Ch.4

Question 1

What is the supply chain management?

Answer 1

A supply chain is the network of all the activities involved in delivering a finished product/service to the customer.
Sourcing of: raw materials, manufacturing and assembly, warehousing, order-entry and tracking, distribution, delivery.
Supply Chain Management is the vital business function that coordinates and manages all the activities of the supply chain.
SCM coordinates movement of goods through supply chain from suppliers to manufacturers to distributors.
SCM promotes information sharing along the chain like forecasts, sales data, and promotions.
SCM is the collaboration of supply chain companies and coordination of their activities so that market demand is met efficiently and effectively.

Question 2

What are the components of Supply Chain in a manufacturing perspective?

Answer 2

-External Suppliers – source of raw material
Tier one supplier: supplies directly to the processor
Tier two supplier: supplies directly to tier one
Tier three supplier: supplies directly to tier two
-Internal Functions / Operations
Processing, purchasing, planning, quality, shipping
-External Distributors – transport finished products to appropriate locations
Logistics managers are responsible for managing the movement of products between locations.

Question 3

What are the components of supply chain in the service sector?

Answer 3

-Internal Operations
Integration is key
-External Distributors
Service provider maybe different, i.e., not a part of travel agency

Question 4

What is the bullwhip effect?

Answer 4

Inaccurate or distorted demand information created in the supply chain

Question 5

Bullwhip effect is caused from what?

Answer 5

• Demand forecasting updating
• Order batching
• Price fluctuations
• Rationing
• Shortage Gaming (ordering more than you actually need just in case that you receive the right amount)

Results in: excessive inventory, poor customer service, lost revenues

Question 6

What is the role of purchasing & logistics?

Answer 6

• Selecting suppliers
• Negotiating and administering long-term contracts
• Monitoring supplier performance
• Placing orders to suppliers
• Developing a responsible supplier base
• Maintaining good supplier relations

Question 7

What is logistic management?

Answer 7

(to manage the flow of materials and information) is key to SCM (it allows to reduce overall costs and increase responsiveness).

Logistics related activities are:

• Transport planning
• Crossdocking and warehousing
• Transport execution and control
• Reverse logistics

Question 8

What is outsourcing? What are the benefits & risks?

Answer 8

Buying goods or services instead of producing or providing them in-house.

Benefits:

• Lower cost (due to economies of scale).
• Gain expertise and knowledge.
• Gain flexibility (for temporary demand).
• Increase capacity.

Risks:
-Reduction in control and expertise.