Module in Supply Chain Management PDF

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Table of Contents......................................................................................................................................................................... i UNIT I: INTRODUCTION AND OVERVIEW OF SUPPLY CHAIN MANAGEMENT.................................. 1 The Concept of Supply Chain Management............................................................................................................... 2 The Importance of Supply Chain Management....................................................................................................... 4 Societal Role of Supply Chain Management.............................................................................................................. 4 Supply Chain Activities / Functions............................................................................................................................. 5 Make or Buy Decisions and Considerations.............................................................................................................. 6 Supply Chain Strategies and Managing Supply Chain........................................................................................... 7 Supply Chain Integration: Issues and Opportunities............................................................................................ 8 The Concept of Vendor Managed Inventory (VMI) and Its Benefits.............................................................. 8 Types of Purchase Orders................................................................................................................................................. 9 Assessing Learning............................................................................................................................................................ 10 Activity 1-1....................................................................................................................................................................... 10 Activity 1-2....................................................................................................................................................................... 12 Activity 1-3....................................................................................................................................................................... 13 UNIT II: MATHEMATICAL FOUNDATIONS OF SUPPLY CHAIN SOLUTIONS..................................... 14 Supply Chain Planning..................................................................................................................................................... 15 Key Supply Chain Planning Elements........................................................................................................................ 15 Supply Chain Planning Software.................................................................................................................................. 16 Supply Chain Planning Strategies................................................................................................................................ 16 Capacity Planning............................................................................................................................................................... 17 Capacity Strategies............................................................................................................................................................. 17 Strategic Capacity Planning for Products and Services..................................................................................... 17 Defining and Measuring Capacity and the Determinants of Effective Capacity...................................... 18 Steps in the Capacity Planning Process..................................................................................................................... 18 Inventory Optimization................................................................................................................................................... 19 Dynamic Routing and Scheduling................................................................................................................................ 19 Assessing Learning............................................................................................................................................................ 20 Activity 2-1....................................................................................................................................................................... 20 Activity 2-2....................................................................................................................................................................... 23 Activity 2-3....................................................................................................................................................................... 24 UNIT III: VENDOR SELECTION....................................................................................................................... 25 Vendor Selection................................................................................................................................................................. 26 Vendor Evaluation............................................................................................................................................................. 26 Vendor Development........................................................................................................................................................ 27 Negotiations.......................................................................................................................................................................... 27 Tools for Vendor Selection............................................................................................................................................. 27 Assessing Learning............................................................................................................................................................ 30 Activity 3-1....................................................................................................................................................................... 30 i  Activity 3-2....................................................................................................................................................................... 32 Activity 3-3....................................................................................................................................................................... 33 UNIT IV: LOGISTICS MANAGEMENT............................................................................................................. 34 Definition of Logistics....................................................................................................................................................... 35 Supply Chain Management and Logistics................................................................................................................. 35 Role of Logistics in Supply Chain Management..................................................................................................... 35 Logistics Management...................................................................................................................................................... 36 7 R’s of Logistics Management...................................................................................................................................... 36 Importance of Logistics Management in Modern Business Operations..................................................... 37 Distribution Management............................................................................................................................................... 37 Four (4) Channels of Distribution............................................................................................................................... 38 A Systems Approach to Logistics Management..................................................................................................... 38 Assessing Learning............................................................................................................................................................ 40 Activity 4-1....................................................................................................................................................................... 40 Activity 4-2....................................................................................................................................................................... 42 Activity 4-3....................................................................................................................................................................... 43 UNIT V: SUPPLY CHAIN INVENTORY MANAGEMENT............................................................................. 44 The Role of Inventory in the Supply Chain.............................................................................................................. 