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Questions and Answers
What is a primary function of a Bill of Lading in the shipping process?
Which Incoterm requires the seller to obtain insurance during transit?
Under which Incoterm is the seller responsible for clearing goods for import?
What does the term 'Cross docking' primarily focus on?
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What is the seller’s obligation under the Ex Works (EXW) term?
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Which term indicates that the seller delivers goods to a terminal but does not unload them?
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What does FCA stand for in Incoterms, and who is responsible for the goods at the seller’s premises?
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Which Incoterm indicates that the seller is responsible for costs incurred to transport goods to an agreed location?
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Which of the following accurately describes the purpose of back ordering?
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Which of the following accurately contrasts FIFO and LIFO methods in inventory management?
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What is the main benefit of implementing just-in-time manufacturing?
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What is included in the landed cost of an item?
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Which of the following actions is part of the order fulfillment process?
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What aspect of supply chain management may contribute to reduced inventory costs?
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Which statement best describes the primary function of supply chain management?
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During times of high demand, which strategy allows companies to fulfill orders for out-of-stock items?
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What does the abbreviation DAT represent in Incoterms?
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Under which Incoterm does the seller's obligation end when goods are placed at the seller's premises?
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Which Incoterm requires the seller to handle both freight and insurance costs?
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What is a key characteristic of cross docking?
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Which Incoterm signifies that the seller is responsible for all import duties and tariffs?
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What is the main duty of the seller under the FCA (Free Carrier) Incoterm?
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Which of the following best describes the seller's obligation under the DAP Incoterm?
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What is a legal function of a Bill of Lading during shipping?
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What is a characteristic of just-in-time manufacturing?
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Which statement accurately describes FIFO?
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What does the 'landed cost' of an item include?
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What distinguishes LIFO from FIFO?
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Which of these is a crucial aspect of the order fulfillment process?
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How does back ordering function in supply chain management?
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Which of the following is essential for implementing just-in-time manufacturing effectively?
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What is the primary goal of supply chain management?
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Study Notes
Supply Chain Management
- A network between a company and its suppliers to produce and distribute a specific product to the final buyer.
- Includes activities, people, entities, information, and resources.
Supply Chain Processes
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Work-flow of Supply Chain at TSM:
- Shows important steps in a generic supply chain.
- Includes:
- Order Generation & Fulfillment
- Procurement
- Production
- Delivery
- Customer Service
Key Activities in Macro Process Under Supply Chain Management
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Order Generation & Fulfillment:
- Five steps in the order fulfillment process:
- Receiving inventory shipments
- Inventory storage
- Order processing
- Shipping
- Returns processing
- Five steps in the order fulfillment process:
Important Concepts in Supply Chain
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Just-in-Time Manufacturing (JIT):
- Also known as the Toyota Production System (TPS).
- Adopted by Toyota in the 1970s.
- Aims to increase efficiency and decrease waste.
- Reduces inventory costs.
- Requires producers to forecast demand accurately.
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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.
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Landed Cost:
- The total cost of ownership of an item.
- Includes the cost price, shipping charges, custom duties, taxes, and other buyer charges.
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Back Ordering:
- Practice of placing an order for a product temporarily out of stock.
- Used during high demand or for slow-moving products with a sudden demand spike.
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Bill of Lading:
- A shipping document showing goods, quantity, and destination.
- Required for land, sea, or air transport.
- Acts as a legal receipt of payment.
- Signed by the seller/shipper, carrier, and buyer/receiver.
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Cross Docking:
- Shipping goods from vendors to customers with minimal storage time.
Different Incoterms in Supply Chain
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Incoterms: Internationally recognized rules defining seller and buyer responsibilities in export transactions.
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EXW (Ex Works):
- Seller fulfills its obligation by placing goods on its premises, ready for the buyer’s pickup.
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FCA (Free Carrier):
- Seller delivers goods to the carrier or buyer’s person at the seller’s premises.
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CPT (Carriage Paid To):
- Seller delivers goods to the carrier at an agreed upon location.
- Seller pays for transport to the agreed location.
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CIP (Carriage and Insurance Paid To):
- Similar to CPT, but the seller pays for insurance to protect from buyer’s risk during transit to the agreed upon place.
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DAT (Delivered At Terminal):
- Seller delivers and unloads goods at a specified terminal (quay, warehousing, shipping yard, rail or air cargo terminal), for the buyer.
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DAP (Delivered at Place):
- Seller delivers and unloads goods at the named destination, for the buyer.
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DDP (Delivered Duty Paid):
- Seller transports goods to a destination and clears them for import, including paying duties or tariffs.
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FAS (Free Alongside Ship):
- Seller delivers goods alongside the ship at the port of shipment.
- Buyer is responsible for all costs and risks from this point on.
Supply Chain Management
- A network between a company and its suppliers to produce and distribute a specific product to the final buyer
- Includes different activities, people, entities, information, and resources
- The work-flow of the supply chain at TSM is a key process
Supply Chain Process
- The supply chain process is a critical aspect of managing a successful business
- The process involves:
- Planning
- Sourcing
- Making
- Delivering
- Returning
- These processes are all interconnected and require careful coordination to ensure that products are delivered to customers on time and in good condition
Scope of Supply Chain Management
- The scope of supply chain management is wide and encompasses various aspects of a business
- Important activities in the macro process under supply chain management include:
- Order Generation & Fulfillment
- Procurement
- Production
- Logistics
- Customer Service
- The scope can be visualized as a pyramid, with the base being operational efficiency and the top being strategic competitiveness
Order Generation & Fulfillment
- Key process in the supply chain
- Order generation is the initial step where customers place orders for products
- Order fulfillment involves:
- Receiving Inventory Shipments
- Inventory Storage
- Order Processing
- Shipping
- Returns Processing
- The order fulfillment process is crucial to ensure customer satisfaction
Important Concepts in Supply Chain
- Just-in-time Manufacturing
- Increase efficiency and decrease waste by receiving materials as needed
- Reduces inventory costs
- Requires producers to forecast demand accurately
- FIFO & LIFO
- 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 your most recent purchases are sold first
- Landed Cost
- Total cost of ownership of an item
- Includes 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 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
- A legal receipt of payment signed by all parties involved in the shipment
- Cross Docking
- Direct shipping of goods from vendors to customers with little to no storage time
Incoterms In Supply Chain
- Incoterms are a set of internationally recognized rules that define the responsibilities of sellers and buyers in the export transaction
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EXW - Ex Works
- Seller fulfills its obligation when it places goods on the seller’s premises, ready to be picked up by the buyer.
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FCA - Free Carrier
- Seller delivers goods to the carrier or person identified by the buyer on the seller’s premises.
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CPT - Carriage Paid To
- Seller delivers goods to the carrier or person identified at another agreed upon location.
- Seller pays costs to transport goods to such agreed upon place.
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CIP - Carriage and Insurance Paid To
- Expansion of CPT, with seller agreeing to pay for insurance to protect from buyer’s risk of loss or damage to goods during transit.
- Seller must only obtain minimum coverage; buyers may want to purchase additional protection.
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DAT - Delivered At Terminal
- Seller delivers goods to the buyer at an identified terminal, including a quay, warehousing, shipping yard or a rail or air cargo terminal, and unloads such goods for the buyer.
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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.
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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.
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FAS - Free Alongside Ship.
- Seller is responsible for delivering the goods to the buyer alongside the vessel.
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Description
This quiz covers the fundamentals of Supply Chain Management, including key processes, activities, and concepts. Explore the workflow at TSM, the steps involved in order fulfillment, and the principles of Just-in-Time Manufacturing. Test your understanding of these vital supply chain components.
