers

What is one of the main objectives of just-in-time manufacturing established by Toyota in the 1970s?

Decrease waste and increase efficiency Signup and view all the answers

Which of the following accurately describes the concept of back ordering?

A system of placing orders for out-of-stock items during high demand Signup and view all the answers

What is a primary difference between FIFO and LIFO methods of inventory management?

FIFO sells the oldest items first while LIFO sells the newest items first Signup and view all the answers

Which of the following components is NOT typically included in the landed cost of an item?

Retail mark-up Signup and view all the answers

What is the primary focus of supply chain management within a firm?

Creating a network to efficiently produce and distribute products Signup and view all the answers

What does the acronym TPS refer to in supply chain management?

Toyota Production System Signup and view all the answers

Which inventory management concept helps in tracking the cost of goods sold based on the order of purchase?

Fifo and Lifo tracking Signup and view all the answers

During which scenario is back ordering typically utilized?

When inventory is low but demand spikes unexpectedly Signup and view all the answers

What does the term 'CIP' in Incoterms imply?

The seller must provide insurance and transportation to a designated place. Signup and view all the answers

Which Incoterm indicates that the seller must deliver goods and unload them at a specific location?

DAP Signup and view all the answers

What is a key characteristic of the 'DAT' Incoterm?

The seller must unload goods at a terminal for the buyer. Signup and view all the answers

In terms of export transactions, what do Incoterms define?

The responsibilities of sellers and buyers. Signup and view all the answers

Which Incoterm indicates that the seller must handle all duties and tariffs for imported goods?

DDP Signup and view all the answers

What does the 'FCA' Incoterm specify about the seller's responsibility?

The seller must deliver goods to the carrier at their premises. Signup and view all the answers

Which of the following accurately describes the role of a Bill of Lading?

It serves as a legal receipt and documentation for shipping transactions. Signup and view all the answers

What differentiates 'EXW' from 'FCA' in terms of seller responsibilities?

FCA requires goods to be delivered to a carrier, whereas EXW does not. Signup and view all the answers

Which Incoterm places the responsibility of risk on the buyer once the goods are placed at the seller's premises?

EXW Signup and view all the answers

What does the 'CPT' Incoterm imply about transportation costs?

Seller pays for transportation to an agreed location. Signup and view all the answers

In which Incoterm does the seller assume responsibility for insurance during the transit of goods?

CIP Signup and view all the answers

Which Incoterm ensures that the seller delivers goods and is responsible for unloading them at a terminal?

DAT Signup and view all the answers

Which of the following best describes the DDP Incoterm?

Seller pays duties and tariffs upon delivery. Signup and view all the answers

Which Incoterm specifies that the seller delivers the goods to the carrier identified by the buyer?

FCA Signup and view all the answers

What type of method is cross docking in supply chain management?

Shipping goods directly from suppliers to customers with minimal storage. Signup and view all the answers

Which Incoterm is likely to result in additional costs for the buyer due to minimal insurance coverage?

CIP Signup and view all the answers

What is a significant downside of Just-in-time manufacturing?

Requires accurate demand forecasting Signup and view all the answers

Which of the following best exemplifies the concept of back ordering?

Requesting items that are out of stock due to high demand Signup and view all the answers

In which situation would FIFO be the preferred method for inventory management?

When there is a high turnover rate of products Signup and view all the answers

What does the Landed Cost effectively calculate?

The total cost of ownership inclusive of all fees Signup and view all the answers

How does LIFO method track the cost of inventory?

Most recent purchases are sold first Signup and view all the answers

Which of the following is a key characteristic of an effective supply chain network?

Streamlined activities across different stakeholders Signup and view all the answers

What role does inventory storage play in the order fulfillment process?

It supports efficient handling and retrieval of products Signup and view all the answers

Which statement correctly distinguishes the economic implications of FIFO from LIFO?

FIFO increases the value of taxable income during inflation Signup and view all the answers

What is the primary aim of Just-in-time manufacturing in the context of supply chain management?

To reduce production times by forecasting accurately Signup and view all the answers

In which scenario would back ordering typically be adopted?

For slow-moving products suddenly seeing increased demand Signup and view all the answers

Which method of inventory tracking is characterized by selling the most recently purchased items first?

LIFO Signup and view all the answers

What is an essential factor in the determination of landed cost?

Shipping charges, custom duties, and taxes Signup and view all the answers

During which step of the order fulfillment process is inventory organized for dispatch?

Shipping Signup and view all the answers

How does FIFO improve inventory management outcomes?

By ensuring older stock is sold first to minimize spoilage Signup and view all the answers

Which of the following issues could arise from poor demand forecasting in Just-in-time manufacturing?

