Supply Chains Creating Value - Chapter 9
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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?

<p>(Order lead time x usage rate) + safety stock (C)</p> Signup and view all the answers

What is the significance of reverse logistics for companies?

<p>It helps to transform waste into valuable products (C)</p> Signup and view all the answers

What is the primary function of supply chain management?

<p>To design, monitor, and alter supply chains for efficiency (B)</p> Signup and view all the answers

What does sourcing involve?

<p>Evaluating and hiring businesses to supply goods and services (C)</p> Signup and view all the answers

Which of the following best describes outsourcing?

<p>Transferring tasks to companies that can provide more value (C)</p> Signup and view all the answers

What is offshoring?

<p>Outsourcing work to companies abroad (C)</p> Signup and view all the answers

Which risk is associated with outsourcing?

<p>Loss of control over proprietary technology (B)</p> Signup and view all the answers

What does the hidden cost of global sourcing refer to?

<p>Costs related to international logistics and tariffs (D)</p> Signup and view all the answers

Which statement about the value chain is correct?

<p>Each partner should help create more value for customers. (B)</p> Signup and view all the answers

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

<p>19-81% (D)</p> Signup and view all the answers

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

<p>To decrease costs and transit time while increasing customer service (B)</p> Signup and view all the answers

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

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

Which transportation method is characterized as being expensive but fast?

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

Which factor is NOT typically considered in forecasting?

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

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

<p>GPS, RFID, and Barcodes (D)</p> Signup and view all the answers

Which characteristic is NOT a factor when choosing transportation?

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

What is the primary goal of inventory management?

<p>To avoid stockouts (C)</p> Signup and view all the answers

Which inventory management system involves minimal inventory on hand?

<p>Just-in-time inventory (D)</p> Signup and view all the answers

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

<p>Emphasis on processing and moving goods (C)</p> Signup and view all the answers

What is a common drawback of using trucks for transportation?

<p>They have size and weight restrictions (B)</p> Signup and view all the answers

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

<p>Loss in inventory due to theft and errors (D)</p> Signup and view all the answers

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

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

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

<p>To uniquely identify products (A)</p> Signup and view all the answers

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

<p>To advance the well-being of society (B)</p> Signup and view all the answers

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

<p>Collaborative planning, forecasting, and replenishment (A)</p> Signup and view all the answers

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

<p>By paying them higher prices for their products (B)</p> Signup and view all the answers

What is a stockout?

<p>When a product is out of stock for customers (C)</p> Signup and view all the answers

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

<p>They improve a company's image and differentiate it from competitors (C)</p> Signup and view all the answers

What is the characteristic of vendor-managed inventory?

<p>Suppliers manage the inventory levels for retailers (A)</p> Signup and view all the answers

What logistical challenge is most likely associated with outsourcing overseas?

<p>Customs challenges and transport lead time delays (A)</p> Signup and view all the answers

How does demand planning affect production scheduling?

<p>It influences the amount of materials to be purchased and goods to be produced (D)</p> Signup and view all the answers

What does lead time refer to in a production context?

<p>The duration from order placement to product delivery (C)</p> Signup and view all the answers

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

<p>The firm may choose to bring production in-house (B)</p> Signup and view all the answers

What does forecasting determine in the context of demand planning?

<p>The expected sales volume and timing of products (B)</p> Signup and view all the answers

Flashcards

Supply Chain

All organizations involved in a product's journey, from production to customer.

Supply Chain Management

The process of improving supply chain efficiency.

Value Chain

All partners in the supply chain working together to create value for customers.

Sourcing

Finding and selecting businesses to supply goods/services.

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Procurement

The actual purchasing of goods/services from sources.

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Outsourcing

Hiring outside companies to perform certain tasks.

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Offshoring

Outsourcing work to companies in other countries.

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Hidden Costs of Global Sourcing

Unexpected expenses related to international sourcing.

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Social Responsibility in Outsourcing

Considering the well-being of society and the environment while running a business, not just profit.

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Environmental Sustainability

Doing business in a way that has minimal impact on the environment, protecting it for future generations.

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Fair Trade

A movement paying farmers and producers in developing countries higher prices to reduce poverty.

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Outsourcing Concerns (Logistics)

Issues like transportation delays, customs problems, and issues with timely delivery when outsourcing to overseas locations.

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Demand Planning

Estimating how much of a product will be sold.

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Production Scheduling

Managing the resources and processes to create and deliver goods and services.

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Lead Time

The time it takes to get a product or service to the customer.

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Forecasting

Determining how much of a product will be sold and when.

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Collaborative Planning, Forecasting and Replenishment (CPFR)

A supply chain strategy where partners collaborate on forecasting, planning, and replenishing products to meet demand.

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Supply Chain Visibility

The ability for all supply chain partners to have access to real-time information about product movement and inventory levels.

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Inventory Control

The process of managing inventory levels to ensure enough products are available to meet customer demand without excessive costs.

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Stockout

A situation where a company runs out of a product that a customer wants.

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Safety Stock

Extra inventory kept as a buffer to handle unexpected increases in demand or supply delays.

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Shrinkage

A reduction in inventory levels due to theft, damage, errors, or fraud.

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Just-in-Time (JIT) Inventory

A system where goods arrive just as they are needed, minimizing inventory storage costs and waste.

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Vendor-Managed Inventory (VMI)

Suppliers manage their customers' inventory levels, ensuring products are available when needed.

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RFID Tag

A small electronic device that emits radio signals to track and record shipments. It stores product information like the electronic product code (EPC).

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Warehousing vs. Distribution Center

Warehouses focus on storing goods for longer periods to meet supply and demand changes. Distribution centers process and move goods quickly to wholesalers, retailers, or consumers.

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Logistics

The physical flow of materials throughout the supply chain, from raw materials to finished products.

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What is the goal of logistics?

To reduce costs (money spent on transportation) and transit time (how long it takes to move goods) while improving customer service (making customers happy).

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Truck Transportation

Most flexible mode of transportation, moving goods directly from factories or warehouses to customers. It's more expensive than rail but offers more schedule and route choices.

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Intermodal Transportation

Combining two or more transportation modes (truck, train, ship, etc.) for a single shipment.

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Track and Trace Systems

Electronic systems that record and monitor the path of shipments, using technologies like GPS, RFID, and barcodes. They help businesses keep track of goods in transit.

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What makes track and trace systems important?

They provide visibility into the supply chain, allowing businesses to monitor their shipments and understand their location and status in real-time.

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Reverse Logistics

The process of moving products and materials backward through the supply chain to extract value from them. It involves returning used or unwanted products, recycling materials, and reusing parts.

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Upcycling

A process of transforming waste into new products of higher quality or value. It prioritizes creating something new and better from discarded materials.

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Reorder Point

The inventory level that triggers the need to place a new order. It helps ensure that you always have enough stock on hand to meet customer demand.

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Order Lead Time

The time it takes between placing an order and receiving the goods. It includes processing time, shipping time, and any other delays.

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Usage Rate

The speed at which a product's inventory is consumed or sold. It's the average amount of a product used or sold per time period.

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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%).

Social Responsibility in Outsourcing

  • 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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Marketing Principles - Using Supply Chains for Customer Value - PDF

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.

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