15.5: Managing a Global Supply Chain Flashcards
What is the potential impact of supply chain management on a firm’s profitability?
Efficient supply chain management can reduce material costs by 50 to 70 percent of revenues, significantly impacting profitability. A small reduction in costs can equate to a large increase in total profits.
What is Just-in-Time (JIT) inventory?
JIT inventory is a system that reduces inventory holding costs by having materials arrive just in time to enter the production process, minimizing waste and reducing the amount of working capital tied up in inventory.
What are the benefits and drawbacks of JIT systems?
Benefits include reduced inventory costs and improved product quality. The drawback is the lack of buffer stock, which can lead to shortages in the event of supply disruptions.
How does information technology play a role in supply chain management?
Information technology, particularly web and cloud-based systems, allows for real-time tracking of components, optimizes production scheduling, and facilitates better communication between a firm and its suppliers.
What are the implications of JIT systems during supply disruptions?
JIT systems can leave firms without inventory buffers, making it challenging to respond to disruptions, as seen during events like 9/11 or the SARS outbreak. Firms need to build redundancy into supply chains to mitigate this risk.
What is the role of coordination in global supply chains?
Coordination ensures that different parts of the supply chain work together effectively, much like the ailerons and rudder coordinate to steer an aircraft. It involves shared decision-making and operational collaboration.
What are the six operational objectives to address in a global supply chain?
The objectives are responsiveness, variance reduction, inventory reduction, shipment consolidation, quality, and life-cycle support.
What is the importance of interorganizational relationships in global supply chains?
Trust and commitment in relationships among supply chain partners lead to more efficient and effective operations, enabling better coordination and integration.
How should a global company allocate its efforts across different categories of the supply chain?
A company should allocate efforts based on the vendor, supplier, customer, and partner categories, with a recommendation of 20% to vendors, 30% to suppliers, 30% to customers, and 50% to partners in the upstream/inbound portion of the supply chain.
What are the business implications of the material discussed in the chapter?
The key areas include coordination through materials management, just-in-time systems, the importance of information technology, and the coordination of global supply chains.
What is the purpose of coordinating a global production system?
The purpose is to manage logistics and activities from sourcing materials to delivering finished products to the end user at the lowest cost and in a way that best serves customer needs, thereby reducing costs and enhancing competitive advantage.
How can just-in-time (JIT) systems impact a firm’s profitability and inventory management?
JIT systems can reduce inventory holding costs by having materials arrive just as needed for production, which decreases warehousing costs and working capital needs, potentially increasing profitability. However, they can leave a firm without a buffer stock during supply disruptions.
What role does information technology play in modern materials management?
Information technology helps optimize production scheduling and accelerates production when needed by tracking component parts and improving communication between firms and suppliers, making supply chain management more efficient.
How does the coordination of global supply chains contribute to the efficiency of international business?
Coordination leads to shared decision-making and collaboration, which creates a more integrated and effective global supply chain by considering issues related to inventory, planning, and product development.
