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OM 320 Exam 1 > Chap 1-5 > Flashcards

Chap 1-5 Flashcards

1
Q

Define Supply chain management and its 3 key flows

A

all about managing 3 key flows of Material, Information, Money
Closely related to logistics management.
The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer
The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities … also includes coordination with channel partners, which can be suppliers, intermediaries, third party service providers, and customers.

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2
Q

What are some benefits of supply chain management?

A

Shorter leadtimes, improved planning/forecasting, cost savings, efficiency optimization, smaller inventory carrying/holding costs, reduction in amount of inventory, reduction of amount of suppliers, reduction of time needed to handle complex products, reduction of time to respond to customers with large purchasing budgets

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3
Q

Can nonprofit, educational, or government organizations benefit from supply chain management? How?

A

yes, in terms of better customer service, better inventory management, cheaper purchase prices

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4
Q

Could a firm have more than one supply chain? Explain

A

yes a firm can have more than one supply chain. For ex: Zara
local vendors with higher cost, faster response time
European vendors with lower costs, slower response time

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5
Q

What role do information systems play in supply chain management? Give some examples.

A

SRM software, Cloud computing monitoring supply chain real time which solves time zone/geographic location differences TO IMPROVE VISIBILITY savings costs

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6
Q
  1. Define functional and innovative products. Give examples.
A

functional-predictable demand/long lifecycle everyday products ex:toothpaste
innovative-unpredictable demand/short life cycle ex:technology/iphone

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7
Q
  1. Define efficient and responsive supply chains. How do they relate to functional and innovative products?
A

efficient=functional, responsive=innovative

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8
Q
  1. If a firm’s cost of goods sold is $3.5 million and its average inventory is $600,000,
    what is the inventory turnover? What is the days of inventory?
A

inventory turnover= 5.83 times days of inventory= 62.57 days

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9
Q

inventory turnover ratio

A

COGS/AVG Inventory

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10
Q

Days Sales of Inventory

A

(AVG Inventory/COGS)*365

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11
Q

C2C Example

A

Days of Inventory+Days AR-Days AP

[(avginven/cogs)365) + ((avgrec/currentyearrevenue)365)) - ((avgpay/currentyearrevenue)*365))]

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12
Q

importance of C2C

A

Negative is good, the more negative the better

Negative essentially means they get money from customers before paying suppliers

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13
Q
  1. Describe the e-procurement system and its advantages over the manual system
A

user input material req. w/qunty and date needed, its submitted at purchasing department electronically to buyer, then buyer assigns qualified suppliers to bid -item description,closing date,conditions. -> buyer reviews closed bids and selects a supplier.
advantages: time/cost savings, accuracy, real time, mobility, trackability, management, benefits to the suppliers

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14
Q
  1. How can purchasing help to improve the competitive edge of an organization?
A

purchasing through outsourcing can a allow a organization to focus on its core competencies, lowering costs can emphasize a cost excellence competitive advantage ex:walmart
purchasing in general can give competitive edge by finding ways to lower costs such as order processing costs

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15
Q
  1. Why are small value purchase orders problematic? How can purchasing more effectively deal with this problem?
A 
problematic because order processing costs may outweigh the revenue from the customer's small orders overtime. ->not worth it. 
To deal with this:
Procurement Credit Card/P Card
Blank Check PO
Blanket or Open End PO
Stockless Buying/System Contracting
Petty Cash
Fixed Order Interval
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16
Q
  1. Should unit price be used as the sole criterion for selecting suppliers? Why or why not?
A

no because discounts, transportation, inventory holding,delivery time, cost of capital, supplier quality/defects, should be taken into account as well.

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17
Q
  1. Explain backward vertical integration
A

Backward vertical integration-ex:Starbucks buy a coffee Farm in China rather then buy coffee bean from supplier.

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18
Q

. What are the advantages of outsourcing compared to backward vertical integration?