45 Inventory Management Process.................................................................................................................................. 45 Inventory Management Techniques.......................................................................................................................... 45 Inventory Management Strategies.............................................................................................................................. 46 Useful Inventory Management Formulas................................................................................................................. 47 Economic Order Quantity (EOQ)............................................................................................................................ 47 Safety Stock...................................................................................................................................................................... 48 Reorder Point.................................................................................................................................................................. 48 Assessing Learning............................................................................................................................................................ 50 Activity 5-1....................................................................................................................................................................... 50 Activity 5-2....................................................................................................................................................................... 52 Activity 5-3....................................................................................................................................................................... 53 UNIT VI: INFORMATION TECHNOLOGY IN A SUPPLY CHAIN............................................................... 54 The Role of Information Technology (IT) in a Supply Chain........................................................................... 55 The Supply Chain IT Framework................................................................................................................................. 55 Transaction Management Foundation...................................................................................................................... 58 Assessing Learning............................................................................................................................................................ 59 Activity 6-1....................................................................................................................................................................... 59 Activity 6-2....................................................................................................................................................................... 61 Activity 6-3....................................................................................................................................................................... 62 References........................................................................................................................................................... 63 ii UNIT I: INTRODUCTION AND OVERVIEW OF SUPPLY CHAIN MANAGEMENT MANAGEMENT Overview This module introduces you to the fundamental concepts and significance of supply chain management (SCM). You will explore the roles and activities involved in SCM and gain a comprehensive overview of its importance in today's business environment. Learning Objectives At the end of the unit, I am able to: 1. describe the concept and significance of supply chain management; 2. determine the roles and activities performed in supply chain management; and 3. summarize the overview of supply chain management. Setting Up Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Tell Me Game! Direction: This game will help you relate your personal experience of the topics to be discuss in this chapter. It will boost your prior knowledge on the topic for you to easily cope up with the topics in this module. Here are the mechanics: 1. Try to ask a seller of a retail product and a seller of a wholesale or bulk products. Compare their price. Based on your comparison try to figure out why are they different and what made it different price in buying a wholesale or bulk compared to retail. 2. After doing so, try to relate each of your answers on the subtopics to be discuss in this module and answer the remain question you might be thinking. 1 Lesson Proper The Concept of Supply Chain Management The scent of your favorite coffee fills the air soon after your alarm clock leaves and the coffeemaker begins. The supply chain will deliver coffee beans to your kitchen and the world over. Every household has something so common: preparing, requirement forecasting, sourcing and logistical skills in order to transfer the beans to local sellers while they are still young. Your caffeine fix options would be severely limited without a strong supply chain in place. According to Fernando (2022), a supply chain is the network of individuals, companies, resources, activities, and technologies used to make and sell a product or service. A supply chain starts with the delivery of raw materials from a supplier to a manufacturer and ends with the delivery of the finished product or service to the end consumer. Meanwhile, supply chain management (SCM) is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace. Supply chain management can be broadly categorized into five steps or areas: 1. Planning. To get the best results from SCM, the process usually begins with planning to match supply with customer and manufacturing demands. Firms must predict what their future needs will be and act accordingly. This relates to raw materials needed during each stage of manufacturing, equipment capacity and limitations, and staffing needs along the SCM process. 2. Sourcing. Efficient SCM processes rely very heavily on strong relationships with suppliers. Sourcing entails working with vendors to supply the raw materials needed throughout the manufacturing process. A company may be able to plan and work with a supplier to source goods in advance. However, different industries will have different sourcing requirements. In general, SCM sourcing includes ensuring: o the raw materials meet the manufacturing specification needed for the production of goods. o the prices paid for the goods are in line with market expectations. o the vendor has the flexibility to deliver emergency materials due to unforeseen events. o the vendor has a proven record of delivering goods on time and in good quality. 3. Manufacturing. At the heart of the supply chain management process, the company transforms raw materials by using machinery, labor, or other external forces to make something new. This final product is the ultimate goal of the manufacturing process, though it is not the final stage of supply chain management. 4. Delivering. Once products are made and sales are finalized, a company must get the products into the hands of its customers. The distribution process is often seen as a brand image contributor, as up until this point, the customer has not yet interacted with the product. In strong SCM processes, a company has robust logistic capabilities and delivery channels to ensure timely, safe, and inexpensive delivery of products. 5. Returning. The supply chain management process concludes with support for the product and customer returns. Its bad enough that a customer needs to return a product, and its even worse if its due to an error on the company's part. This return process is often called reverse logistics, and the company must ensure it has the capabilities to receive returned products and correctly assign refunds for returns received. 2  It is expected that all the things should be handled in the supply chain correctly to satisfy consumer expectations in anything. And it means getting things correctly for the first time – there are no mulligans, no errors. The Seven Rights of Fulfillment guided world-class enterprises throughout the supply chain to deliver quality service and satisfy customers. APICS Dictionary, 15th edition, defines Perfect Order Fulfillment as a measure of an organization’s ability to deliver a perfect order. Perfect Order is defined as an order which the “seven R’s” are satisfied: the right product, the right quantities, the right condition, the right place, the right time, the right customer, the right cost.’ In short, Perfect Order Fulfillment is the percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage or defects. A research study of more than 100 producers, distributors and retailers over ten years ago has revealed certain widely used supply chain strategies and initiatives. These ideas and practices have been broken down to seven principles and have been presented by SCM professionals in an article from the Supply Chain Management Review. Principle 1: Customer segments based on the different groups' service needs, and adjust the supply chain to provide a profitable service for these segments. Principle 2: Adapting the logistics network to the customer segments' service needs and profitability. Principle 3: Listen to market signals and coordinate demand forecasting across the supply chain to ensure accurate forecasts and optimum allocation of resources. Principle 4: Differentiate between the product and the customer and speed throughout the supply chain. Principle 5: Strategically controlling supply sources in order to reduce the total ownership and service costs. Principle 6: Build an IT supply chain strategy that supports multiple decision-making levels and offers a clear picture of the flow of goods, resources and knowledge. Principle 7: To follow a performance-crossing networks in order to measure mutual progress in effectively and efficiently reaching end users. Even though these timeless concepts are over ten years old, they emphasize the need for supply chain management to concentrate on the company. They stress the importance of organized activities inside and through organizations (demand planning, procurement, assembly, distribution and knowledge sharing). An excerpt from the article is provided here: "Managers are being more and more assigned a role in a very real battle – one direction motivated by the increased demands of consumers and the other by the desire for growth and propitiation of the business. Many have discovered that they can prevent the cable from snapping and indeed achieve profitable growth through strategic variable management of the supply chain.” Two important things these experienced managers recognize: 1. They think of all the links involved in the flow of products, services and information from their suppliers to their customers (i.e. canal customers, such as distributors and retailers) in the entire supply chain. 2. They are striving for tangible results — concentration on revenue growth, asset use and costs. 3 The Importance of Supply Chain Management It is well known that supply chain management is an integral part of most businesses and is essential to company success and customer satisfaction. 1. Boost Customer Service Customers expect the correct product assortment and quantity to be delivered. Customers expect products to be available at the right location. Customers expect products to be delivered on time. Customers expect products to be serviced quickly. 2. Reduce Operating Costs o Decreases purchasing cost. Retailers depend on supply chains to quickly deliver expensive products to avoid holding costly inventories in stores any longer than necessary. o Decreases production cost. Manufacturers depend on supply chains to reliably deliver materials to assembly plants to avoid material shortages that would shutdown production. o Decreases total supply chain cost. Manufacturers and retailers depend on supply chain managers to design networks that meet customer service goals at the least total cost. 3. Improve Financial Position o Increases profit leverage. Firms value supply chain managers because they help control and reduce supply chain costs. This can result in dramatic increases in firm profits. o Decreases fixed assets. Firms value supply chain managers because they decrease the use of large fixed assets such as plants, warehouses and transportation vehicles in the supply chain. o Increases cash flow. Firms value supply chain managers because they speed up product flows to customers. Societal Role of Supply Chain Management 1. Ensuring Survival of Humans o SCM helps sustain human life. Human beings rely on supply chains to provide basic food and water resources. o SCM enhances human health. Human beings rely on supply chains for drug and health care delivery. The difference between life and death may be the supply chain output during a medical emergency. o SCM protects people against extreme climatic conditions. Humans are dependent on the energy supply chain to supply the energy for lighting, heat, cooling and air conditioning for homes and businesses. Logistic failure (a power blackout) could soon lead to a danger to people's lives. 2. Improving Life Value o Economic growth base. Companies with highly established supply chain infrastructure (modern interstate highways, a massive rail network and numerous modern ports and airports) can trade many goods quickly and efficiently between businesses and consumers. Therefore, the economy is expanding. Ironically, the one thing most poor countries have in common is neither a very poorly developed infrastructure for the supply chain. o Improves living standard. Companies with a highly developed supply chain infrastructure (modern interstate highway system, extensive rail network, numerous modern ports and airports) are able to exchange goods quickly and cheaply between 4  businesses and consumers. As a result, consumers can afford to buy a higher level of living in society with their income thereby. o Employment development. Professionals in the supply chain design and operate the supply chain in the business, overseeing transport, storage, inventory management, packaging and logistics details. As a result, there are many jobs in the supply chain sector. o Opportunity for pollution reduction. Packaging and transportation are central to supply chain activities. Some unwanted environmental pollutants, like cardboard waste and carbon dioxide gas fuel emissions, are produced as a by-product of these activities. o The opportunity for energy use reduction. Supply chain activities involve transportation of both human and product. Scarce energy is being exhausted as a by- product of these practices. Transportation actually accounts for 30% of world energy usage and 95% of global oil production. As network designers, supply chain experts play their part in developing less resourceful, energy-efficient supply chains. Supply Chain Activities / Functions Supply chain strategy must be consistent with both the overall business strategy and efforts within such areas as purchasing, logistics, manufacturing and marketing. The Supply Chain activities have to be clearly spelled out for the given business. 1. Strategic Activities o Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities. o Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics. o Product design coordination, so that new and existing products can be optimally integrated into the supply chain, load management o Information Technology infrastructure, to support supply chain operations. o Where to make and what to make or buy decisions o Align overall organizational strategy with supply strategy 2. Tactical Activities o Sourcing contracts and other purchasing decisions. o Production decisions, including contracting, locations, scheduling, and planning process definition. o Inventory decisions, including quantity, location, and quality of inventory. o Transportation strategy, including frequency, routes, and contracting. o Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. o Milestone payments 3. Operational Activities o Daily production and distribution planning, including all nodes in the supply chain. o Production scheduling for each manufacturing facility in the supply chain (minute by minute). o Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. o Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. o Inbound operations, including transportation from suppliers and receiving inventory. 5  o Production operations, including the consumption of materials and flow of finished goods. o Outbound operations, including all fulfillment activities and transportation to customers. o Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities. distribution centers, and other customers. o Performance tracking of all activities. Make or Buy Decisions and Considerations The decision to make or buy is to make a business decision to either make an object internally (in-house) or purchase it externally (from an external supplier). Often known as outsourcing, the purchase side of the decision. Decisions are typically made when a business which has created or partially changed a component or part significantly — is having difficulties with existing suppliers or is declining capability or increasing demand. Analysis of performance or purchase is carried out on a strategic and operational level. Obviously, the long range of the two is the strategic level. At the strategic level the factors considered include prospective prediction and the existing climate. Things such as government policy, competitive companies and consumer dynamics all influence making or buying decisions strategically. Naturally, businesses should create products that reinforce their core competencies, or are in line with them. These are areas in which the company is strongest and give the company a competitive edge. Decisions on making or purchasing are often taken into service. Review by Burt, Dobler, and Starling, and Joel Wisner, G. Keong Leong, and Keah-Choon Tan in separate texts suggests these things which favor a path within the company: o Performance considerations (less costly to do the job) o Want to combine farm activities o The successful usage, using established idle power, of excess plant capability to assist fixed overhead absorption. o Want to monitor output and/or quality directly o Improved regulation of quality o Proprietary technologies must be secured by design secrecy o Untrustworthy networks o No eligible suppliers o Want to retain stable workers (during rising sales periods) Companies can be affected by factors which include externally: o Lack of expertise-how o The work and know-how of suppliers goes beyond that of the consumer o Price (less costly to buy) cost considerations o Specifications for limited volume o Limited