Midterm Quiz PDF

Six Major Change Drivers—Technology Six Major Change Drivers—Government Technology is a...

Six Major Change Drivers—Technology Six Major Change Drivers—Government Technology is a facilitator of internal process and supply chain Policy and Regulation transformation. It is also a major force in changing the dynamics of More competitive environment is a result of the deregulation of the marketplace. several important sectors in the United States occurred in the 1980s and 1990s. The Internet. “Connected” 24/7 The transportation industry. Expanded services beyond transportation, with Social networks. Impact on customer demand and the speed of information service providers’ role evolving to outsourcing partners transfers The financial sector. More flexible and responsive to customer needs, making The world’s “knowledge pool” connection. Opportunities for collaboration in businesses more cognizant of supply chain management impact on efficiency and supply chains. cash flow The communications industry. A component of the information revolution, leading to dramatic improvements and opportunities in logistics and supply chains ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Six Major Change Drivers—Globalization Six Major Change Drivers—Empowered Globalization creates more economic and political risk, shorter product Consumers life cycle, and the blurring of traditional organizational boundaries. Consumers are empowered by exponentially expanded access to product sources and related information and increased buying Inventory management challenges power due to high income levels. Faster duplicability of products & services Increased pressures on supply chain due to increased demands at the Faster reduction in demand retail level in terms of: Requirement of new pricing policies Competitive prices Higher risk of obsolescence High quality in products and services Tailored or customized products Longer and more complex supply chain challenges Convenience and responsiveness – 24/7 availability with a minimum of wait time Growth and increased scope of outsourcing Flexibility – Omnichannel distribution strategies ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 Six Major Change Drivers Six Major Change Drivers—Organization Consolidation and Power Shifts During the 1980s and especially the 1990s, economic power and the driving force in supply chains shift from product manufacturers to Source Figure 1.1: Center for Supply Chain Research, Penn State University. the retail end of the supply chain. More collaboration among organizations in supply chains Win-win, improved services such as: − Scheduled deliveries − “Rainbow” pallets − Advance shipments notices (ASNs) shrink-wrapped pallets Sharing of point-of-sale data to mitigate “bullwhip effect” ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7  Supply Chain Flows Major Supply Chain Issues (3 of 5) Organizational Information Cost and Value Relationships The challenges The challenges Center for Supply Chain Research, Penn State University. The challenges The sharing of information The prevention of sub- Internal collaboration along the supply chain optimization (marketing, sales, operations, finance, etc.) The discipline to ensure the integrity of the vast amount External collaboration of data collected and stored (vendors, customers, transportation companies, 3PLs) ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 Integrated Supply Chain—Basics Major Supply Chain Issues (2 of 5) SCM is the art and science of integrating the flows of products, information and financials through the entire supply pipeline from the supplier’s supplier to the customer’s customer. Supply Chain Network Complexity Inventory Deployment Source Figure 1.4: Center for Supply Chain Research, Penn State The challenges The challenges The challenges Network system (facilities Increased requirements in Increased requirements for and supporting simplifying and continually coordination or integration transportation services) evaluating areas of to reduce inventory levels must be capable and complexity in the various on horizontal (single-firm) flexible to respond and aspects of supply chains and vertical (multiple-firms) change with market levels in the supply chain dynamics University. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 Six Major Change Drivers—Sustainability Major Supply Chain Issues (1 of 5) The pursuit of sustainability is widely recognized as a key element of successful supply chain management. This is critical to effective 1. Supply chain networks 7. Performance measurement risk management and achieving competitive advantage. 2. Complexity 8. Technology Society. Focus on people is a significant concern in the area of sustainability. 3. Inventory deployment 9. Transportation management 4. Information 10. Supply chain security Environment. The objective of being “green” is a key element of making positive contributions to improving our environment. There are many ways in which 5. Cost and value 11. Talent management supply chains may help to achieve desired outcomes. 