Supply Chains Creating Value

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Questions and Answers

What is the primary objective of inventory management?

To maximize production efficiency

To increase lead time for orders

To minimize inventory costs while maintaining supply (correct)

To eliminate waste in the supply chain

What does the term 'reorder point' refer to?

The point at which a new order must be placed (correct)

The maximum number of units a company can stock

The average sales rate of a product

The quantity of excess inventory kept on hand

What is upcycling?

Using raw materials to create finished goods

Minimizing production costs by using less material

Turning waste into new products of higher value (correct)

The process of returning disposed products to the supply chain

How is the reorder point calculated?

(Order lead time x usage rate) + safety stock Signup and view all the answers

What is the significance of reverse logistics for companies?

It helps to transform waste into valuable products Signup and view all the answers

What is the primary function of supply chain management?

To design, monitor, and alter supply chains for efficiency Signup and view all the answers

What does sourcing involve?

Evaluating and hiring businesses to supply goods and services Signup and view all the answers

Which of the following best describes outsourcing?

Transferring tasks to companies that can provide more value Signup and view all the answers

What is offshoring?

Outsourcing work to companies abroad Signup and view all the answers

Which risk is associated with outsourcing?

Loss of control over proprietary technology Signup and view all the answers

What does the hidden cost of global sourcing refer to?

Costs related to international logistics and tariffs Signup and view all the answers

Which statement about the value chain is correct?

Each partner should help create more value for customers. Signup and view all the answers

What percentage of costs can hidden costs increase to when sourcing globally?

19-81% Signup and view all the answers

What is the primary goal of logistics in the supply chain?

To decrease costs and transit time while increasing customer service Signup and view all the answers

Which mode of transportation is most suitable for heavy, low value, nonperishable goods?

Waterways Signup and view all the answers

Which transportation method is characterized as being expensive but fast?

Air transport Signup and view all the answers

Which factor is NOT typically considered in forecasting?

Employee preferences Signup and view all the answers

What do track and trace systems primarily utilize to monitor shipments?

GPS, RFID, and Barcodes Signup and view all the answers

Which characteristic is NOT a factor when choosing transportation?

Consumer preferences Signup and view all the answers

What is the primary goal of inventory management?

To avoid stockouts Signup and view all the answers

Which inventory management system involves minimal inventory on hand?

Just-in-time inventory Signup and view all the answers

Which option describes the role of distribution centers compared to warehouses?

Emphasis on processing and moving goods Signup and view all the answers

What is a common drawback of using trucks for transportation?

They have size and weight restrictions Signup and view all the answers

What does the term 'shrinkage' refer to in inventory management?

Loss in inventory due to theft and errors Signup and view all the answers

Which transportation method is indicated to belong to the shipper and is specifically used for liquids?

Pipelines Signup and view all the answers

What is the purpose of an electronic product code (EPC)?

To uniquely identify products Signup and view all the answers

What is the primary purpose of companies engaging in social responsibility?

To advance the well-being of society Signup and view all the answers

In the context of collaborative forecasting, what is meant by CPFR?

Collaborative planning, forecasting, and replenishment Signup and view all the answers

How does the Fair Trade movement primarily aim to help producers?

By paying them higher prices for their products Signup and view all the answers

What is a stockout?

When a product is out of stock for customers Signup and view all the answers

What impact do greener products have on a company's competitive position?

They improve a company's image and differentiate it from competitors Signup and view all the answers

What is the characteristic of vendor-managed inventory?

Suppliers manage the inventory levels for retailers Signup and view all the answers

What logistical challenge is most likely associated with outsourcing overseas?

Customs challenges and transport lead time delays Signup and view all the answers

How does demand planning affect production scheduling?

It influences the amount of materials to be purchased and goods to be produced Signup and view all the answers

What does lead time refer to in a production context?

The duration from order placement to product delivery Signup and view all the answers

What might happen if outsourcing proves to be untenable for a firm?

The firm may choose to bring production in-house Signup and view all the answers

What does forecasting determine in the context of demand planning?

The expected sales volume and timing of products Signup and view all the answers

Study Notes

Chapter 9: Using Supply Chains to Create Value for Customers

Supply chain includes all organizations impacting products before, during, and after production.
Supply chain management is the process of designing, monitoring, and altering supply chains for efficiency.
Value chain implies supply chain partners should exceed basic functions to create more customer value.