A
  • help a company to lower its cost structure
  • increase product differentiation
  • focus on the distinctive competencies that are vital to its long term competitive advantage and profitability.
  • outsourcing activities has many benefits, there are also risks associated with outsourcing.
  • A company can experience a holdup which refers to the risk that a company will become too dependent on the specialist provider of an outsourced activity and that the specialist will use this fact to raise prices beyond some previously agreed on rate.
  • A company that is not careful can lose important competitive information when it outsources an activity.
  • with backward vertical, you have the important competitive information.
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19
Q
  1. What is forward integration?
A

When manufacturer buys the distributor/retailer ex:intel buys dell or dell buys best buy. It saves one step and hope for higher profits, and faster to get to the customer

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20
Q
  1. When should a firm outsource instead of making the items in-house?
A

should outsource if it is not companys core competency, if it is not critical to success of the product, and does not have specializations/special skills needed, when there are a surplus of reliable/capable suppliers

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21
Q
  1. What factors should be considered while choosing suppliers?
A

technology, quality, responsiveness, delivery, cost, environmental impact

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22
Q
  1. What are the reasons to use a single supplier? What are the reasons not to?
A

TO: single supplier to receive more discounts, establish close relationship, supplier more willing to contribute to JIT programs and special designs, long term stability, switching costs may be too high
NOT TO: will not be able to encourage competition for high standards of quality, failure of delivery or quality which will impact customer base right away with not having another supplier on hand

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23
Q
  1. How does public procurement differ from corporate purchasing?
A

Public Procurement: Federal Acquisition Regulation/Buy American Act/DFARS/Green
Competitive bidding=goes to lowest most responsible/responsive bidder
Performance Bond=fulfill contract on time w/specification give incentive
Corporate Purchasing: not compelled to open bid to full competition recognised value and strategic benefits that procurement can bring to the organisation; in private, it is seen as integral to the organisation, however in public its merely routine /operational / transactional…almost a means to an end” “Private sector are more flexible and open to innovations; they are profit and people driven. Public sector is highly regulated and sometime can be seen as inflexible.”

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24
Q
  1. What are the benefits of global sourcing? What are the risks involved in global sourcing?
A

benefits: Cheaper, more options, innovation, access larger base of suppliers.
risks: risk of quality, risk of long delivery time, risks of unethical/unsustainable such as human/animal rights or safety/environmental issues. practices that will tarnish company brand image, cause public boycotts, cause sales/market share to decline

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25
Q
  1. What is spend analysis?
A

how much you spend, what did you spend where and what was I thinking? all data on past purchases, which vendors, where vendors located how they are distributed geographically. How spread out among vendors. How to consolidate to get better pricing. Pure money not necessarily looking at quality.

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26
Q
  1. Why should an organization be concerned with supplier relationships?
A

increase quality, dependent on them, good relationship= more likely to do more good things for you such as expediting order and giving you exclusive discounts based on loyalty

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27
Q
  1. What are some tools an organization can use to manage its suppliers effectively?
A

Supplier Certification, Reward Program, SRM, Supplier Development, Supplier Management

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28
Q
  1. It has often been pointed out that 60 percent of strategic alliances fail? What are the reasons for this?
A

dissimilar objectives, inability to share risks, lack of trust, cooperation is KEY, many managers enter w/o researching steps necessary to ensure basic principles of cooperation

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29
Q
  1. What is supplier certification? What are its benefits?
A

insuring your supplier meet certain criteria ethics, quality, ISO 9000 or 14000 are they six sigma are they lean, what is on time delivery price. involves upfront certification. then become on supply base. Adding suppliers on base that exactly fit business needs. Sets role model for other suppliers. Develops trust

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30
Q
  1. What is supplier development?
A

corrective actions, manage to be better. process of working with certain suppliers on a one-to-one basis to improve their performance for the benefit of the buying organisation.

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31
Q
  1. Why do organizations have supplier awards program?
A

to inspire other suppliers to compete and produce more innovative quality products. reward those who aspire to do so and keep continuous quality process
 Award winners exemplify true partnerships continuous improvement, organizational commitment, & excellence.

32
Q
  1. What is ethical sourcing and why do firms do it?
A

means ensuring that the products being sourced are created in safe facilities by workers who are treated well and paid fair wages to work legal hours. It also implies that the supplier is respecting the environment during the production and manufacture of the products.
firms do it for long run revenue from savings costs on sustainable practices. Costs will also be saved with compliance reported to stakeholders. They also do it so customers can see ethical practices and feel right purchasing products.

