11: SCM

Question 1

Objective: build chain of suppliers focus on max value to ultimate customer

SCM: integration of activities that procure materials and services, transform them into intermediate goods and final products and deliver them through distribution system.

Answer 1

Firms strive to:

1. Increase competitiveness
2. Make suppliers parentheses
3. Depends on close long-term relationships with few suppliers.

Question 2

Supply chains strategic importance:

1. Coordination of all SC activities
2. Includes suppliers, manufacturers, distributors etc
3. Large portion sales spent on purchases
4. Supplier relationships increasingly integrated and long term
5. Managing supplier relationships key

Answer 2

Eight Critical SCM Activities:

1. Sharing info with customer
2. Order fulfillment
3. Distributors
4. Accounts payable, receivable
5. Suppliers
6. Warehousing and inventory
7. Transportation modes
8. Credit and cash transfers

Question 3

Seven S’s of SCM:

1. Synergy
2. Serialization
3. Synchronization
4. Standards
5. Semantics
6. Social
7. Sustainability

Answer 3

Supply chains in global environments must be able to:

1. React to sudden changes (parts availability, distribution, shipping channels, import duties)
2. Use latest computer and transmission tech (to schedule and manage shipments)
3. Staff with local specialists (handle duties, freights, customs)

Question 4

Supply Chain Risk:

Likelihood and consequence of events at any point in the end-to-end supply chain.

Supply Chain Risk Management:

Coordination of activities to direct and control a firms end-to-end SC regarding SC risks

Answer 4

SC Risk:

• more reliance on supply chain = more Risk
• fewer suppliers = more dependence
• vendor reliability and quality risks
• globalization and logistical complexity
• political and currency risks

Question 5

Risk and Mitigation Tactics:

1. Research and assess risks
2. Innovative planning
3. Reduce disruptions
4. Prepare responses
5. Flexible + secure SC
6. Diversified supplier base

Answer 5

Specific Risk Mitigation:

1. Supplier failure to deliver
2. Supplier quality failure
3. Logistics delays or damage
4. Distribution
5. Information less or distorted
6. Political
7. Economic
8. Natural disasters
9. Theft, vandalism & terrorism

Question 6

SC Strategies:

1. Many Suppliers

Based on price, suppliers compete, LT relationships not the goal, kraljic’s supply matrix

Answer 6

2. Few Suppliers

• Longer term relationships with few suppliers
• value creation through economies of scale and learning curve improvements
• suppliers more willing to participate in JIT programs and contribute design and tech
• changing suppliers costly
• captives
• poor supplier performance
• trade secrets

Question 7

3. Vertical Integration

• ability to produce goods/services that were previously purchased
• improve cost, quality and inventory
• But requires capital, managerial skills and demand
• risky in industries with rapid tech change
• backward int. = towards suppliers / items made and bought
• forward int. = towards customer / items kept and sold

Answer 7

Benefits of Vertical Integration:

1. Market intelligence improved
2. More reliable options available for tech innovations
3. Enhancement of organizations control
4. Low cost opportunities

Question 8

4. Joint ventures

Partners agree to develop, for a finite time, a new entity by contributing equity.

Share in revenues, expenses and costs

Formal collaboration
Partners called “co-venturers”
Cooperation without diluting brand

Answer 8

6. Virtual Companies:

Use suppliers on an as needed basis.

Rely on variety of supplier relationships to provide services on demand.

Lean performance, low cap investment, flexibility, speed