Sourcing and Procurement

Sourcing is evaluating and hiring businesses to supply goods and services.
Procurement is the actual purchasing of goods and services.
Outsourcing can provide more value, cost effectiveness, or faster lead times if a specialized company can add more value than an in-house function.
Companies outsource to lower costs and focus on core activities.
Offshoring is a type of outsourcing.

Risks in Outsourcing

Outsourcing is not a solution for all problems.
Loss of control can be a serious risk.
Offshoring can lead to problems with control.
Quality and safety concerns may arise from reliance on external suppliers.
Companies must ensure their suppliers maintain quality and safety standards.
Loss of control over proprietary technology can be a significant risk..

Hidden Costs of Global Sourcing

Additional costs like international freight, insurance, and packing (10-1%).
Import duties (0-50%).
Customhouse broker fees (3-5%).
Extra inventory in case of delays (5-15%).
LC cost (1%).
International travel and communication (2-8%).
Increased costs can be substantial (19% to 81%).

Companies should manage businesses to advance societal well-being, not just profit.
Environmental sustainability means engaging in practices with minimal impact on the environment.
Ethical practices, such as Fair Trade, can improve company image and appeal to social-conscious consumers.
Companies can improve their image by having greener products and ethical practices.

Other Outsourcing Concerns

Logistics challenges like delays from overseas shipments (offshoring).
Customers might switch to competitors if products/services are unavailable due to outsourcing issues.
Work force policies of third-party suppliers can affect outcomes.

Demand Planning and Forecasting

Demand planning estimates customer demand for goods or services.
Production scheduling manages resources for offering production.
Lead time is the time between order and delivery.
Forecasting determines sales volume and timing.
Important factors for forecasting include: sales history, industry trends, economic factors, competitive situations, promotional activities, customer base changes, and supply chain input.

Inventory Management

Inventory control ensures products meet customer needs.
Goal is to avoid inventory shortages (stockouts).
Safety stock provides a buffer for unexpected demand surges.
Inventory shrinkage includes shoplifting, employee theft, and paperwork errors.
Just-in-time (JIT) inventory minimizes inventory held.
Vendor-managed inventory (VMI) has suppliers manage inventory levels.
SKUs are unique identifiers for products.
EDI is electronic data exchange for business documents.

Warehousing and Distribution Centers

Warehouses accommodate supply and demand changes.
Trends are towards smaller warehouses.
Distribution centers handle processing and moving goods to wholesalers, retailers, or consumers.

Transportation

Logistics is the physical movement of goods in the supply chain; goal is to decrease costs and transit time, while increasing customer service.
Transportation methods include: trucks, water, air, railroads, pipelines.

Railroads

Used for heavy, bulky freight over long distances.
Factories are often located on rail spurs for convenient loading and unloading.

Trucks

Flexible schedules and routes for direct delivery from factory/warehouse to customer.
More expensive than rail.
Vulnerable to size and weight restrictions.

Waterways

Used to transport heavy, low-value, non-perishable goods.
Barges can haul significantly more weight than rail.
Ocean-going vessels can transport thousands of containers.

Air Transport

Fast, but expensive.
Contributes to just-in-time (JIT) cost efficiencies.

Pipelines

Belong to the shipper and carry the shipper's products.
Used for petroleum and chemicals.

Choosing Transportation

Key factors for choosing transportation include speed, dependability, load flexibility, accessibility, and frequency.

Coordinating Transportation

Intermodal transportation uses two or more transport modes.
Piggyback, fishyback, and birdyback are examples of intermodal transport.

Track and Trace Systems

Track and trace systems record shipments electronically.
Shipping costs and tracking are paramount for businesses.
Modern systems use GPS, RFID, and barcodes.
Consumer tracking is increasingly important..

Reverse Logistics

Moves products backward through the supply chain to create value
Used to extract value from waste. Upcycling is a form of reverse logistics.

Reorder Point

Objective of inventory management is to minimize inventory costs while maintaining adequate supply.
Reorder points are calculated to minimize stock outs.
Reorder Point = (Order lead time x usage rate) + safety stock.

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Description

Explore the critical concepts of supply chain management and its role in enhancing customer value in this Chapter 9 quiz. Delve into sourcing, procurement, outsourcing, and the associated risks, emphasizing how supply chain partners can exceed basic functions. Test your understanding of the strategies that drive efficiency and effectiveness in supply chains.

Supply Chains Creating Value - Chapter 9

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