33
Q
  1. What are some common practices or activities of ethical sourcing?
A

OSHA signs in work breakrooms, promotes diversity through buying from small firms, ethnic minority businesses, women-owned businesses. and discontinue buying from firms that use child labor/unacceptable labor rpactices. ex:buying fair trade products (manufacture/grown by disadvantaged producer)

34
Q
  1. What is sustainable sourcing and how does it differ from ethical sourcing? From green purchasing?
A

Ethical Sourcing= that which attempts to take into account the public consequences of organizational buying behavior or bring about positive social change
Sustainable Sourcing= includes green purchasing, some financial benefit, aspects of ethical sourcing. “a set of purchasing goods and services that takes into account the long-term impact on people, profits, and the planet.”
Green Purchasing= practice aimed at ensuring that purchased products or materials meet environmental objectives of the organization such as waste reduction, hazardous material elimination, recycling, remanufacturing, and material reuse.

35
Q
  1. What are the benefits of sustainable sourcing? Can firms actually make money from sustainable sourcing? Do you think it is a good practice?
A

-grow revenue by introducing new&differentiated sustainable products and service
-reduce costs by increasing resource efficiences avoiding use of noncompliant suppliers, and rethinking transportation/distribution designs
-manage risk by managing brand/reputation, develop. approaches for meeting regulations and capture social/environ. conscious customers.
-build intangible assets by enhancing brand/reputation thru social/environ responsibility
*firms can make money from sustainable sourcing only with collaborative relationships with key suppliers & customers to make sustainable sourcing a beneficial reality.
it is a good practice as they can eliminate middlemen/unnecessary suppliers.
I think it is a great practice to remain competitive by observing long term impacts a business will be more financially well off.

36
Q
  1. What is supply base rationalization, and what are its advantages and disadvantages?
A

supplybase rationalization= taking an active role in SCM seek to reduce purchases from marginal or poor-performing suppliers while increasing and concentrating purchases among their more desirable, top-performing suppliers.
advantages-> reduced purchase prices due to qnty discounts, fewer supplier management problems, closer and more frequent collaborations b/t buyer and supplier, greater overall levels of quality and delivery reliability.
disadvantage-> it can contradict ethical sourcing for small business/women/minority owned suppliers

37
Q
  1. What is the Pareto Principle and how does it apply to supply base rationalization?
A

80% products come from 20% of suppliers, eliminate the rest of the suppliers

38
Q
  1. When would firms want to insource a product or process? How is this different from co-sourcing?
A

firms want to insource/backsource a product when the supplier that is outsourced does not provide product innovation, product quality, or sufficient delivery time.
cosourcing= refers to sharing of a process or function w/ internal staff & external supplier. the firm will retain more strategic activities while outsourcing resource intensive/non value added processes. cosourcing gives flexibility when to outsource and for how long.

39
Q
  1. Why are second- and third-tier suppliers important to the focal firm?
A

they are important because costs carried along the way will be from second/third tier suppliers carried over to the direct supplier selling it. Any faults/defects/quality/delivery mistake will effect delivery/quality to the focal firm

40
Q
  1. What is the difference between a many vendor strategy versus a partnership strategy? When should a firm use each?
A

Many vendor strategy=used for commodity product, purchasing based on price, suppliers compete, supplier responsible for tech.,expertise,forecasting,cost,quality,& delivery.
partnership strategy= Another common strategic partnership involves a supplier / manufacturer partnering with a distributor or wholesale consumer. Rather than approach the transactions between the companies as a simple link in the product or service supply chain, the two companies form a closer relationship where they mutually participate in advertising, marketing, branding, product development, and other business functions. As examples, an automotive manufacturer may form strategic partnerships with its parts suppliers, or a music distributor with record labels. used for more specialized products.

41
Q
  1. What is LEED?
A

Leadership in Energy & Environmental Design is a set of rating systems for the design, construction, operation, and maintenance of green buildings, homes and neighborhoods.

