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SCMN 2150- Junior Year > Chapter 5b: Global Sourcing > Flashcards

Chapter 5b: Global Sourcing Flashcards

1
Q

T or F: Global trade is massive.

A

True; (160 members of the World Trade Organization; they export well over $20 trillion of merchandise and commercial services annually)

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2
Q

The top 10 trading companies (including the US, China, Germany, and Japan) account for more than ______ of all export activity.

A

half

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3
Q

Supply chain professionals must design and manage networks of global links/nodes to effectively control the flow of _______, _______, and ______ across borders.

A

materials; money; information

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4
Q

T or F: Global supply chain management is more complex, more risks to mitigate, and more regulation.

A

True (Therefore, it requires more planning and expertise than a domestic supply chain)

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5
Q

What are the 3 activities for Global SCM?

A
  1. International Sourcing
  2. Export Preparations
  3. International Delivery
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6
Q

International sourcing in global SCM includes what 3 P’s?

A
  1. Preparation
  2. Purchasing
  3. Production
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7
Q

T or F: the location of the international sourcing activities indirectly influences planning and design of global fulfillment networks.

A

False; it DIRECTLY influences

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8
Q

Extensive __________ and _________ are required to create a viable global supply chain network.

A

planning; negotiation

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9
Q

focuses on planning, implementing, and controlling the cross-border flows of materials, money, and information between companies in different countries.

A

global supply chain management

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10
Q

Goal of Global Supply Chain Management:
to be _______, ______, and ______ than competitors on a global scale

A

better, faster, and cheaper

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11
Q

What are the 3 distinct moves made in a global supply chain?

A
  1. Initial Move
  2. International Move
  3. Final Move
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12
Q

Match each description to the corresponding distinct move made in a global supply chain:
1. transfers the goods between the two countries, port to port
2. getting the goods from the origin facility to the exit port
3. delivers goods from the customs entry point at the border to the customers location

A
  1. International Move
  2. Initial Move
  3. Final Move
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13
Q

How are global SC activities coordinated? → There are 3 channels of activity involved in managing the money, information, and product flows in a global SC:

A
  1. Transaction Channel (money)
  2. Communications Channel (information)
  3. Distribution Channel (product)
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14
Q

Which channel of activity involved in managing the money, information, and product flows in a global SC does each of the following describe:
1. Transfer of ownership, freight control, and payment responsibilities; Selection of trade terms clarifies financial liabilities and risk of each party in the international transaction.
2. Proper selection of modes, carriers, and routes.
3. Documentation requirements, interactions with governments and stakeholders.
Essential for compliance, visibility, and control of global goods.

A
  1. Transaction Channel
  2. Distribution Channel
  3. Communications Channel
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15
Q

Why global SCM is so complex –> That is, what are the 4 traditional challenges of global SCM, and two additional challenges?

Traditional Challenges:
1. ________ barriers
2. ________ exchange
3. _________ inconsistencies
4. _________ issues

Additional Challenges:
1. International _________ require more steps
2. _______ _________ area.

A
  1. Language
  2. Currency
  3. Regulatory
  4. Security
  5. transactions
  6. broader geographic (so greater potential for things to go wrong))
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16
Q

What are the 3 cost considerations in global supply chain management?

A
  1. Landed Cost of a global shipment (at minimum, companies should consider this)
  2. Third Party Fees
  3. Sneaky Costs
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17
Q

Match the following description with the cost consideration in global SCM they pertain to:
1. documentation preparation, export packing, and related charges.
2. in-transit inventory ownership cost, warehousing expenses, and costs related to delays, damage, or lost sales.
3. includes the purchase price of the goods, delivery charges, insurance fees, and customs duties.

A
  1. Third Party Fees
  2. Sneaky Costs
  3. Landed cost of a global shipment

(These costs combined account for 15-20% of a product’s value. Costs should be considered when comparing supplier options)

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18
Q

Does global SCM create value (is the payoff worth the effort)?

A

Yes, the benefits/rewards far outweigh the risks

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19
Q

4 benefits of global SCM:
1. Low supply chain _______ create _______ matching of supply and demand.
2. Suppliers gain access to ______ _______ at a reasonable cost.
3. Consumers gain a ______ _______ of affordable goods.
4. Workers gain access to higher _______, _______ jobs, which boosts ______ ___ _______.