Inventory shortages leading to production delays Signup and view all the answers

What is a critical benefit of utilizing LIFO during inflationary periods?

It reduces taxable income by selling older stock first Signup and view all the answers

What is the role of a Bill of Lading in the context of transportation?

It documents the type of goods, their quantity, and the destination. Signup and view all the answers

How does the 'CIP' Incoterm enhance the responsibilities of the seller compared to 'CPT'?

It necessitates the seller to purchase minimum insurance for the goods during transit. Signup and view all the answers

What distinguishes the 'DAP' Incoterm from 'DAT' in shipping terms?

DAP involves delivery to a named destination at the buyer's disposal, while DAT is limited to terminals only. Signup and view all the answers

Which of the following is true regarding the responsibilities under the EXW Incoterm?

The buyer assumes all risk and transportation responsibility once goods are ready for pickup. Signup and view all the answers

What does the term 'Cross Docking' imply in a supply chain context?

Goods are shipped directly from the supplier to the customer with minimal handling. Signup and view all the answers

When using the DDP Incoterm, what responsibility does the seller have?

The seller must pay for all duties and tariffs and ensure customs clearance. Signup and view all the answers

In which widely recognized Incoterm does the seller deliver goods alongside a ship?

FAS Signup and view all the answers

What is one primary limitation of the 'CIP' Incoterm for buyers?

It may only provide minimum insurance coverage, leaving the buyer vulnerable. Signup and view all the answers

Study Notes

Supply Chain Management

A network between company and its supplier to produce and distribute a specific product to the final buyer.
Includes different activities, people, entities, information, and resources.

Work-flow of Supply Chain at TSM

Not specified in the provided text.

Supply Chain Processes

Not specified in the provided text.

Scope of Supply Chain in a Firm

Not specified in the provided text.

Key Activity in Macro Process Under Supply Chain Management

Not specified in the provided text.

Order Generation & Fulfillment

Five steps:
- Receiving inventory shipments
- Inventory storage
- Order processing
- Shipping
- Returns processing

Important Concepts in Supply Chain

Just-in-time manufacturing:
- Also known as the Toyota Production System (TPS).
- Adopted by Toyota in the 1970s.
- Aims to increase efficiency and decrease waste by receiving materials just as they are needed.
- Reduces inventory costs.
- Requires producers to forecast demand accurately.
FIFO (First In, First Out):
- Method of cost lot tracking where items are valued and sold in the order they were purchased.
LIFO (Last In, First Out):
- Method of cost lot tracking where the most recent purchases are sold first.
- Works opposite to FIFO.
Landed Cost:
- Total cost of ownership of an item.
- Includes the cost price, shipping charges, custom duties, taxes, and any other charges borne by the buyer.
Back Ordering:
- Practice of placing a purchase order to a supplier for a product that's temporarily out of stock in your warehouse.
- Typically adopted during times of high demand or for slow-moving products that suddenly see a spike in demand.
Bill of Lading:
- Shipping document showing the type of goods, their quantity, and the destination address.
- Required whenever goods are transported by land, sea, or air.
- Acts as a legal receipt of payment and must be signed by all parties involved in the shipment: the seller/shipper, the carrier, and the buyer/receiver.
Cross Docking:
- Method by which a business owner can ship goods received from vendors to customers with minimal storage time.

Different Incoterms in Supply Chain

Incoterms are a set of internationally recognized rules defining the responsibilities of sellers and buyers in export transactions.
EXW (Ex Works):
- Seller fulfills its obligation when it places goods on its premises, ready for the buyer to pick up.
FCA (Free Carrier):
- Seller delivers goods to the carrier or person identified by the buyer on the seller's premises.
CPT (Carriage Paid To):
- Seller delivers goods to the carrier or person identified at another agreed upon location.
- Seller pays for the costs to transport goods to the agreed upon place.
CIP (Carriage and Insurance Paid To):
- Expansion of CPT, where the seller agrees to pay for insurance to protect from buyer’s risk of loss or damage to goods during transit to the agreed upon place.
- Seller must obtain minimum coverage, buyers may want additional protection.
DAT (Delivered At Terminal):
- Seller delivers goods to the buyer at an identified terminal like a quay, warehousing, shipping yard, or a rail or air cargo terminal.
- Seller unloads goods for the buyer.
DAP (Delivered at Place):
- Expansion of DAT, requiring the seller to deliver and unload goods to the disposal of the buyer at a named destination.
DDP (Delivered Duty Paid):
- Seller must transport goods to a destination and have them cleared for import, including payment of duties or tariffs for importing or exporting products across borders.
FAS (Free Alongside Ship):
- Not specified in the provided text.