42
Q
  1. What is Life Cycle Assessment?
A

compilation and evaluation of the inputs, outputs and the potential environmental impacts of a product system throughout its life cycle.

43
Q

Backhaul

A

trucking term as the return portion of the trip with full/partial/empty haul(deadheading)

44
Q

Reverse Logistics

A

A unique form of inbound logistics where returned goods are properly disposed with an attempt to recover some of their original value

45
Q

Remanufacturing

A

Remanufacturing involves the taking of a used piece of equipment from a telecommunications network and returning it to the market in “like-new” condition, with a brand new warranty. Possibly incorporating new technology, the refurbished item comes with the same look, feel and functionality of new product, Olson says.

46
Q

Extended Producer Responsibility (EPR) also known as Take-back Legislation

A

“[EPR] is an environmental protection strategy to reach an environmental objective of a decreased total environmental impact of a product, by making the manufacturer of the product responsible for the entire life-cycle of the product and especially for the take-back, recycling and final disposal

47
Q

Carbon Neutral

A

the state achieved when a firm can offset the carbon footprint of its operations-for example, by planting trees.

48
Q

Lean & Green

A

six sigma

49
Q

Greenhouse gasses (GHG)

A

transportation carbon footprint ex:walmart/hp try to reduce. walmart announce reduce 20 million metric tons

50
Q

Cap and Trade

A

The “cap” sets a limit on emissions, which is lowered over time to reduce the amount of pollutants released into the atmosphere.

The “trade” creates a market for carbon allowances, helping companies innovate in order to meet, or come in under, their allocated limit. The less they emit, the less they pay, so it is in their economic incentive to pollute less.

51
Q

What is Wal-Mart’s business strategy? What is their supply chain strategy (efficient or responsive) and why?

A

Business strategy is to manufacture and supply products that will sustain people and the environment.
Supply chain strategy is efficient because the majority of goods supplied by Wal-Mart are functional products. While Wal-Mart also supplies innovative products, it has no control over their manufacturing, such as Sony products.

52
Q

Given this strategy, how does sustainability fit in? Do customers care? Are they willing to pay for sustainability? walmart

A

With the volume of goods Wal-Mart supplies, sustainability is essential to continued success. While sustainable manufacturing will require an initial investment, in the long run, it will help reduce costs by implementing recycling and renewable resources into the supply chain. Customers will likely care, but also be willing to pay for it since environmental issues have become widely publicized and raised awareness. In the 90s Walmart had a green tag program that showed which products were econimically friendly and those products sold out.

53
Q

How is Wal-Mart getting its suppliers to make changes and share data on environmental impacts?

A

Wal-Mart is certifying environmentally sustainable products and is providing network partner assistance to suppliers. It is also bringing in top 10-15% of suppliers into work groups to share info on sustainability.

54
Q

How has sustainability been integrated into purchasing and supplier management at Wal-Mart?

A

Wal-Mart has committing itself to buying larger volumes of environmentally sustainable products, thereby creating an incentive for suppliers. It has also worked on restructuring the buyer role and cutting out the middleman to reduce waste from transportation and relocation of goods.

55
Q

China is mentioned a lot in the Wal-Mart article and is the subject of the third article. Why is China such a big deal for sustainable supply chains?

A

Historically, China has seen a high level of pollution caused by the high demand for its goods. Since many of Wal-Mart primary suppliers are in China, Wal-Mart has focused on bringing the manufacturers to the new greener standards, ensuring they adhere to the Beijing Sustainability Summit goals.

56
Q

What do you think Wal-Mart had the most success with? Why?

A

Wal-Mart has been most successful in driving the shift towards sustainability. It was very successful because of its economies of scale and amounts of resources. Wal-Mart has a lot of bargaining power with its suppliers and is able to negotiate the conditions under which suppliers manufacture products.

57
Q

What was Wal-Mart least successful with? Why?

A

Wal-Mart has less control over name brand innovative goods, since most of those come from large scale manufacturers that operate on their own terms. While many of those are also shifting towards greener manufacturing, it is not due to Wal-Mart’s influence.