or insufficient production facilities o Want to maintain a policy on multiple sources o Considerations of indirect management power o Considerations of sourcing and inventory o Preference for brand o Not applicable to the strategy of the company The cost and the availability of productive resources are the two main factors to consider in making or purchasing decisions. The consequences of these factors would cover all costs and be of long-term significance. Burt, Dobler and Starling note that "no other element is more common in perception or confusion." The buying company would naturally compare costs of production and 6 acquisition. The main elements included in this comparison are Burt, Dobler and Starling. The "make" analytical elements include: o Incremental carrying costs for inventories o Labor related costs o Overhead costs for marginal factories o The purchased content has been shipped o Incremental cost of production o Any costs associated with consistency and related issues o Incremental costs of procurement o Incremental cost of debt For the "buy" study cost considerations include: o The part purchase price o Costs of shipping o Costs of receipt and monitoring o Incremental cost of production o All quality or service follow-up costs Six of the costs to be taken into account are incremental. An additional expense should not be borne by definition if the component was imported from an external supplier. Incremental costs include the variable cost plus the cumulative portion of the fixed overhead allocated to the component production, when a business is not able to manufacture the product at the present time.. If the company has a surplus capacity of the output of the element in question, only the overhead variances arising from the manufacture of the components is considered in progress. This implies that fixed costs are not incremental and should not be considered part of the cost of making the part under circumstances with a reasonable idle power. Supply Chain Strategies and Managing Supply Chain A supply chain strategy is the overarching plan that an organization uses to manage the flow of goods and services, from sourcing raw materials to delivering products to customers. It outlines the key processes, technologies, and partnerships that the organization will use to optimize the efficiency and effectiveness of its supply chain. There are several different components that make up a supply chain strategy, including: 1. Sourcing. This involves identifying and selecting suppliers, as well as managing the relationships with those suppliers to ensure that they can meet the organization’s needs in terms of quality, cost, and delivery. 2. Logistics. This includes managing the movement of goods and materials through the supply chain, from the point of origin to the point of consumption. This can include transportation, warehousing, and inventory management. 3. Production. This includes the processes and technologies that are used to turn raw materials into finished goods. It can also include managing the flow of goods through the organization’s own production facilities. 4. Distribution. This involves getting the finished goods to the customers. It can include managing the organization’s own distribution centers, as well as working with third-party logistics providers (3PLs) and other partners to deliver products to customers. 5. Customer Service. This includes managing the relationship with customers, including taking orders, providing after-sales service, and handling returns and complaints. 7 Creating a supply chain strategy There are three phases to creating a supply chain strategy: 1. Supply chain strategy design. At this stage, you will decide the company’s strategic objectives and KPIs. You should also review and choose suppliers, decide where to locate warehouses and whether to implement software throughout the supply chain. 2. Supply chain strategy planning. If you understand your strategic objectives, you will be able to plan how to balance supply and demand. This will ensure that you have the right goods, at the right time, and in the right place to meet customer demand. 3. Supply chain strategy execution. This is where inventory teams will manage warehouses and inventory levels to ensure the company can meet customer demand. Supply Chain Integration: Issues and Opportunities Supply chain integration is a strategy that establishes a single system that can bring together multiple stakeholders involved in the process for greater efficiency, both in terms of productivity and cost savings. Supply chain integration is done to create an efficient system that starts from raw materials from the supplier to the end product going to the consumer without delays, increases in cost, or poor customer experience. An organization strives to build a superior supply chain with the help of integration. It involves complete system transparency, from the supplier to the customer. Multiple elements at multiple levels in an enterprise must work together to achieve integration in the supply chain. As the supply chain integration benefits far outweigh the efforts in establishing the processes, it is essential to understand the key elements to achieve supply chain integration. 1. Choosing the right vendors. A business needs to choose the right vendors who are willing to meet the standard requirements at the right price and at the right time. 2. Working with internal teams. A business needs to work closely with internal teams in the supply chain and across the organization. Therefore, you can expect efficient supply chain processes with the internal team onboard for supply chain integration. 3. Waste elimination. A business needs to focus on eliminating wastage from supply chain processes. It can be done via manual changes or with gaps identified with the procurement software. Aside from that, there are several barriers to the supply chain integration process. Some of the critical barriers to supply chain integration are: o Lack of IT solutions o Lack of knowledge o Poor working relationship o Lack of communication o Cost of integration o Conflicting goals The Concept of Vendor Managed Inventory (VMI) and Its Benefits The Vendor Managed Inventory (VMI) is used to manage the inventory of their customers by manufacturers. It happens with physical counts or the use of customer info. When inventory rates exceed their reorder points, vendors must refill their inventory. There following are the benefits using Vendor Managed Inventory: 1. More tracking. In order to forecast demand accurately, VMI gives sellers more leverage. This can lead to more productive production. They will produce clean and deliver frequently. In addition, VMI reduces inventory and inventory shortages. In addition, VMI providers have 8  full visibility into inventory levels of their customers. They can satisfy demand better and that inventory and expense. 2. Strengthen the relationship between consumers and suppliers. Superior service providers are able to establish better relations with their customers. VMI vendors should grow into more valuable vendors. In addition, the strategic coordination will be improved. VMI will give both parties substantial benefits. 3. Price management of production. When VMI regulates suppliers, waste, value-added factors and other costs can be minimized. Precise preparation decreases storage costs and reduces unused inventory. In particular, sellers should reduce inventory shortfalls and high shipping distribution costs. Types of Purchase Orders In essence, a purchase order is a request from the buyer to the vendor, which provides information on what they want in their order: object, quantity, delivery time, etc. If the order is approved, it is a contract which is binding on any conditions stated in the order. There are four major types of buying orders, which vary basically based on the amount of details that you know when the order is put. 1. Standard Purchase Order. The most common form of purchasing order is where every aspect of the goods to be purchased is known, i.e. the amount, the size, the delivery time and the payment terms is known at the time of the purchase. Standard buying orders are used for sporadically ordered products, one-off shipments or shopping, where there is a lot of clarity about exactly what is required. 2. Plan Purchase Order. The majority of the information for this purchase order are known: products, number, price and payment terms. You agree to price and quantity and so on by using this order, but you just make a timely delivery schedule. Then you can build releases against the PPO with a comprehensive delivery schedule when you decide those dates that you want your goods shipped. You commit to the delivery when you release it. 3. Contract Purchase Order. Even the particular item needed is not known, or this final purchase order form. In that case, you can negotiate with your supplier on terms and conditions, but only until the products and quantities you want are determined. Standard Purchase Orders are defined by referring to the CPO when something from that supplier is purchased from the CPO. 4. Blanket Purchase Order. The situation with a BPO is the same as that of a PPO, unless prices and quantities are also unknown. In some delivery conditions you will still specify the item you want, but nothing until you release it against the BPO. Typically for the specified period, you agree on a maximum quantity and then order a quantity below it. The price breaks depending on the quantity you bought may be agreed upon. 9 Assessing Learning Activity 1-1 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Select and encircle the best answer. 