Supply Chain Management

A network between a company and its suppliers to produce and distribute a specific product to the final buyer
Involves different activities, people, entities, information, and resources

Supply Chain Processes

Supply chain is a process that involves many steps
Each step needs to be managed effectively to ensure that the final product reaches the customer on time and in good condition

Scope of Supply Chain in a Firm

Supply chain is a key function of any business that manufactures or sells products
Can be divided into different stages, each with its own set of activities

Key Activities in Macro Process Under Supply Chain Management

Order generation and fulfillment
Inventory management
Procurement
Production
Logistics

Order Generation and Fulfillment

Five steps in order fulfillment process:
- Receiving Inventory Shipments
- Inventory Storage
- Order Processing
- Shipping
- Returns Processing

Important Concepts in Supply Chain

Just-in-time manufacturing
- Also known as Toyota Production System (TPS)
- Adopted by Toyota in the 1970s
- Increases efficiency and decreases waste
- Reduces inventory costs
- Requires producers to forecast demand accurately
FIFO & LIFO
- FIFO: First in, first out, items are valued and sold in the order they were purchased
- LIFO: Last in, first out, most recent purchases are sold first
- Works opposite to FIFO
Landed Cost: The total cost of ownership of an item, including the cost price, shipping charges, customs duties, taxes, and any other buyer charges.
Back Ordering: A practice of placing a purchase order to a supplier for a product that's temporarily out of stock in the warehouse and already been ordered by customers.
- Adopted during times of high demand and for slow-moving products that see a spike in demand
Bill of Lading: A shipping document showing the type of goods, their quantity, and the destination address.
- Required whenever goods are transported from one point to another
- Acts as legal receipt of payment
- Has to be signed by all parties involved: seller/shipper, carrier, and buyer/receiver
Cross Docking: A method by which a business owner can ship goods that they have received from vendors to their customers with little to no storage time.

Different Incoterms in Supply Chain

Incoterms are a set of internationally recognized rules that define the responsibilities of sellers and buyers in export transactions.
EXW: Ex Works
- Seller fulfills its obligation when it places goods on the seller’s premises, ready to be picked up by the buyer.
FCA: Free Carrier
- Seller delivers goods to the carrier or person identified by the buyer on the seller’s premises.
CPT: Carriage Paid To
- Seller delivers goods to the carrier or person identified at another agreed upon location.
- Seller must pay for the costs to transport goods to the agreed upon place.
CIP: Carriage and insurance Paid To
- An expansion of CPT, seller agrees to pay for insurance to protect from buyer’s risk of loss or damage to goods during transit to the agreed upon place.
- Seller must obtain minimum coverage, buyers may want to purchase additional protection.
DAT: Delivered At Terminal
- Seller is obligated to deliver goods to the buyer at an identified terminal.
- May include a quay, warehousing, shipping yard or a rail or air cargo terminal, and unload such goods for the buyer.
DAP: Delivered at Place
- An expansion of DAT by requiring the seller to deliver and unload goods to the disposal of the buyer at a named destination.
DDP: Delivered Duty Paid
- Seller must transport goods to a destination and have them cleared for import, including the payment of duties or tariffs for importing or exporting products across borders.
FAS: Free Alongside Ship.

Supply Chain Management

A chain connecting a company and its suppliers that produces and distributes products to final buyers.
Includes activities, people, entities, resources and information.

Supply Chain Processes

Activities that ensure products are available to customers in the right place at the right time.

Scope of Supply Chain in a Firm

Covers all the activities that involve the flow of goods and services.

Key Activities in Supply Chain Management

Procurement: Selecting and acquiring raw materials and finished goods.
Production: Transforming raw materials into finished goods.
Distribution: Moving finished goods from the factory to the customer.
Inventory management: Managing the amount of inventory on hand.
Customer service: Resolving customer issues and providing support.

Order Generation & Fulfillment

Five steps in the order fulfillment process: receiving inventory shipments, inventory storage, order processing, shipping, returns processing.

Important Concepts In Supply Chain Management

Just-in-Time (JIT): A manufacturing system where materials are delivered just in time for production.
- Reduces inventory costs.
- Requires producers to forecast demand accurately.
FIFO (First-In, First-Out) & LIFO (Last-In, First-Out): Cost lot tracking methods for valuing and selling items in the order they were purchased.
Landed Cost: The total cost of ownership of an item, including the cost price, shipping charges, customs duties, taxes, and any other charges borne by the buyer.
Back Ordering: Placing an order for a product that is temporarily out of stock, usually during times of high demand or for slow-moving products.
Bill of Lading: A document that shows the type of goods, their quantity, and the destination address. It serves as a legal receipt of payment.
Cross Docking: Shipping goods directly from vendors to customers with minimal storage time.

