competency 5

Question 1

Components of a Supply Chain for a Manufacturer

Answer 1

• External suppliers — source of raw material
o Tier one supplier supplies directly to the processor o Tier two supplier supplies directly to tier one
o Tier three supplier supplies directly to tier two
• Internal functions:
o processing, purchasing, planning and control, quality, shipping

Question 2

Components of a Supply Chain

Answer 2

External distributors transport finished products to appropriate locations.
o Logistics managers are responsible for managing the movement of products between locations.
o Logistics includes:
• traffic management — arranging the method of shipment for
both incoming and outgoing products or material
• distribution management — movement of material from manufacturer to the customer

Question 3

Factors Affecting Supply Chain Management

Answer 3

Information technology
o Enablers include the Internet, Web, EDI, intranets and extranets, bar-code scanners, and point-of-sale demand information.
• E-commerce and e-business
o Use Internet and Web to transact business.
• Business-to-business (B2B) e-commerce
o Businesses selling to/buying from other businesses.

Question 4

Implementing Supply Chain Management requires:

Answer 4

o analyzing the whole supply chain
o starting by integrating internal functions first
o integrating external suppliers through partnerships

Question 5

measuring Supply Chain Performance

Answer 5

o return on investment
 o profitability
o market share
o revenue growth
o customer service levels 
o inventory turns
o weeks of supply
o inventory obsolescence

Question 6

Supply Chain Performance Metrics

Answer 6

Measurements of behavior/performance must be consistent with Supply chain objectives.
- Some measurements include:
o Warranty costs
o Products returned
o Cost reductions allowed because of product defects
o Company response times
o Transaction costs

Question 7

Supply Chain ops reference (SCOR) model

Answer 7

1. Reliability
   a. Measured on-time delivery
   b. Order fulfillment lead time
   c. Fill rate
2. Flexibility
   a. Supply chain response time
   b. Production flexibility
3. Expenses
   a. SCM cost
   b. Warranty cost as a percentage of revenue
   c. Value added per employee
4. Assets/utilization
   a. Total inventory days of supply
   b. Cash to cash cycle time
   c. Net asset turns

Question 8

Vertical Integration

Answer 8

is a measure of how much of the supply chain is owned or operated by the manufacturer

Question 9

Backward integration:

Answer 9

is a company’s acquisition or control of sources of raw materials and component parts: the company acquires, controls, or owns the sources that were previously external suppliers in the supply chain

Question 10

Forward integration:

Answer 10

is a company’s acquisition or control of its channels of distribution—what used to be the external distributors in the supply chain

Question 11

Sourcing Decisions

Answer 11

Questions to ask before making a sourcing decision:

• Is product/service technology critical to firm’s success?
• Is product/service a core competency?
• Is it something your company must do to survive?

Question 12

Insourcing and Outsourcing

Answer 12

Specific calculations to support the decision to insource or outsource.