3- Supply Chain Flashcards
What is the Supply Chain
and what’s its Strategic Importance ?
Supply chain management is the integration of the activities that procure materials and services, transform them into intermediate goods and the final product, and deliver them to customers
Competition is no longer between companies; it is between supply chains
What do Logistics mean in SCM?
the part of SCM that is concerned with managing the flow of inventory
Reasons for making? [11]
Maintain core competence Lower production cost Unsuitable suppliers Assure adequate supply (quantity or delivery) Utilize surplus labor or facilities Obtain desired quality Remove supplier collusion Obtain unique item that would entail a prohibitive commitment for a supplier Protect personnel from a layoff Protect proprietary design or quality Increase or maintain size of company
Reasons for buying? [10]
Frees management to deal with its core competence
Lower acquisition cost
Preserve supplier commitment
Obtain technical or management ability
Inadequate capacity
Reduce inventory costs
Ensure alternative sources
Inadequate managerial or technical resources
Reciprocity
Item is protected by a patent or trade secret
What is Outsourcing?
A benefit/reason for it?
What can be outsourced?
Transfers traditional internal activities and resources of a firm to outside vendors
Utilizes the efficiency that comes with specialization
Firms outsource information technology, accounting, legal, logistics, and production
What 4 Questions do you ask before deciding to outsource?
Is activity of strategic importance
Does company have specialized knowledge
Is company’s operations performance superior?
Is significant operations performance improvement likely?
If no to all these.. outsource
Supply Chain Strategies
Negotiating with many suppliers Long-term partnering with few suppliers Vertical integration Keiretsu Virtual companies that use suppliers on an as needed basis
Characterisitcs of SC with many suppliers? Commonly used for... Purchasing is typically based on... suppliers compete with... supplier is responsible for .... x6
Commonly used for commodity products
Purchasing is typically based on price
Suppliers compete with one another
Supplier is responsible for technology, expertise, forecasting, cost, quality, and delivery
Characterisitcs of SC with few suppliers;
Buyer forms..
create value thru..
Suppliers more willing to participate in…
What is a huge cost and often avoided?
Buyer forms longer term relationships with fewer suppliers
Create value through economies of scale and learning curve improvements
Suppliers more willing to participate in JIT programs and contribute design and technological expertise
Cost of changing suppliers is huge
What is vertical integration?
which direction and names for it?
Benefits x3 but requires x3
What industries is it risky in?
Developing the ability to produce goods or service previously purchased
Integration may be forward, towards the customer, or backward, towards suppliers
Can improve cost, quality, and inventory but requires capital, managerial skills, and demand
Risky in industries with rapid technological change
Keiretsu Networks DEF?
Middle ground between? Supplier becomes part of? Financial support for and from? Members expect? but in return provide? May extend thru?
A keiretsu is a set of companies with interlocking business relationships and shareholdings. In the legal sense, it is a type of informal business group that are loosely organized alliances
A middle ground between few suppliers and vertical integration
Supplier becomes part of the company coalition
Often provide financial support for suppliers through ownership or loans
Members expect long-term relationships and provide technical expertise and stable deliveries
May extend through several levels of the supply chain
Virtual Companies [3]
Rely on a variety of supplier relationships to provide services on demand
Fluid organizational boundaries that allow the creation of unique enterprises to meet changing market demands
Exceptionally lean performance, low capital investment, flexibility, and speed
In a Lean Supply chain:
What are the supply chain objectives? 4
What is the nature of demand? 4
Low cost, High utilisation, Min inventory, low cost suppliers
Predictable, Low variety, few changes, price stable, long lead time, low margin
Agile Supply chain
What are the supply chain objectives? 4
What is the nature of demand? 4
High cost, Low utilisation, Max inventory, High cost suppliers
UnPredictable, High variety, multiple changes, price instable, short lead time, High margin
Functional SC Vs Innovative Supply chain
Cost of Lost Sales [L/H] Risk of obsolescence [L/H] Forecast Accuracy [H/L] Product variety [L/H] product life cycle [L/H]