1. It is the network of individuals, companies, resources, activities, and technologies used to make and sell a product or service. a. Supply chain b. Supply chain management c. Suppliers d. None of the above 2. This relates when a business is predicting the raw materials needed during each stage of manufacturing, equipment capacity and limitations, and staffing needs along the SCM process. a. Sourcing b. Planning c. Delivering d. None of the above 3. This entails working with vendors to supply the raw materials needed throughout the manufacturing process. a. Delivering b. Manufacturing c. Sourcing d. None of the above 4. It guarantees a delivery date to the customer, while ensuring that a company can fulfill the order with flexibility and reliability. a. Delivering b. Customer service c. Order promising d. None of the above 5. It includes the transportation from suppliers and receiving inventory. a. Inbound operations b. Outbound operations c. Either a or b d. None of the above 6. It involves checking that the raw materials meet the manufacturing specification needed for the production of goods. a. Manufacturing b. Sourcing c. Returning d. None of the above 7. It is considered as the heart of the supply chain management process. a. Planning b. Returning 10  c. Manufacturing d. None of the above 8. It ensures that the prices paid for the goods are in line with market expectations. a. Sourcing b. Planning c. Delivering d. None of the above 9. It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a competitive advantage in the marketplace. a. Supply chain management b. Entrepreneurship c. Logistics management d. None of the above 10. It involves making a business decision to either make an object internally (in-house) or purchase it externally (from an external supplier). a. Supply chain management b. Opportunity cost c. Make or buy d. None of the above 11. It involves transforming raw materials by using machinery, labor, or other external forces to make a product. a. Delivering b. Sourcing c. Manufacturing d. None of the above 12. The majority of the information for this purchase order are known: products, number, price and payment terms a. Standard Purchase Order b. Plan Purchase Order c. Blanket Purchase Order d. None of the above 13. It secures that the supplier has a track record of providing goods that are both timely and of high quality. a. Returning b. Sourcing c. Delivering d. None of the above 14. Once products are made and sales are finalized, a company must get the products into the hands of its customers. This step is called a. Delivering b. Returning c. Manufacturing d. None of the above 15. It is a strategy that establishes a single system that can bring together multiple stakeholders involved in the process for greater efficiency, both in terms of productivity and cost savings. a. Supply Chain Integration b. Supply Chain Management c. Vendor Managed Inventory d. None of the above 11 Assessing Learning Activity 1-2 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Do this to evaluate your understanding of the lessons. Make or Buy Decision What to do? 1. Think of a product that you want to sell. 2. Try to decide whether to buy or make that product. 3. Make a table of advantage and disadvantage of making and buying the product and try to make a decision whether to buy or make. 4. Explain your decision. 12 Assessing Learning Activity 1-3 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Do this to evaluate your understanding of the lessons. 1. In your own understanding based on the discussion in this module, what is the importance of supply chain management. _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 2. What are the societal roles of SCM? Give at least 2specific roles and explain each. _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 3. What are the 3 activities performed in SCM? Explain. _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 4. Choose 2 types of purchase order and explain. _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 13 UNIT II: MATHEMATICAL FOUNDATIONS OF SUPPLY CHAIN SOLUTIONS Overview This unit is designed to equip the you with the essential knowledge and skills needed to excel in supply chain management. By focusing on the mathematical foundations and strategic aspects of the field, you will gain a deep understanding of the core principles and methodologies that drive effective supply chain operations. Learning Objectives At the end of the unit, I am able to: 1. understand the mathematical foundation of supply chain management; 2. determine the supply chain planning, methods, capacity and strategies; 3. define and measure the capacity in supply chain; and 4. describe the process of capacity planning. Setting Up Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Direction: In layman’s terms, explain the statement below: “If you failed to plan, you planned to fail.” __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________. 14 Lesson Proper Supply Chain Planning Supply Chain Planning (SCP) is a forward-looking inventory management mechanism designed to automate supply distribution by suppliers to consumers, to align supply and demand with supplies. An SCP suite has a transnational framework that helps you to schedule, evaluate the scenarios and execute on demand commitments in real-time, taking into account constraints. Include common modules: § Available / Suitable to promise § Sales and business planning / integrated business planning § Collaborative planning (including forecasting and refilling) § Vendor-managed inventory / direct point of sale § Planning of events (promotion, life cycle) § Planning of demand § Planning of inventory § Planning and scheduling of production / factory § Planning for distribution (unrestricted, planning for distribution requirements [DRP] and deployment) § Strategic design of the network § Optimization of inventory strategy (simultaneous, multi-tiered) § Planning of supply (optimized, DRP and deployment) § Planning of production / multi-plant capacity (master production planning, rough-cut capacity planning) Key Supply Chain Planning Elements For businesses to ensure that their supply chains have two things that are efficient, it is important, firstly, that the supply chain is economical and, secondly, that the goods are delivered on time. Supply chain management consists of a variety of very necessary and essential elements of the program. Each portion will be addressed in brief. 1. Planning. This is one of the central steps. The methods must be formulated and applied before the beginning of the entire supply chain. It is important to check product or service demand, to check feasibility, cost, benefit, labor, etc. This would be almost difficult for the company to achieve productive and long-term benefits without a clear plan or strategy in place. This process also takes enough time. You can only continue after the arrangements are completed and all the benefits and drawbacks considered. 2. Information. A continuous flow of information dominates the world today. In order to thrive, a business must be knowledgeable about the various aspects of its output with all the latest details. If the knowledge is disseminated accurately and in time across several levels of the organization, the market dynamics of the production and demand of a given goods can be better understood. In a knowledge-based global economy information is critical, and ignorance of any market dimension could potentially harm business prospects. 3. Source. For supply chain management systems, manufacturers play a very important role. Using different raw material sets, products and services sold to end customers are made. Good quality raw materials must therefore be procured at reasonable rates. When a manufacturer is unable to deliver on a timely and budgetary basis, the client is expected to lose out and earn a reputation. A business must have high quality services so that it can manufacture higher quality goods and retain its credibility on the market. 4. Inventory. It is essential that an inventory be maintained and fully maintained for a highly effective supply chain management system. The inventory contains the ready list for the 15  product or service of goods, raw materials and other necessities. The list must be updated periodically to demarcate stock and inventory needed. Inventory management is essential to the supply chain management process, as both production and product sales are not possible without proper inventory management. 5. Production. It is one of the most important aspects of this system. It is only possible in combination with all the other elements of the supply chain. It is important that good planning and goods supply and storage are well established for the cycle of production to begin. Tests, packaging and final arrangements for delivery of the finished product are practiced in the manufacture of goods. 