CHAP 2 Flashcards
What defines a firm’s competitive strategy?
Customers’ priorities
Competitive Strategy aims to?
Provide products and services that satisfy these customers needs
What does a competitive strategy target?
One or more customer segments
What starts a value Chain?
Well it begins with new product development strategy
What is included in a value chain?
New product development
Marketing and sales
Operations
Distribution
service
What is new product development strategy (part of value chain)?
Creates specifications for the product
Timing of product introductions
Portfolio of products
What relates to technologies for future operations (via patents) and set of products/services?
product development strategies
Which strategy falls under Dell computers’ decisions to offer many products?
Product development
Which strategy falls under IBM workstations to be the technology leader?
Product development
How do marketing and sales strategies generate demand (part of value chain)?
Publicizing the customer priorities that the product and services will satisfy
What does marketing strategy do (part of value chain)?
It brings customer input back to the new product development.
Frequently look at what discounts to offer
Coupons (look at coupons and determine if they will use it)
Relates to positioning, pricing and promotion of products/services
Operation strategy does what in the value chain?
It transforms inputs to outputs based on specifications to create the product.
What does distribution do in the value chain?
Either takes the product to the customer or brings the customer to the product
Walmart decision to do EDLP (Every day low prices) falls under which strategy?
Marketing strategy
Company decision to never offer more than 40% discount falls under which strategy?
Marketing strategy
Bestbuy decision to demand smoothing via coupons fall under which strategy?
Marketing strategy
What does service do in the value chain?
It responds to customer requests during or after the sale
What supports and facilitates the functioning of the value chain?
Finance, accounting, information technology and human resources
What is strategy?
What each process or function will try to do particularly well
What is the product development strategy?
specifies the portfolio of new products that a company will try to develop
What dictates whether the development effort will be made internally or outsourced?
Product development strategy
What strategy specifies how the market will be segmented and how the product will be positioned, priced and promoted?
Marketing and sales strategy
What strategy determines the nature of procurement of raw materials, transportation of materials to and from the company, manufacture of the product or operation to provide the service, and distribution of the product to the customer, along with any follow-up service and a specification of whether these processes will be performed in-house or outsourced?
Supply chain strategy
What does a supply chain management strategy relate to?
Relates to procurement, transportation, storage and delivery
When a firm never uses more than 1 supplier for every input falls under which strategy?
Supply chain management strategy
When a firm never expedites orders just because they are late falls under which strategy?
Supply chain management strategy
When a firm always uses domestic suppliers within the sales season not in advance falls under which strategy?
Supply chain management strategy
Cisco’s decision to use contract manufacturers
is what type of strategy?
supply chain strategy
Amazon’s decision in 2016 to open bookstores and announce the opening of “convenience” stores. is what type of strategy?
supply chain strategy
Amazon’s decisions to build warehouses to stock some products and to continue using distributors as a source of other products. Is what type of strategy?
supply chain strategy
What does a strategic fit require?
Both competitive and supply chain strategies of a company have aligned goals
Fit the supply chain to customer
Consistency between the customer priorities that the competitive strategy hopes to satisfy and the capabilities that the supply chain strategy aims to build refers to?
Strategic fit
Given the change in customer priorities, Dell has shifted a greater fraction of its production to a build-to-stock model to maintain _____?
strategic fit
Dell’s supply chain has moved from a relentless focus on responsiveness to a greater focus on low cost.Is an example of what?
strategic fit
What does a company must ensure to achieve a strategic fit?
a company must ensure that its supply chain capabilities support its ability to satisfy the needs of the targeted customer segments.
What are the three basic steps to achieving strategic fit?
understanding the customer and supply chain uncertainty
Understanding the supply chain capabilities
Achieving strategic fit
What does a company must understand in “customer and supply chain uncertainty”?
understand the customer needs for each targeted segment and the uncertainty these needs impose on the supply chain
So for understanding the customer they would need to look at range of demand, production lot size and response time.service level, product variety, innovation, accommodating poor quality
What does the customer needs under the “customer and supply chain uncertainty” help the company define?
define the desired cost and service requirements
Why do we look at the supply chain uncertainty for (under the customer and supply chain uncertainty)”
helps the company identify the extent of unpredictability of demand and supply that the supply chain must be prepared for.
What does it mean by “understanding the supply chain capabilities”?
Every supply chain is designed to perform different tasks that is why we must understand what each supply chain is designed to do.
What happens if there is a mismatch between what the supply chain does particularly well and the desired customer needs?
company will either need to restructure the supply chain to support the competitive strategy or alter its competitive strategy.
What is demand uncertainty?
reflects the uncertainty of customer demand for a product.
What is Implied demand uncertainty?
is the resulting uncertainty for only the portion of the demand that the supply chain plans to satisfy based on the attributes the customer desires.
What Is example of implied demand uncertainty?
firm supplying only emergency orders for a product
Raising the service level _____the implied demand uncertainty even though the product’s underlying demand uncertainty _______
Increases, does not change
In case of customer needs, range of quantity required increases causes implied demand uncertainty to ________ because a wider range of the quantity required implies ___variance in demand
Increase; greater
In case of customer need, lead time decreases causes implied demand uncertainty to _______because there is ____ time in which to react to orders
increase; less
In case of customer need, variety of products required increases causes implied demand uncertainty to _____ because demand per product becomes ____ predictable
Increase; less
In case of customer need, required service level increases causes implied demand uncertainty to ____ because the firm now has to handle the unusual surges in demand
Increase
In case of customer need, rate of innovation increases causes implied demand uncertainty to ________because new products tend to have _____ uncertain demand
Increase; more
In case of customer need, number of channels through which product may be acquired increases causes implied demand uncertainty to _____ because customer demand per channel becomes ______ predictable
Increase; less
What is a mission, mission statement?
