Class 2

Question 1

Define: Logistics

Answer 1

the movement and warehousing of material and/or product and/or information, both within the production facility and outside

Question 2

Define: Supply Chain

Answer 2

The sequence of organizations (including their facilities and activities) that are involved in the production and delivery of a product

Question 3

Define: Supply chain management

Answer 3

The collaboration and co-ordination of all the components of the supply chain so that market demand is met as efficiently and effectively as possible

Question 4

Define: Electronic Data Interchange

Answer 4

the direct, computer-to-computer transmission of inter-organizational data and transactions, including purchase orders, sales data, advance shipping notices, invoices, etc

Question 5

Describe the bullwhip effect

Answer 5

The increase of demand variability as the demand signal moves upstream in supply chain. It causes excess inventory and production costs.

Question 6

What is the bullwhip effect caused by? (4) what are some solutions? (4)

Answer 6

the bullwhip effect is caused by:
- large order quantities downstream
- slow reaction to demand changes upstream, due to lack of demand visibility and long lead times
- manufacturer price discounts
- hoarding by retailers in tight supply markets
Solutions include:
- sharing end-customer demand information upstream
- ordering regularly and evenly
-using everyday-low pricing instead of price discounts
- basing allocations on previous demand

Question 7

Describe make vs buy

Answer 7

A strategic and economic decision regarding whether specific materials, products or services should be sourced internal or external to the organization

Question 8

List 7 important supply chain facilitators and describe them

Answer 8

a) Electronic Data Interchange - the direct computer-to-computer transmission of inter-organization data and transactions, including purchase orders, sales data, advance shipping notices, invoices, etc
b) E-commerce - the use of computers and telecommunications to conduct buying and selling
c) Quick response (QR) - A just-in-time inventory replenishment system, usually facilitated in an inter-organizational relationship by means of EDI, XML, etc.
d) Vendor Managed Inventory (VMI) - Initiatives to reduce inventories in the supply chain by having a vendor accept responsibility to check, maintain, and replenish inventory at a buyers site.
e) Third-Party Logistics (3PL) - outsourcing activities like warehousing, transportation and delivery, customs and brokerage, order management, etc. Allows access to scale, scope, expertise; allows company to focus on core business
f) Distribution Requirements Planning (DRP) - a system for planning distribution across a multi-echelon distribution network
g) Collaborative Planning, Forecasting and Replenishment (CPFR) - An effort to increase the effectiveness and efficiency of supply chains by establishing a process for communication and agreeing on forecasts between the manufacturer and the customer

Question 9

6 reasons why a firm might consider outsourcing

Answer 9

1) can’t make it (lack of knowledge)
2) can’t make it as cheaply
3) lack capacity
4) fundamentally different business or technology
5) Not strategic for me
6) political/strategic development

Question 10

2 reasons why a firm might decide to avoid outsourcing

Answer 10

1) When I can do it just as cheaply

2) When it is strategic for me

Question 11

4 types of supply metrics and examples of each

Answer 11

1) Reliability - on time delivery, order fulfillment lead time, fill rate, perfect order fullfillment
2) Flexibility - supply chain response time, upside production flexibility
3) Expenses - supply chain management costs, warranty cost as a percent of revenue, value added per employee
4) Asset utilization - total inventory days of supply, cash-to-cash cycle time, net asset turns