6. Location. Any business which wants to thrive and prosper needs a place that will support the company. Take, for example, a carbonated drinks factory is set up in an area where the water supply is scarce. Water is a basic necessity of this kind of business. The lack of water could hinder production as well as affect the goodwill of the company. A business cannot survive if it has to share a scarce raw material with the community. The appropriate location, which is well connected and very close to the source of the essential resources for production, is therefore vital to the prosperity of the business. 7. Transportation. It is vital in terms of carrying raw materials to the manufacturing unit and delivering the final product to the market. At each stage, timely transportation of goods is mandatory to sustain a smooth business process. Any business which pays attention to this component, and takes good care of it, will benefit from the production and transportation of its goods on time. 8. Return of Goods. The facility for the return of faulty or malfunctioning products and a highly sensitive customer complaint redress group are among the numerous components that build a powerful supply chain. Nobody’s unerring. Even a computer will malfunction once a million or more times. One can expect returns of goods under different circumstances as part of a strong business process. There are also inevitable intermittent delays in the strongest quality assurance systems. For such shortcomings, through which customer concerns eventually result, a business must revoke goods instinctive. Supply Chain Planning Software Supply Chain Planning Software provides tools to help plan and organize the various parts of the supply chain. The program for supply chain planning helps businesses to streamline and speed up supply chain operations by detecting supply chain problems, and predicting consumer supply and demand. The feature of these tools includes supply chain models, Gantt plan diagrams and dashboards to assess the current demand and supply. Software for supply chain planning is often used in stacks of other different supply chain management tools, such as visibility software for supply chain and supplier connection management software. The most common supply chain planning software are Oracle SCM Cloud, SAP Integrated Business Planning, Oracle Demantra, Anaplan, Logility Solutions, Oracle Supply Chain Planning Cloud, AIMMS Prescriptive Analytics Platform, JDA. Supply Chain Planning Strategies The supply chain planning strategies include the following: 1. Data gathering. Precise figures and data provide insight into the supply chain. Critical decisions can be made early with up-to-minute and real-time data. 2. Lean Production. Just-in-time stock management allows production costs to be reduced. Order fulfillment and labor costs would be reduced, allowing a much more efficient flow of inventories. 3. Increased Visibility. Often supply chains have unavoidable miscalculations such as waste. Increased visibility of operations may reduce the amount of inventory or waste from spec. 16  Adding these losses to production and managing them effectively will require a male-up plan to achieve performance. 4. Standardization. The achievement of an ERP system to allow growth of productivity would help the supply chain to develop its revenue in the short and long term. In a planning framework, it encourages an overall partnership and, in the future, will minimize mistakes to find software understandable within a team. The preparation phase of the supply chain takes a reasonable amount into account. Most facilities, if not all, try ways to plan better for unexpected problems and situations in the supply chains and other related obstacles within the supply chain of their customers. Without a comprehensive plan, it is possible that an installation will fail totally when the first unforeseen hurdle arises; production is affected. Capacity Planning Planning of production processes takes account of input, conversion and performance specifications. Capacity preparation will be conducted upon analysis of the outlook and long-term planning organization. Capacity is defined as being able to attain, store, or produce. For the organization, the capacity would be the ability of the system to produce output within a specific time frame. In operations, management capacity is referred to as the amount of input resources available to produce relative output over a period of time. Terms of capacity are commonly referred to as a full output potential which can be achieved within a regular schedule of work. Capacity planning is necessary in order to assess optimal resource usage and plays a significant role in the decision-making process, such as expanding existing activities, changing product lines, introducing new products, etc. Capacity Strategies A technique used to identify and measure the overall capacity of production is referred to as strategic capacity planning. Strategic capacity planning is utilized for capital intensive resource like plant, machinery, labor, etc. Strategic capacity planning is important, because it helps the organization fulfill the organization's potential needs. Planning ensures that running expenses are kept at the lowest amount possible without impacting efficiency. It ensures the organization remains competitive and is able to achieve a plan for long-term growth. Strategic Capacity Planning for Products and Services Capacity refers to the ability of a device to manufacture goods or deliver services over a specified time period. Power planning requires aspects of both long- and short-term type. Long-term considerations relate to the total capacity level; short-term considerations are related to capacity availability variability due to seasonal, unpredictable, and erratic demand fluctuations. When actual production is less than what is feasible or desirable for a business, excess capacity comes in. It also means that the demand for the commodity on the market is below what the business might possibly deliver to the consumer. Over capacity is inefficient and can force producers to incur higher costs or lose market share. The three key inputs to capacity planning are as follows: § The form of ability needed § How much capacity is needed? § When is it necessary? 17 Defining and Measuring Capacity and the Determinants of Effective Capacity When choosing a capability indicator, it is best to pick one that does not need to be changed. When dealing with more than one product, it is best to measure the capacity of each product. For example, the capacity of a company is either to produce 100 microwaves or 75 refrigerators. This is less confusing than just saying that the capacity is 100 or 75. Another method for measuring capacity refers to the availability of inputs. Note that a specific measure of capacity cannot be used in all situations; it needs to be tailored to the specific situation at hand. The following are the determinants of effective capacity: § Facilities. Size and expansion capacity are important when designing installations. Other considerations for facilities include local factors (cost of transportation, distance to market, availability of labor, energy sources). The work area layout can determine how the work can be carried out smoothly. § Product and service factor. As production is more reliable, processes and products become more standardized. This results in higher efficiency. § Process Factor. Quantity efficiency is a major capability determinant, but the production quality is the same. When production does not follow expectations, the performance rate would drop due to the need for inspection and rework. Improved processes that enhance quality and efficiency will contribute to capacity building. The time it takes to adjust equipment settings for different goods or services is another process aspect that must be considered. § Human Factors. The roles performed in some positions, the complexity of the activities involved and the preparation, skills and experience needed to do the job all influence the capacity and actual success. The motivation, absence, and turnover of workers also influences the production output. § Policy Factors. Capacity may be impacted by requiring or not having capabilities such as overtime or second or third shifts. § Operations Factors. The question of scheduling can occur when a company has different equipment capabilities or variations in the demands of its work. Other areas of effect on productive efficiency include decisions on inventory management, late deliveries, procurement requirements, acquisition of purchasing materials and components, and quality checks and audits. § Supply Chain Factors. Questions include: What is the impact on manufacturers, storage, transport and dealers of the changes? Will these supply chain elements be able to manage the increase if capacity is increased? If capacity is to be the, how does business, loss impact these supply chain elements? § External Factors. Minimum requirements for quality and efficiency will restrict management's capacity-enhancing choices. Inadequate preparation can be a significant constraint on successful capability determination. System and human factors are the most critical elements of successful efficiency. The process factors must be effective and operate smoothly, so that the production rate does not decrease drastically. Human factors need to be adequately educated and skilled, inspired and low absenteeism and labor turnover. All potential alternative solutions need to be tested in addressing constraint problems. Steps in the Capacity Planning Process 1. Estimate future needs for power 2. Assess existing capability and infrastructure and find shortcomings 3. Identify options for enforcement. 