Incoterms

Internationally recognized rules defining the responsibilities of sellers and buyers in export transactions.

Different Incoterms

EXW (Ex Works): Seller fulfills its obligation when goods are ready for pickup at the seller's premise.
FCA (Free Carrier): Seller delivers goods to the carrier or person identified by the buyer on the seller's premises.
CPT (Carriage Paid To): Seller pays for transport costs to an agreed upon location.
CIP (Carriage and Insurance Paid To): Seller pays for insurance to protect the buyer from loss or damage during transit.
DAT (Delivered At Terminal): Seller delivers and unloads goods at a specified terminal.
DAP (Delivered at Place): Seller delivers and unloads goods at the buyer's disposal at a specified destination.
DDP (Delivered Duty Paid): Seller transports goods to a destination and clears them for import, including payment of duties and tariffs.
FAS (Free Alongside Ship): Seller fulfills obligation when goods are placed at the buyer's disposal alongside the ship.

Supply Chain Management

A network connecting a company and its supplier to produce and distribute a specific product to the final buyer.
Includes various activities, people, entities, information, and resources.

Work-Flow of Supply Chain at TSM

(No information provided regarding the work-flow of supply chain at TSM.)

Supply Chain Processes

(No information provided about the processes.)

Scope of Supply Chain in a Firm

(No information provided about the scope.)

Key Activity in Macro Process Under Supply Chain Management

(No information provided about the key activities.)

Order Generation & Fulfillment

Five steps in the order fulfillment process:
- Receiving inventory shipments
- Inventory storage
- Order processing
- Shipping
- Returns processing

Important Concepts in Supply Chain

Just-in-time manufacturing:
- Also known as the Toyota Production System (TPS)
- Adopted by Toyota in the 1970s
- Increases efficiency and decreases waste by receiving goods just in time for their use
- Reduces inventory costs
- Requires producers to forecast demand accurately
FIFO (First In, First Out):
- A method of cost lot tracking where items are valued and sold in the order they were purchased.
LIFO (Last In, First Out):
- A method of cost lot tracking where the most recent purchases are sold first.
- Works opposite to FIFO.
Landed Cost:
- The total cost of ownership of an item.
- Includes the cost price, shipping charges, custom duties, taxes, and any other charges borne by the buyer.
Back Ordering:
- Placing a purchase order to a supplier for a product that's temporarily out of stock in your warehouse and has already been ordered by customers.
- Usually adopted during times of high demand and for slow-moving products that suddenly see a spike in demand.
Bill of Lading:
- A shipping document showing the type of goods, their quantity, and the destination address.
- Required whenever goods are transported from one point to another, by land, sea, or air.
- Acts as a legal receipt of payment and is signed by the seller/shipper, the carrier, and the buyer/receiver.
Cross docking:
- A method by which a business owner can ship goods they have received from vendors to their customers with little to no storage time.

Different Incoterms in Supply Chain

Incoterms are internationally recognized rules that define the responsibilities of sellers and buyers in export transactions.

Incoterms Definitions

EXW (Ex Works):
- The seller fulfills its obligation when it places goods on the seller's premises, ready to be picked up by the buyer.
FCA (Free Carrier):
- The seller delivers goods to the carrier or person identified by the buyer on the seller's premises.
CPT (Carriage Paid To):
- The seller delivers goods to the carrier or person identified at another agreed upon location.
- The seller pays for the costs to transport goods to the agreed upon place.
CIP (Carriage and Insurance Paid To):
- An expansion of CPT.
- The seller agrees to pay for insurance to protect against the buyer's risk of loss or damage to goods during transit to the agreed upon place.
- Seller must obtain minimum coverage, so buyers may want to purchase additional protection.
DAT (Delivered At Terminal):
- The seller delivers goods to the buyer at an identified terminal (quay, warehousing, shipping yard, rail, or air cargo terminal) and unloads them for the buyer.
DAP (Delivered at Place):
- An expansion of DAT, requiring the seller to deliver and unload goods to the disposal of the buyer at a named destination.
DDP (Delivered Duty Paid):
- The seller must transport goods to a destination and have them cleared for import, including payment of duties or tariffs for importing or exporting products across borders.
FAS (Free Alongside Ship):
- (No information provided.)

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Description

Explore the fundamentals of supply chain management, including the flow of goods from suppliers to consumers and key processes involved. This quiz covers essential concepts such as order fulfillment and just-in-time manufacturing.