6. Organizational relationships Economy. Continued economic and financial sustainability is essential to making future positive impacts on society and the environment. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15  Summary Urbanization The rate of change has been driven by a set of external forces including globalization, technology, organizational consolidation and shifts in power in The rise of “megacities” Urban sustainability challenges supply chains, empowered consumers, and government policy and regulations. − By 2030, 60% of the world’s Waste and pollution population will live in urban Supply chains are extended enterprises which require managing four flows— Water and energy areas (vs. 47% in 2000) products, information, financials (cash), and demand on a collaborative basis. Change most profound in less Traffic congestions The global supply chains of the best companies must be adaptive, resilient, and least developed countries of and responsive to meet the challenges of the global economy and develop Health problems the world mitigating strategies for disruptive forces. Green spaces − Urban sustainability challenges Poverty Social security ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 Major Supply Chain Issues (5 of 5) Contributing Factors for Global Flows and Trade Supply Chain Security Talent management 1. Population size and distribution 2. Urbanization 3. Land and resources The challenges The challenges 4. Technology and information Risk of disruptions, Attract, develop, and vulnerability, and exposure maintain the appropriate 5. Globalized economy to terroristic threats pool of talent from entry exacerbated by distance level to executive level and complexity in global supply chain ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Major Supply Chain Issues (4 of 5) Rationale for Global Trade and Commerce Performance Transportation Absolute advantage Technology Measurement Management − Lower cost and/or access to items not available locally The challenges The challenges Comparative advantage The challenges Connecting lower-level Evaluate, strategically plan, − Differences in the cost of producing products in different countries Transport “perfect metrics in an organization and successfully implement storm.” Transport market directly to the high-level the technology to make the changes; driver shortages; performance measures of improvements desired fuel costs; infrastructure the organization and the constraints; and regulatory supply chain changes ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3  Supply Chain in Global Economy Global Markets and Strategy Global trade growth has been fueled by free trade agreements (FTAs) that lift most Customer Service Perspective tariff, quota, and fee/tax limitations on trade. 1. Standardization to reduce complexity must maintain some customization. The best supply chains compete successfully on a national, regional, and global basis. 2. Global competition often reduces the product life cycle. Bilateral  FTAs  Regional 3. Organizational structures and business models change with more outsourcing. Bi-lateral Regional trade agreements involve 3 or more nations 4. Globalization introduces more volatility and complexity. agreements are between two US currently involved in: nations − Free Trade Area of Americas − Middle East Free Trade Initiatives US currently in 20 − Enterprise for ASEAN Initiatives bi-lateral FTAs − North American Free Trade Agreement (NAFTA) − USMCA (US-Mexico-Canada) Agreement (proposed) ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Technology and Information Global Markets and Strategy Supply Chain Perspective Technology has two important dimensions. 1. Strategically sourcing materials and components worldwide 2. Selecting global locations for key supply depots and DCs Technology as an “internal” change agent 3. Evaluating transportation alternatives and channel intermediaries − Enhanced efficiency, effectiveness, and ability of an organization to compete in the global marketplace 4. Understanding governmental influences on global SC flows Technology as an “external” change agent 5. Examining opportunities for collaboration with 3PLs or 4PLs − New forms of competition or new business models (e.g. omnichannel distribution, global outsourcing) ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19 Land and Resources Global Markets and Strategy Success in the global market-place requires development of a cohesive set of strategies including product development, technology, marketing, manufacturing, and supply chains. Crop & forest Water Food Energy Land Supply chain perspective Customer service perspective Critical role of technology in mitigating resource scarcity ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18  Supply Chain in Global Economy Value-added Roles of Logistics NAFTA → USMCA Agreement Five Principal Types of Economic Utility NAFTA Economic Utility − Established free trade among Canada, the U.S., and Mexico. ▪ Time − Goals involved making structural changes to operate a borderless logistics ▪ Form network in North America. ▪ Possession USMCA (2020) ▪ Quantity − Proposed multi-lateral trade agreement with U.S., Mexico, and Canada ▪ Place ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Role of Ports What Is Logistics? Global Supply Chain and Security Logistics can be viewed as part of organizational management with four major subdivisions. Ports are a critical part of global supply chains and a major focus for global security. 