A
  1. costs; profitable
  2. global markets
  3. wider variety
  4. higher paying, skilled; standard of living
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20
Q

a procurement strategy in which a company broadens its supply base beyond its home borders to create competition and reduce prices for purchased goods.

A

Global sourcing

21
Q

4 Goals of Global Sourcing:
1. Reduce _______.
2. Expand ________.
3. Reduce ________.
4. Access new ______ and specialized _______/_______.

A
  1. costs (leverage low costs of materials and labor, low tariffs, and economic incentives)
  2. capacity
  3. risk (by establishing alternate sources of supply)
  4. designs; skills/ideas
22
Q

What is the purpose of global sourcing?

A

To create competition and reduce prices for purchased goods

23
Q

What are the 5 primary steps in the global sourcing process?

A
  1. Evaluate the spend category and user requirements
  2. Identify and qualify potential suppliers
  3. Select supplier and negotiate details
  4. Plan and execute the implementation
  5. Monitor the results and take corrective actions
24
Q

Which step of the global sourcing process does this describe?
- Develop an understanding of the supply base and investigate the capabilities of individual suppliers.
- Involves rigorous qualification processes, evaluation of sample materials, review of referrals, and site visits.
- It takes time to find the right suppliers in geographically-accessible locations within politically-stable countries.

A

Step 2: Identify and qualify potential suppliers

25
Q

Which step of the global sourcing process does this describe?
- Analyze historical purchase data and future demand projections for global sourcing candidates.
- The primary users of the material components under consideration should be consulted regarding their volume requirements, quality specifications, and delivery deadline.

A

Step 1: Evaluate the Spend Category and User Requirements

26
Q

Which step of the global sourcing process does this describe?
- Relationship between you and the supplier must be managed to ensure that the product meets quality specifications, volume commitments are being maintained, and delivery timeliness is acceptable.
- If a problem arises, work with the supplier to quickly rectify and investigate how to reduce the likelihood of your current situation.

A

Step 5: Monitor the Results and Take Corrective Action

27
Q

Which step of the global sourcing process does this describe?
- Begins after you narrow down the options to a capable, well-located supplier with adequate capacity.
- Negotiate a contract with the selected supplier. The fundamental negotiations involve pricing, volume, and schedule. However, you will also need to clarify issues related to product quality and supply chain responsibilities.

A

Step 3: Select the Supplier and Negotiate the Details

28
Q

What are the 3 fundamental negotiations between a company and supplier that are discussed as part of Step 3: Select the Supplier and Negotiate the Details in the Global Sourcing Process?

A
  1. Pricing
  2. Volume
  3. Schedule
29
Q

Which step of the global sourcing process does this describe?
- Share detailed information in a clear, concise way when releasing the initial orders to a global supplier.
- A great deal with a high-quality global supplier can be easily ruined if the transition of production and delivery fails.
- If you don’t properly articulate your needs and maintain open lines of communication with the global supplier, requirements can easily get lost in translation.

A

Step 4: Plan and Execute the Implementation

30
Q

6 Global Sourcing Risks:
1. Longer _____ _____.
2. Higher _______ _____ via inventory carrying costs.
3. Higher _________ costs.
4. Increased chances for in-transit ______/_______.
5. Lower _______ ________ protection.

A
  1. lead times
  2. logistics cost
  3. transportation
  4. damage/theft
  5. intellectual property (patents, trademarks, etc.)
  6. Reduced supply chain visibility
31
Q

What are 4 ways to mitigate global sourcing risks?

A
  1. Understand the risks
  2. Choose strong suppliers
  3. Work in countries with strong supply chain infrastructures
  4. Develop effective disruption mitigation strategies
32
Q

What is the critical success factor of global sourcing?

A

Active Engagement → (there needs to be ongoing communication, linking of technology, and operational oversight)

33
Q

Global sourcing is the foundation of the _______ _______ Strategy, used by many apparel retailers. Retailers supplement their offerings of national branded goods with private labeled clothing. These goods are unique to the retailer which helps them maintain customer loyalty.

A

Private Label

34
Q

Much of the initial growth of global sourcing resulted from companies using suppliers and countries with (high/low) labor rates. This tactic generates a (low/high) purchase cost per unit, but it often (increases/decreases) SC risk, logistics cost, and quality issues.