58
Q
  1. What is demand forecasting?
A

A statement or inference about the future, usually using information about the past to make predictions about the future.
Underlying basis of all business decisions
Used for planning:
Production
Inventory
Personnel
Facilities

59
Q
  1. Why is demand forecasting important for effective supply chain management?
A

having the right forecast allows purchasing dep. to order right amt products, operations to produce right amt, & logistics to deliver right amount. timely and accurate demand info is critical. inaccurate forecast lead to imbalances spply/dmd.
benefits: lower inven.,less stockout, smoother production plans, reduced costs, improved customer service.

60
Q
  1. What are the main components of a time series?
A 
trend
seasonal
cyclical
random variations
*dependent upon availability of historical data.
*most used forecasting models (72%)
61
Q

trend-time series

A

trend,-inc/dec over many years due to population growth or shifts, cultural changes, income shifts
ex: linear, s-curve, exponential, or asymptotic

62
Q

cyclical-time series

A

wavelike movements longer than a year and influenced by macroeco & political factors.
ex:business cycle recession or expansion
global event such as 1973 oil embargo, 1991 mexican financial crisis, hurricane katrina

63
Q

seasonal variations -time series

A

seasonal variations show peaks and valleys that repeat over a consistent interval such as hours,days,weeks,months,years,or seasons.
ex:hotels experience large crowds during traditional holidays

64
Q

random variations-time series

A

UNEXPECTED or unpredictable events such as disasters (hurricane/tornado),strikes, and wars.

65
Q
  1. Explain the difference between a time series model and an associative (causal) model.
A
  • time series based on historical data
  • causal/associative assume that the variable being forecasted (the dependent variable) is related to other variables (independent variables) in the environment. This approach tries to project demand based upon those associations. In its simplest form, linear regression is used to fit a line to the data. That line is then used to forecast the dependent variable for some selected value of the independent variable.
66
Q

examples ofcommon time series models

A

naive forecast, simple moving avg, weighted moving avg, and exponential smoothing.

67
Q

Under what conditions would one model be preferred to the other associative/causal or Time series?

A

time series when short time available to forecast, for short term forecasts
causal when several months available to forecast, for long term forecasts.-assumption that dependent/independent variables remain valid in future

68
Q
  1. What is the impact of the smoothing constant value on the simple exponential forecast?
A

higher alpha/smooth constant then more responsive, if lower alpha -> more smoother

69
Q
  1. What is CPFR? Why would a company consider adopting CPFR?
A

set of business processses that entities in a supply chain can use for for collaboration on a number of retailer/manufacturer functions towards overall efficiency in the supply chain. CPFR is a registered trademark
fairly integrative relationship with supplier.

  • Forecasting better because sharing information. could be manual or automated.
  • optimize supply chain improve demand forecast accuracy, deliver right product right time to right place. reducing inventories ACROSS supply chain, avoid stockout, improve customer service.
  • REAL VALUE exchange of forecasting info.RATHER then from more sophisiticated forecast algo. for combined.
70
Q

Trumpet of Doom

A

the further out in future forecast, less accurate it is. lots of error/variance

71
Q
  1. What is the hockey stick effect?
A

trend up in sales at the end of quarter. Increase of studying before finals. Happens because of procrastination

72
Q
  1. What is channel stuffing?
A

buy bunch of beer place in backroom. Part of Hockey Stick Effect. done for sales incentives. its not accurate of actual customers and actual demand.

73
Q
  1. What methods are used to determine the accuracy of any given forecasting method? How would you determine if regression or exponential smoothing is better in a particular forecasting application?
A
  • MAD/MSE used to determine accuracy of any given forecasting method
  • exponential smoothing for data showing little trend/seasonality
  • regression if there is a definite variable why demand occurs.
74
Q
  1. What is the difference between an independent and dependent variable?
A

y dependent x is independent

ex: for ski resort,
x: degress temp y=sales

75
Q

exponential smoothing equation

A

Ft = Ft-1 + a(At-1 - Ft-1)

= aAt-1 +(1- a) Ft-1

OM 320 Exam 1 (1 decks)

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