1. Business Logistics. Part of supply chain that plans, implements, and controls the flow and storage of goods, services, and related information. 2. Military Logistics. Design and integration of all aspects of support for the Over 90 percent of U.S. international trade passes through ports. operational capability of the military forces and their equipment. Ports are bases of operation to deploy troops and equipment. 3. Event Logistics. Network of activities, facilities & personnel required to organize, schedule & deploy the resources for an event to take place and withdraw after the event. 4. Service Logistics. Acquisition, scheduling & management of facilities, assets, personnel & materials to support a service operation & business. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Supply Chain Security Summary A Balancing Act Trade flows between the United States and other countries have grown considerably, resulting in global supply chains becoming increasingly important. Security Measures Global Trade Flows The increased complexity and competitiveness of a global economy have resulted in shorter product life cycles, new forms of competition, and new The Trade Act of 2002 Electronic filing of cargo information business models. The U.S. Maritime Transportation Standards for container seals and Success in the global marketplace requires ongoing development of a cohesive Security Act of 2002 locks, cargo tracking, identification, set of strategies that has implications to both supply chains and customer and screening systems for ocean services. The Customs Trade Partnership containers Against Terrorism (C-TPAT) Companies individually, jointly, and in cooperation with the government are A “green lane” actively involved in supply chain security. With increasing regional economic integration, NAFTA has helped to foster trade in North America. Proposed USMCA Agreement should exceed benefits of NAFTA ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26  Micro Dimensions of Logistics Micro Dimensions of Logistics (3 of 5) Logistics Interfaces with Other Functional Areas Factors Affecting Cost & Importance of Logistics Manufacturing Marketing (4 Ps – Marketing Mix) Length of the production run Price (e.g. purchase quantity Available quantity of raw material and discounts) Inventory Effect Transportation Effect Spatial Relationships component Product (e.g. size, shape, weight, Industrial packaging packaging) Promotion Place (distribution channel selection) Increasing inventory Cost of lost sales can The location of fixed Logistics costs can reduce the be reduced by points in the logistics Finance Accounting cost of lost sales. spending more on system with respect to Inventory Cost information for analysis of transportation service demand and supply Warehouses & transportation fleet alternative logistics options to improve customer points are very owned and/or outsourced Supply chain tradeoffs and Customer service performance measurement service. important to transportation costs. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 Key Logistics Activities Micro Dimensions of Logistics (2 of 5) Factors Affecting Cost & Importance of Logistics 1. Transportation 8. Production planning & scheduling Competitive Order Cycle Length Substitutability 2. Storage 9. Procurement Relationships 3. Industrial packaging 10. Customer service Customer service can Shorter order cycles Customer service is 4. Materials handling 11. Plant & warehouse site location be a very important reduce the inventory important for highly form of competition. required by the substitutable products 5. Inventory control 12. Others* customer. to reduce lost sales 6. Order fulfillment * Others include parts and service cost. support, return goods handling, and 7. Demand forecasting salvage and scrap disposal. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 Value-added Roles of Logistics Micro Dimensions of Logistics (1 of 5) Factors Affecting Cost & Importance of Logistics Generally, production/manufacturing activities are credited with providing form utility; logistics activities with time, place, and quantity utilities; and marketing 1. Competitive relationships activities with possession utility. 2. Order cycle length 3. Substitutability 4. Inventory effect 5. Transportation effect 6. Product-related factors 7. Spatial relationships ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14  Logistics and Systems Analysis Unique Aspects of Strategic Sourcing Approaches to Analyzing Logistics Systems 1. Consolidation/leveraging of purchasing power The analysis of logistics systems may require different views or perspectives of logistics activities. 