The reason for existence of an organization
What is strategy?
A plan for achieving organizational goals
What are tactics?
The actions taken to accomplish strategies
What are operations?
Day to day decisions to support tactics
The ability to respond to wide ranges of quantities demanded is what?
Supply chain responsiveness
The ability to meet short lead times is an example of?
Supply chain responsiveness
The ability to handle a large variety of products is an example of?
Supply chain responsiveness
The ability to build highly innovative products is an example of?
Supply chain responsiveness
The ability to meet a very high service level is an example of?
Supply chain responsiveness
The ability to handle supply uncertainty is an example of?
Supply chain responsiviness
What are the six capabilities that deem a supply chain to be responsive?
The ability to respond to wide ranges of quantities demanded
meet short lead times
handle a large variety of products
build highly innovative products
meet a very high service level
handle supply uncertainty
What happens when we respond to wide range of quantities demanded?
It means capacity must be increased which increases costs
What is supply chain efficiency?
is the inverse of the cost of making and delivering a product to the customer.
What is the cost-responsivess efficient frontier?
Its the curve in the diagram showing the lowest possible cost for a given level of responsiveness
What should a firm do if there are not on the efficient frontier?
Should improve both its respnsivenss and its cost performance by moving toward the efficient frontier.
What should a firm do if there are already on the efficient frontier?
They can improve their responsiveness only by increasing cost and becoming less efficient.
They make a trade-off between efficiency and responsiveness
What is a key strategic choice for any supply chain in regards to cost-responsivenness efficient frontier?
Its the level of responsiveness it seeks to provide
How is lowest cost defined in the cost-responsivess efficient frontier?
Defined by existing technology
If the supply source capability has frequent breakdowns it causes the supply uncertainty to?
Increase
If the supply source capability has unpredictable and low yields it cause the supply uncertainty to?
Increase
If the supply source capability has poor quality it causes the supply uncertainty to?
Increase
If the supply source capability has limited supply capacity causes supply uncertainty to?
Increase
If the supply source capability has inflexible supply capacity causes supply uncertainty to ?
Increase
If the supply source capability has an evolving production process causes supply uncertainty to?
Increase
England, Inc.’s retailers allow customers to select from a wide variety of styles and promise relatively quick delivery. This is an example of what uncertainty?
High level of implied uncertainty on the supply chain
By holding more raw material inventories, the company allows its suppliers to
Focus on efficiency which means on the supplier side they have the least implied uncertainty
If the company decreases its raw material inventories, its suppliers must?
become more responsive
What are the five key levers to deal with supply chain uncertainty?
Capacity
Inventory
Time
Information
Price
A combination of ____ capacity and ____ capacity can help a supply chain deal with uncertainty.
Excess ; flexible
What is this an example of : “paint mixer found in paint stores in most parts of the world. The mixers are flexible and can mix paint in a large variety of colors. This allows the paint store to deal with the uncertainty of which color a particular customer may want to buy. “???
Capacity
What is one of the most common levers used in practice to deal with uncertainty?
Inventory
What should you consider when using inventory lever to deal with supply chain uncertainty?
must consider the cost of holding inventory when using this lever to deal with uncertainty
A combination of speedy supply and the willingness of customers to wait can help a supply chain deal with uncertainty. What lever is this?
Time
What should you consider when using the time lever when dealing with supply chain uncertainty?
the cost of speedy supply and the potential loss of customers by making them wait when using time as a lever to deal with uncertainty.
investing in the appropriate information can help a supply chain reduce the uncertainty it faces. Which lever are they referring to?
Information
What is scope of strategic fit?
refers to the functions within the firm and stages across the supply chain that devise an integrated strategy with an aligned objective
Intraoperation scope has each stage of the supply chain devising its strategy _____.
INDEPENDENTLY. Meaning they cared for themselves but didnt care how it would impact the other stages.
Example of this is if a firm shipped full truckloads without any regard for the resulting impact on inventories or responsiveness
What is intrafunctional view?
Its when firms attempted to align all operations within a function
example: All supply chain functions, including sourcing, manufacturing, warehousing, and transportation, had to align their strategies to minimize total functional costs
What is the weakness of the intrafunctional view?
is that different functions within a firm may have conflicting objectives.
How to achieve the goal of interfunctional scope?
To achieve this goal, all functional strategies are developed to align with one another and with the competitive strategy.
What does intercompany scope propose?
Instead of just forcing the inventory onto the weaker party, the two parties work together to reduce the amount of inventory required.
By working together and sharing information, they can reduce inventories and total cost, thus increasing the supply chain surplus
What is Agile intercompany scope?
refers to a firm’s ability to achieve strategic fit when partnering with supply chain stages that change over time.
What scope would allow the firm to use the low cost supplier to supply the predictable portion of demand for the product with the responsive supplier being the backup who comes through when demand exceeds supply available from the low cost supplier?
Agile intercompany scope
How to achieve the goal of interfunctional scope?
all functional strategies are developed to align with one another and with the competitive strategy