18  4. Perform financial studies of each alternative 5. Assess important qualitative questions for each alternative 6. Choose the right choice to follow in the long run 7. Implement the alternative chosen 8. Track results Inventory Optimization The method of optimization of inventory is to maintain a correct inventory to meet the target level of operation while maintaining a minimum amount of inventory capital. To do so, both supply and demand fluctuations need to be taken into account. The next level of stock control for warehouse and supply chain directors and buyers is stock optimization. Optimizing your stock means you can determine exactly how much every individual SKU needs to be purchased and when it is necessary to always serve your customers. Seasonal and campaigns are taken into account as well as lead times and timetables by providers in inventory optimization. So, you can have the right goods in the right warehouse without adding too much capital to the stock. The following tools can help the business to optimize its inventory: 1. Demand forecasting. It is the process of using predictive analysis of historical data to estimate and predict customers' future demand for a product or service. Demand forecasting helps the business make better-informed supply decisions that estimate the total sales and revenue for a future period of time. 2. Inventory policy. It is a set of rules and guidelines that define how you manage your inventory levels, replenishment, and tracking. It should specify the inventory methods, systems, and tools that you use, as well as the roles and responsibilities of your inventory staff. 3. Inventory replenishment. It is the process of ordering stock from suppliers in time to meet customer demand and avoid stock shortages without stockpiling surplus inventory. Inventory replenishment solutions also refer to the process of moving inventory from reserve storage in multiple warehouses to primary locations. Dynamic Routing and Scheduling Dynamic scheduling or routing is closely related to routing and matching because it uses either the same or similar software and is often used by para-transit providers in order to measure routes in real-time so that the communication can be carried out. The software requires digital maps of the road network, including one-way sections and restricted turns. These need to show road widths and restrictions so that the system can calculate the shortest appropriate routes accurately – and information on road surfaces need to be maintained so that their suitability for different types of public passenger transport vehicle can be assessed. The service requires in-vehicle devices to guide the driver and links to the control center where the calculation of ride sharing and matching is performed, because schedules are being re-calculated in real time, the waiting passages can only receive summarized and approximate advance information. For example, times can be seen instead of a detailed timing as a "time window" in which the vehicle is to arrive. 19 Assessing Learning Activity 2-1 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Select and encircle the best answer. 1. This determinant of effective capacity involves assessing the work area layout, cost of transportation, distance to market, availability of labor, energy sources. a. External factors b. Policy factor c. Facilities d. None of the above 2. These type of inventory refers to the partially finished products or processed materials to complete products like planks, sleeves, collar, etc. a. Raw materials b. Work-in-progress c. Finished goods d. None of the above 3. It is the process of ordering stock from suppliers in time to meet customer demand and avoid stock shortages without stockpiling surplus inventory. a. Inventory replenishment b. Inventory policy c. Demand forecasting d. None of the above 4. Good quality raw materials must therefore be procured at reasonable rates. This method is part of a. Production b. Sourcing c. Return of goods d. None of the above 5. This determinant of effective capacity considers the complexity of the activities involved and the preparation, skills and experience needed to do the job all influence the capacity and actual success. a. External factors b. Human factor c. Policy factor d. None of the above 6. These type of inventory refers to the unprocessed materials used for various products like wood, metal, linen, coal, etc. a. Raw materials b. Work-in-progress c. Finished goods d. None of the above 20 7. It involves maintaining a correct inventory to meet the target level of operation while maintaining a minimum amount of inventory capital. a. Supply chain planning b. Capacity planning c. Inventory optimization d. None of the above 8. This includes the management of raw materials, components, and finished products, as well as warehousing and processing of such items. a. Sourcing b. Transportation c. Inventory management d. None of the above 9. It is a set of rules and guidelines that define how you manage your inventory levels, replenishment, and tracking. a. Inventory replenishment b. Inventory policy c. Demand forecasting d. None of the above 10. It is the process of taking inputs and uses them to create an output which is fit for consumption – a good or product which has value to an end-user or customer. a. Production b. Sourcing c. Transportation d. None of the above 11. It is the process of finding the most efficient and cost-effective route to deliver goods from one point to another. a. Scheduling b. Capacity c. Routing d. None of the above 12. This element should be considered which needs to be well connected and very close to the source of the essential resources for production, is therefore vital to the prosperity of the business. a. Location b. Inventory management c. Transportation d. None of the above 13. This determinant of effective capacity involves decisions on inventory management, late deliveries, procurement requirements, acquisition of purchasing materials and components, and quality checks and audits. a. Policy factor b. Product and service factor c. Operations factor d. None of the above 14. It is a forward-looking inventory management mechanism designed to automate supply distribution by suppliers to consumers, to align supply and demand with supplies. a. Supply chain management b. Inventory management c. Supply chain planning d. None of the above 21 15. It is vital in terms of carrying raw materials to the manufacturing unit and delivering the final product to the market. a. Production b. Inventory management c. Transportation d. None of the above 22 Assessing Learning Activity 2-2 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Do this to evaluate your understanding of the lessons. Conduct a research about the following tools and provide real-life examples: 1. Demand forecasting 2. Inventory policy 3. Inventory replenishment 23 Assessing Learning Activity 2-3 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Do this to evaluate your understanding of the lessons. 1. Identify and describe each key supply chain planning element. _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 2. What is a capacity strategies? _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 3. Explain at least three (3) determinants of effective capacity. _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 24 UNIT III: VENDOR SELECTION Overview This unit focuses on the critical aspects of vendor evaluation and development, the importance of negotiations, and the tools used for supplier selection within supply chain management (SCM). You will gain insights into building and maintaining effective supplier relationships, which are essential for ensuring a reliable and efficient supply chain. Learning Objectives At the end of the unit, I am able to: 1. identify how to evaluate and develop vendors in SCM; 2. describe the importance of negotiations; and 3. identify the tools for supplier selection. Setting Up Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Direction: In layman’s terms, explain the statement below: “What is the importance of suppliers in businesses?” __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________. 25 Lesson Proper Vendor Selection The procurement department is responsible for selecting the seller, which is part of the procurement management process. The selection of the vendor is a subsidiary process which enables those vendors that meet procurement process needs to clearly be identified, defined and approved. Often, the selection criteria of vendors are different between organizations, but must be defined and included as an inventory management plan feature. The following are the criteria for selection of vendors: o Supply – the contractor 's able to procure all necessary items within desired delivery dates o Procurement quality services – the contractor's ability to deliver the products in the required quality o Procurement costs – price analysis offered by several businessmen o Past results – reports on the procurement operation of the contractor Vendor Evaluation Vendor evaluation is a system for recording and ranking the performance of a supplier in terms of a variety of issues, which may include delivery performance and the quality of the items. A process of vendor rating is essential to effective purchasing. 