A

low; low; increases

35
Q

the production of goods for sale in countries outside the home market of the organization.

A

offshore (global) manufacturing

36
Q

T or F: Most companies enter the global market by exporting goods from their home locations. Later, they produce goods abroad at facilities that are largely independent of the home location.

A

True

37
Q

6 Global Manufacturing Growth Drivers (Advantages):
1. _______ ______ Differences
2. Emerging ________ ______
3. Reduction of ________ costs.
4. Reduction of ______ ______.
5. Access to ________ ______.
6. _______ Reduction

A
  1. Labor Cost
    2.Market Potential
  2. Transaction
  3. Trade Barriers
    5.Necessary Resources
  4. Risk
38
Q

Match each of the following to which global manufacturing growth driver they describe:
1. companies have less to worry about in terms of excessive duties, restrictive quotas being placed on their export products, and fewer delays
2. particularly transportation expenses, and communication cost
3. having operations in multiple locations gives the manufacturer a level of protection against currency exposure, supply bottlenecks, and production disruptions; diversification allows a company to maintain operations even if there’s a natural disaster, political action, etc. in a particular region
4. nearby supply of raw materials, talent, and technical support
5. thanks to low wage growth, sustained productivity gains stable exchange rates and a big energy cost advantage

A
  1. Reduction of Trade Barriers
  2. Reduction of Transaction Costs
  3. Risk reduction
  4. Access to Necessary Resources
  5. Labor Cost Differences
39
Q

What two countries are the current rising stars of global manufacturing?

A

US and China

40
Q

4 Global Manufacturing risks (disadvantages):
1. _________ structures
2. ________ and ________ barriers
3. __________ fluctuations
4. SC _________ ________.

A
  1. Regulatory
  2. Language; cultural
  3. Currency
  4. Network Integrations (integrate the new location into the SC network)
41
Q

What are the 4 global manufacturing methods?

A
  1. Licensing
  2. Contract Manufacturing
  3. Joint Ventures
  4. Direct Foreign Investment
42
Q

T or F: Offshore manufacturing provides the advantage of lower labor costs, often resulting in cheaper production costs.

A

True

43
Q

Global Manufacturing Methods… which one does this describe:
- creation of a company that is owned by the partners.
- Results in a shared risk reward scenario, where each company invests in the manufacturing capability.
- Provides for some local ownership of the venture, which may be a legal requirement
- Smooths out obstacles of entering a foreign market independently.

A

Joint Venture

44
Q

Global Manufacturing Methods… which one does this describe:
- granting another company the right to use your intellectual property for a royalty fee. (this may be a production process or particular component needed to make a branded product)

A

Licensing

45
Q

Global Manufacturing Methods… which one does this describe:
- creates a wholly owned foreign enterprise. The subsidiary organization is the high risk-high reward global production strategy.
- Requires a big investment in a new facility or the purchase of an existing facility, but it allows the company to retain complete control over the operation.
- Wise to hire local talent and have them work alongside expatriate (working abroad) managers to ensure that local customs and regulations are well understood and followed.

A

Direct Foreign Investment

46
Q

Global Manufacturing Methods… which one does this describe:
- popular outsourcing method in which one company produces goods under the label or brand of another firm (ex: Nike designs athletic shoes and hires contract manufacturers in multiple countries to produce the shoes in mass volume for distribution)
- Can be used to create flexible production capacity, without great upfront expense.
- Good to use when the intellectual property owner doesn’t want to build a manufacturing facility in the market, when access to the market is limited by high tariffs, or when product transportation costs are prohibitive.

A

Contract Manufacturing

47
Q

Which global manufacturing method do you choose? Each method has an appropriate application depending on what 4 things?

A
  1. Expertise
  2. Available capital
  3. Risk tolerance of the manufacturer
  4. Desire for control
48
Q

Smaller companies typically use either of which two global manufacturing methods?

A
  1. Licensing
  2. Contract Manufacturing
49
Q

3 Global Manufacturing Barriers:
1. Increased ________ costs.
2. Increased _________ spend.
3. __________ expenses.

A
  1. logistics
  2. delivery
  3. Unexpected

SCMN 2150- Junior Year (14 decks)

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