2. Emphasis on value Materials management vs. physical distribution − Examine logistics as inbound vs. outbound logistics. 3. More meaningful supplier relationships Cost centers − Examine logistics activities as cost centers, allowing tradeoffs between them to be analyzed. 4. Attention directed to process improvement Nodes vs. links 5. Enhanced teamwork and professionalism − Examine nodes (fixed spatial points where goods stop for storage or processing) vs. links (transportation network that connect the nodes in the logistics system). 6. Enhanced teamwork and professionalism Logistics channels − Examine supply chain of network organizations engaged in transfer, storage, handling, communication, and other functions that contribute to product flow. Source Figure 5.1: C. John Langley Jr., Ph.D., Penn State University, Used with permission. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Logistics and Systems Analysis Purchasing vs. Procurement vs. Short-run and Long-run Analysis Strategic Sourcing Short-run or Static Analysis Purchasing is an activity that follows conduct of a formal sourcing process, while procurement and strategic sourcing are best described as processes. Concentrates on a specific point in time or level of production output. Strategic Sourcing Managing procurement priorities such that they are well-aligned with goals and objectives of the supply Long-run or Dynamic Analysis chain and of the overall organization. Examines a logistics system over a long time period or range of output. Procurement Managing a broad range of activities within the procurement process (e.g. supplier selection, price negotiation, contract management, supplier performance management). Purchasing Managing a firm’s acquisition procedures and standards, involving largely transactional activity of the buying of products & services. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Micro Dimensions of Logistics (4 of 5) Summary Factors Affecting Cost & Importance of Logistics Logistics adds place, time, and quantity utilities to products and enhances the form and possession utilities added by manufacturing and marketing. Product-related Factors Key logistics activities are transportation, inventory, warehousing, materials Dollar value. The product’s dollar value typically affects warehousing costs, inventory handling, industrial packaging, customer service, and forecasting. costs, transportation costs, packaging costs, and even materials-handling costs. On a macro basis, logistics-related costs have helped the U.S. economy maintain Density. Weight/space ratio affects transportation and warehousing costs. As its competitive position on a global basis. density increases for a product, its transportation and warehousing costs tend to On a micro basis, logistics interface with other functional areas which aids in decrease. making organizations more efficient and effective. Susceptibility to damage. The greater the risk of damage to a product, the higher The cost of logistics systems can be affected by market competition, spatial the transportation and warehousing cost. relationship of nodes, and product characteristics. Special handling requirements. Need for special handling (e.g. refrigeration, Four approaches to analyzing logistics systems are: materials heating, or strapping) will usually increase warehousing, transportation, and management vs. physical distribution, cost centers, nodes vs. links, packaging costs. and distribution channels. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22  Three Types of Purchasing Activity Strategic Sourcing Process Step 1: Develop Strategic Plan Source Figure 5.4: C. John Langley Jr., Ph.D., Penn State University, Used with permission. Create cross-functional planning committee Identify key members of sourcing team Agree on scope of sourcing processes ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13 Types and Importance of Purchases – Strategic Sourcing Process The Quadrant Technique Source Figure 5.5: C. John Langley Jr., Ph.D., Penn State University, Used with permission. Not all items /services purchased are of equal importance, requiring varying procurement strategies based on their value and risk. Source Figure 5.3: C. John Langley Jr., Ph.D., Penn State University, Used with permission. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Strategic Evolution of Sourcing Process Strategic Sourcing Five Core Principles Source Figure 5.2: C. John Langley Jr., Ph.D., Penn State University, Used with permission. 1. Assess total value. Emphasis beyond acquisition cost, evaluating total cost of ownership and the value of the supplier relationship. 2. Develop individual sourcing strategies. Individual spend categories need customized sourcing strategies. 3. Evaluate internal requirements. Requirements and specifications thoroughly assessed and rationalized as part of the sourcing process. 