26 Vendor Development The development of vendors is one of the most popular strategic sourcing techniques that improve the value we get from providers. Vendor development can be defined as any activity undertaken by a buying company to improve the performance and capacity of a supplier to meet supply needs of buying companies. The process of vendor development is as follows: 1. Survey. Information on potential vendors 2. Inquiry. Detailed analysis of the supplier’s activities furnished by vendors or collected by the company. 3. Compliance, technical, manufacturing, human resource and financial capabilities, responsiveness, the reputation of the vendor. 4. Negotiation and selection. Finalization of vendors. Negotiations Negotiation is a process in which two or more parties with different needs and objectives, discuss a matter of finding a mutually acceptable solution. In business, negotiating skills are important in both informal day-to-day interactions and formal transactions, such as terms of sale, lease, service delivery and other legal contracts. Good negotiations make a major contribution to business performance, as: Help you build better relationships Provide sustainable, reliable solutions — rather than bad, short-term solutions that do not satisfy either party 's needs Aid you avoid future issues and conflicts. The seven types of negotiation include: 1. Competitive - result-driven, assertive and aggressive 2. Principled - value-driven, uses parties' key principles 3. Collaborative - open, understanding, and solution-driven 4. Compromising - fair and cooperative, seeks middle ground 5. Avoiding - intimidated, uncomfortable, avoids conflict 6. Accommodating - relationship-focused, personal, sensitive to emotions 7. Data-driven - fact-based, well-prepared, impersonal, uses data insights Tools for Vendor Selection To facilitate the process of vendor selection, the following quantitative tools are beneficial. 1. Categorical Method. Categorical method is the most uncomplicated method. The lists of relevant performance variables or factors are defined. The buyers will assign performance ratings of each evaluating attribute in categorical terms, e.g. “good”, “neutral”, and “poor”. The ratings are judged by agreement between various representatives from several functions in the company such as procurement, logistics and production. The supplier who obtains highest score will then be the best performer. 27 2. Cost Ratio Method. With cost ratio approach, the total cost of each purchase including selling price with the buyer’s internal operating costs, which are connected with the quality, delivery, and service components of the purchase, is calculated as the total company’s purchasing price. Each internal operating cost will be converted to a cost ratio which expresses the percentage of the total value of the purchase. Lastly, the overall cost ratio is applied to the supplier’s quoted unit price to obtain the net adjusted cost. The supplier with the lowest net adjusted cost would be the best preferred supplier. 28 3. Weighted-Point Method. Weighted-point method is the most frequently used method for evaluation process. With weighted-pointed method, different attributes which are important to the customers are weighted as per their importance level. The evaluator assigns the score to each supplier performance in each attribute and then the score will be multiplied by the assigned weight of each factor. Finally, the weighted score will be totaled to find out the final performance rating of each supplier. The supplier who obtains highest score will then be the best performer. 29 Assessing Learning Activity 3-1 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Select and encircle the best answer. 1. Which of the following is TRUE? a. The vendor can always be considered as supplier. b. The supplier can always be considered as vendor. c. Vendor and supplier are the same. d. None of the above 2. It can be defined as any activity undertaken by a buying company to improve the performance and capacity of a supplier to meet supply needs of buying companies. a. Vendor selection b. Vendor development c. Vendor evaluation d. None of the above 3. They are offering consulting, janitorial, information technology, air-conditioning repair, building maintenance, banking, etc. a. Manufacturers b. Retailers c. Service providers d. None of the above 4. It is a process to have a detailed analysis of the supplier’s activities furnished by vendors or collected by the company. a. Negotiation b. Evaluation c. Inquiry d. None of the above 5. In cost-ratio method, who will be selected? a. The vendor with lowest net-adjusted cost. b. The vendor with highest net-adjusted cost. c. The vendor who is most accessible. d. None of the above 6. Which is the nature of the supplier? a. Business-to-consumer only b. Business-to-business only c. Business-to-business and Business-to-consumer d. None of the above 7. It is a process in which two or more parties with different needs and objectives, discuss a matter of finding a mutually acceptable solution. a. Inquiry b. Survey c. Negotiation d. None of the above 30 8. It is considered as the most uncomplicated method of vendor selection. a. Categorical method b. Cost-ratio method c. Weighted-point method d. None of the above 9. In weighted-point method, who will be selected? a. The vendor with lowest score. b. The vendor with highest score. c. The vendor who provided timely delivery. d. None of the above 10. It this method, the evaluator assigns the score to each supplier performance in each attribute and then the score will be multiplied by the assigned weight of each factor. a. Categorical method b. Cost-ratio method c. Weighted-point method d. None of the above 11. Vendor development is a technique of supply chain management under a. Sourcing b. Manufacturing c. Returning d. None of the above 12. This methods allow the buyers to assign performance ratings of each evaluating attribute in categorical terms, e.g. “good”, “neutral”, and “poor”. a. Categorical method b. Cost-ratio method c. Weighted-point method d. None of the above 13. In categorical method, who will be selected? a. The vendor with lowest score. b. The vendor with highest score. c. The vendor who provided timely delivery. d. None of the above 14. It this method, the total cost of each purchase including selling price with the buyer’s internal operating costs, which are connected with the quality, delivery, and service components of the purchase, is calculated as the total company’s purchasing price. a. Categorical method b. Cost-ratio method c. Weighted-point method d. None of the above 15. It is a subsidiary process which enables those vendors that meet procurement process needs to clearly be identified, defined and approved. a. Vendor development b. Vendor selection c. Vendor evaluation d. None of the above 31 Assessing Learning Activity 3-2 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Complete the table and analyze which vendor will be selected based on their scores. Write the letter of the supplier on the space provided. 1. Supplier _____ Supplier Performance Characteristics Quality Delivery Customer Service Total A Satisfactory (+) Neutral (0) Unsatisfactory (-) B Satisfactory (+) Satisfactory (+) Unsatisfactory (-) C Neutral (0) Satisfactory (+) Satisfactory (+) 2. Supplier _____ Performance Characteristics Quoted Net Delivery Customer Total Supplier Quality Price/Unit Adjusted Cost Service Penalty Cost Ratio (₱) Cost (₱) Ratio Cost Ratio Cost Ratio A 2 2 1 ₱20.00 B 6 7 1 ₱10.00 C 4 3 1 ₱15.00 3. Supplier _____ Supplier A Weight Score Weighted Score Quality 40% 5 Delivery 20% 5 Customer Service 10% 5 Cost 30% 1 Total Score Supplier B Weight Score Weighted Score Quality 40% 3 Delivery 20% 2 Customer Service 10% 5 Cost 30% 5 Total Score 32 Assessing Learning Activity 3-3 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Do this to evaluate your understanding of the lessons. 1. Why do we need to evaluate the suppliers? _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 2. Explain the supplier selection process. _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ _________________________________________________________________________________________________________ ________________________________________________________________________________________________________. 33 UNIT IV: LOGISTICS MANAGEMENT Overview This unit helps you recognize that logistics management is an essential discipline that ensures the right products reach the right place at the right time, contributing to a company's competitiveness and customer satisfaction. Learning Objectives At the end of the unit, I am able to: 1. understand the significance of logistics management; 2. differentiate between supply chain management and logistics management; 3. comprehend the distribution system and its components; and 4. apply a systems approach to logistics management. Setting Up Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Direction: In layman’s terms, answer the question below: Consider a situation where a product you ordered online was delivered late. What do you think might have caused this delay in the supply chain, and how do you believe efficient logistics management could have prevented or minimized this delay? __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________