Ch 6 Supply Chain mgt Flashcards
Supply Chain
a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the
products to customers through a distribution system.
Vertical integration (make or buy)
the proportion of the supply chain the company owns
Reasons org. don’t outsource
Control (strategic process, intellectual property, messy, coordination)
Procurement (purchasing)
involves buying services or materials we elect to not develop internally
Vendor Selection & Development
Selection is based on many criterias- research and rate each alt. supplier on each criteria
-company(size, location, prof, mgt)
-service(delivery on time, cond. on arrival, handle complaints, technical assistance),
-products(quality, price, packaging, warranty),
-sustainability(econ. , social)
Development: Improving supplier operations / efficiency will improve the entire supply chain’s performance
Types of Purchasing
-Centralized
-Stockless
-Blanket purchase Order(POs)
-Buy back contract
-Revenue sharing contract
Centralized
must submit purchasing req. to central procurement office. Positive-purchasing power, oversight(control)
Negatives: slower, reduced flexibility
Stockless
supplier delivers directly to the prod. area than to a stockroom
Blanket Purchase Orders(POs)
A long-term purchase commitment to a supplier for items that are
to be delivered upon receipt of a shipping requisition. GETS DELIVERED WHEN ASKED FOR.
What’s the Pros for retailer & manufacturer in POs
Retailer - unit cost savings, low holding cost, low order cost, less supply uncertainty
Mfg- known demand (efficient prod. plan)
Buy Back contract
AKA return contract allows a retailer to return unsold goods for a partial refund. Reduces retailer’s risk of overstocking while paying them to order more inv.
Benefits of buy back and costs
-Retailers can order large qty w/o the risk of unsold goods
-Suppliers maintain higher prod. & reduce lost sales
-Encourages better dem. forecasting(prediction) and collaboration
And the costa are administrative costs+ add. shipping& handling costs.
Revenue Sharing Contract
an agreement where the retailer and supplier share revenue instead of the retailer purchasing inventory at a fixed price. This reduces risk for both parties and aligns incentives to maximize sales.
Benefits of Revenue Sharing
-Retailers pay less upfront, v risk
-Suppliers earn a share of sales, ^long t. partne.
-Encourages collaboration on mktg & inv decisions.
Vendor Managed Inv (VMI)
common in retail industry, can be employed for supplies too(can also be used to manage supply not only inventory)
Supplier’s Consolidation
Comp. of typical firms vs those excelling at procurement scm.
What’s the lesson for supplier consolidation
Work closer with fewer suppliers
Types of Utility
-Time (When): provides goods when wanted not when produced e.g storage
-Place(Where): provide goods where they are needed e.g transport
-For(What): physical change in goods/packaging e.g assembly, mfg
Logistics costs
all inclusive costs
Transportation (air, rail, ship, truck, etc.)
Inventory (holding costs)
Packing (materials required – boxes, Styrofoam, etc.)
Damage (in-transit, in-storage
Alternative transportation modes
cost, delivery speed, # location served, product variety, shipment frq, schedule dependability.
Assocaited cost for air why is it better
-Inventory- holding cost are lower
-Packing - less packaging
-low frequency of damage
Intermodal Shipments
same as container on boats etc.
Covenient, extensive network, optimal cost, increased security.
Shipment Strategies
-Consolidating: have a dist. center consolidate(combine) shipment to retail locations
-Cross docking: Remove intermediate step of storage by distributing them immediately after they are received.
-Drop shipping: retailer doesn’t have item, orders it from their supplier for you.
Cross docking reduces and requires
Reduces: product handling, inventory, facility costs
Requires: tight scheduling, extensive information technology