4. Focus on supplier economics. Suppliers’ economics understood before identifying buying tactics (e.g. volume leveraging, price unbundling, price adjustment mechanisms). 5. Drive continuous improvement. Strategic sourcing initiatives as subset of continuous improvement process for procurement and sourcing organizations. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11  Strategic Sourcing (2 of 2) Total Landed Cost (TLC) Steps 3–5: Supplier Portfolio Screening Source Figure 5.8: C. John Langley Jr., Ph.D., Penn State University, Used with permission. Source Figure 5.7: C. John Langley Jr., Ph.D., Penn State University, Used with permission. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20 Strategic Sourcing (1 of 2) Strategic Sourcing Process Steps 3–5: Supplier Portfolio Screening Step 7: Collaborative Process Improvement Regular feedback and communications Analyze net savings and compare with goals and objectives Source Figure 5.6: C. John Langley Jr., Ph.D., Penn State University, Process improvement for both suppliers and customers Used with permission. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18 Strategic Sourcing Process Strategic Sourcing Process Step 2: Understand Spend Step 6: Onboarding and Transitioning Refine understanding of sourcing needs of process-owners, with the nature of Finalize understandings and agreements with suppliers the requirement being represented by some type of measurable criteria Create management processes for new suppliers Perform spend analysis to: Conduct transition and onboarding processes − Understand spend by supplier, category, and internal user − Profile current sourcing approaches and areas for improvement Address issues of make vs. buy ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17  Four Basic Types Demand Management (1 of 4) of E-commerce Business Models Importance of Demand Management “Sell-side” vs. “buy-side” system: Whether e-Commerce capabilities are seller-centric or buyer-centric. Common Problems in Demand Management B2B and B2C: Online businesses selling to businesses or consumers, respectively. These are both “sell- side.” Examples include Delta Air Lines (www.delta.com), Barnes & Noble (www.barnesandnoble.com), Amazon (www.amazon.com), and Office Depot (officedepot.com). Lack of coordination between departments Online marketplace: e-Commerce site where product or service information is provided by multiple third Too much emphasis placed on forecasts of demand, with less attention on the parties, whereas transactions are processed by the marketplace operator. Examples include Amazon collaborative efforts and plans needed to be developed from the forecasts (www.amazon.com), Expedia (www.expedia.com), and Uber (www.uber.com). Online trading community: A system maintained by a 3rd party technology supplier that provides buyers Non-strategic uses of demand information and sellers with a structured method for trading, bartering, or selling goods and services. Examples include eBay (www.ebay.com), Craigslist (www.craigslist.org), and NTE (www.nteinc.com). ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4 Advantages and Concerns Demand Management of Electronic Procurement The Essence of Demand Management Concerns Cyber-security To estimate and manage customer demand and use this information to make Lack of face-to-face contact between the buyer and seller operating decisions. Technology-related concerns (lack of standard protocols, system reliability, time & money investment) To further ability of firms throughout the supply chain to collaborate on activities Advantages related to the flow of products, services, information, and capital. Lower operating costs (reduce paperwork & sourcing time, improve control over inventory & spending) Improve procurement and sourcing efficiency (find new supply sources, improve communications, improve personnel use, lower cycle times) Reduce procurement prices Improve communications Desired end result: Greater value for the end user or consumer Easier access to more suppliers Source Figure 5.11: Source: C. John Langley Jr., Ph.D., Penn State University, Used with permission. ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24 ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 E-sourcing and E-procurement Functionality Summary Different procurement and sourcing strategies devised based on the risk and 1. Industry analysis and supplier 7. Logistics procurement value or profit potential from needed products/services that can be classified into: identification 8. Project management generics, commodities, distinctives, and criticals. 2. Analytical tools Strategic sourcing process includes: develop strategic plan, understand spend, 9. Knowledge management evaluate supply sources, finalize sourcing strategy, implement sourcing strategy, 3. Management of RFI/RFP processes 10. Contract management transition and onboarding, and collaborative process improvement. 4. Process automation The concept of total landed cost is a highly-valuable element of the overall