Supply Chain Management Overview

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Questions and Answers

What is a primary characteristic of Just-in-time manufacturing?

  • It prioritizes producing goods in large batches.
  • It involves holding large inventories.
  • It is based on forecasting demand accurately. (correct)
  • It operates without requiring a supplier network.

Which process is included in the five steps of order fulfillment?

  • Inventory storage (correct)
  • Financial auditing
  • Market research
  • Supplier negotiations

What method does FIFO represent in inventory management?

  • Most recent items sold first
  • Oldest items maintained in inventory longest
  • Items valued and sold in the order they were purchased (correct)
  • Sales are based on customer preference

How does LIFO differ from FIFO in inventory management?

<p>LIFO sells the most recent purchases first. (D)</p> Signup and view all the answers

What is the definition of Landed Cost?

<p>Total cost including all ownership-related expenses. (A)</p> Signup and view all the answers

What practice does back ordering facilitate?

<p>Ordering products temporarily out of stock. (C)</p> Signup and view all the answers

Why is accurate demand forecasting essential in a Just-in-Time system?

<p>To reduce inventory costs. (B)</p> Signup and view all the answers

What can be inferred about the importance of the supply chain network?

<p>It integrates various entities to distribute products. (A)</p> Signup and view all the answers

What is the primary function of a bill of lading?

<p>To show the type, quantity, and destination of goods. (D)</p> Signup and view all the answers

Which Incoterm requires the seller to deliver goods to a carrier identified by the buyer?

<p>FCA (B)</p> Signup and view all the answers

What does the term DDP stand for in Incoterms?

<p>Delivered Duty Paid (A)</p> Signup and view all the answers

In which scenario does the seller have the least responsibility under Incoterms?

<p>EXW (D)</p> Signup and view all the answers

Which Incoterm is an expansion of CPT that includes insurance coverage for the buyer?

<p>CIP (B)</p> Signup and view all the answers

What does Cross Docking refer to in logistics?

<p>Shipping received goods to customers with minimal storage. (D)</p> Signup and view all the answers

Under which Incoterm is the seller obligated to deliver and unload goods at a terminal?

<p>DAT (A)</p> Signup and view all the answers

Which of the following Incoterms indicates that the seller pays for transportation costs to a specified location?

<p>CPT (C)</p> Signup and view all the answers

Flashcards

Supply Chain Management

A network connecting a company and its suppliers to produce and distribute a product to the final buyer. It involves various activities, people, information, and resources.

Order Fulfillment Process

The five steps involved in processing and shipping orders: receiving inventory, storage, order processing, shipping, and handling returns.

Just-in-Time Manufacturing

A production method, also known as Toyota Production System (TPS), that minimizes waste and boosts efficiency by receiving inventory only when needed.

FIFO

First-In, First-Out inventory valuation method; items are sold in the order they were purchased.

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LIFO

Last-In, First-Out inventory valuation method; the most recently purchased items are sold first.

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Landed Cost

The total cost of an item, encompassing purchase price, shipping, customs duties, taxes, and other buyer expenses.

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Backordering

A practice of ordering an item from a supplier when the item is temporarily out of stock, but has already been ordered by a customer.

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Bill of Lading

A shipping document specifying goods, quantity, and destination. It's a legal receipt of payment, signed by shipper, carrier, and receiver.

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Cross-Docking

Shipping goods directly from vendor to customer with minimal storage time.

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Incoterms

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

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EXW (Ex Works)

Seller's obligation complete when goods are ready for buyer pickup at seller's premises.

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FCA (Free Carrier)

Seller delivers to the carrier on their premises.

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CPT (Carriage Paid To)

Seller pays transport costs to a designated location.

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CIP (Carriage & Insurance Paid To)

Seller pays transport and minimal insurance to destination.

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DAT (Delivered at Terminal)

Seller delivers and unloads goods at a designated terminal.

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DAP (Delivered at Place)

Seller delivers and unloads goods to buyer at named destination.

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DDP (Delivered Duty Paid)

Seller pays import duties and transports goods to a cleared destination.

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FAS (Free Alongside Ship)

Seller delivers goods alongside the ship, but not loaded on the ship.

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Study Notes

Supply Chain Management

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

What is Supply Chain Management?

  • Effective management of the flow of information, material, and funds from the supplier's supplier to the final consumer and vice versa.

Supply Chain at Tata Steel (TSM)

  • Work-flow: Procurement, Transporter Contract, Tracking, Processing at Plant, Placement of Transport, Loading of Materials, QA Check, Documentation, Planning for Transport, Packaging, Despatch, and Customer Order Fulfillment.

Supply Chain Processes (Push/Pull View)

  • Push Processes: Execution is initiated in anticipation of customer orders (speculative).
  • Pull Processes: Execution is initiated in response to a customer order (reactive).
  • Push/pull boundary separates push processes from pull processes.

Scope of Supply Chain in a Firm

  • Internal Supply Chain: Includes company activities like purchasing, production, and distribution.
  • External Supply Chain: Includes suppliers and customers.
  • Communication and information flow between suppliers, the company, and customers are essential.
  • Different types of relationships (arm's length, collaborative, strategic) exist within external supply chains.
  • CRM, SCM, and SRM are key activities in macro-process under supply chain management.

Order Generation & Fulfillment

  • Five steps in the order fulfillment process: Receiving inventory shipments, Inventory storage, Order processing, Shipping, and Returns processing.

Important Concepts

  • Just-in-Time (JIT):
    • Also known as Toyota Production System (TPS).
    • Aligns raw-material orders with production schedules.
    • Aims to increase efficiency, decrease waste, and reduce inventory costs.
  • Vendor Managed Inventory (VMI):
    • Increases efficiency and decreases waste by receiving; 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 order of purchase.
  • LIFO (Last In, First Out): Method of cost lot tracking where most recent purchases are sold first. Opposed to FIFO.
  • Landed Cost: Total cost of ownership of an item (price, shipping, customs, taxes).
  • Back Ordering: Placing a purchase order for a product temporarily out-of-stock. Typically used in high-demand situations.
  • Bill of Lading: Shipping document showing quantity, type of goods, and destination. Legally binds all parties involved.
  • Cross Docking: Method of shipping goods directly from vendors to customers with minimal storage time.

Different Incoterms

  • Internationally recognized rules defining responsibilities of sellers and buyers in export transactions.
  • Examples include EXW, FCA, FAS, FOB, CFR, DAT, DAP, and DDP

Different Types of Logistics

  • Different levels (1PL to 5PL) of logistics service providers.
  • Activities across the different PLs, from manufacturing, storage, packing to delivery.

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