EC S3

Question 1

Please define customer value and explain how customer value can be enhanced by information technology. (5 Statements)

Answer 1

Definition: The cost that a customer pays for a product, minus the benefits the customers gains from the product. (Schneider, G. p.569)

IT enhances Customer value through:

1. • Communication is one of the aspect of the customer value in the supply chain. Effective and right)
2. -> Advertising, Feedback, Training
3. • Make online orders, which is use of the technology.
4. • Production Process is also technology involved (Increase the quality of the product)
5. • Supply Chain Management
6. • Delivering

Question 2

Please enumerate the six key supply chain activities:

Answer 2

1. Production planning
2. Purchasing (acquire the right raw material)
3. Materials management (
4. Distribution / Marketing (
5. Customer Service (How to use items: Print recipes)
6. Sales Forecasting (sales forecasting = demand forecasting)

Question 3

What is the difference between the supply chain and the value chain?

Answer 3

• *Supply chain vs value chain**
• *Supply chain** = term of activities that are undertaken to deliver the product to the customer. (No emphasize on delivering added value to the customers)
• *Value Chain** = Business process to add value to the final product. (**Extra effort is made to identify and increase customer value) **

Question 4

Please enumerate all primary activities and supportive activities of Porter’s value chain. Add to the each primary activitiy the Role of IT.

Answer 4

Primary

1. Inbound logistics (storage, material check)
   Inventory Control, Material requirements planning
2. Operations (Manufacturering, packaging, storage finished goods)
   Automation and improve tasks
3. **Outbound logistics (Distribution) **
   Delivering the goods to the customers
4. Marketing & Sales
5. **Service **

Supportive:

1. **Procurement **
2. Technology Department
3. Human Resource Management
4. Firm infrastructure

Question 5

Why is Supply chain management so important? Give 3 Statements.

Answer 5

1. To meet the challenge of globalization and longer supply chains
2. To meet the new challenges from e-commerce
3. To manage the complexities of supply chains

Question 6

**Supply chains and vertical integration. **

Please explain vertical integration and the influences for the supply chains. (4 Statements)

Answer 6

1. For any organization vertical integration involves either taking on more of the supplier activities (backward) and/or taking on more of the distribution activates (towards)
   - E.G. Backward Manufacturer of peanut butter grows now peanut themselves.
   - E.G. An example of forward vertical integration would be a peanut manufacturer that decides to start
2. In supply chains, some of the supplying and some of the distribution might be performed by the manufacturer.
3. The significance of vertical integration in the supply chain is that the activities that are performed by the manufacturer are typically more easily managed than those which are performed by other organizations
4. Therefore, the degree of vertical integration can have an impact on the structure and relationships between members of a supply chain. (Vertical Integration does not mean 100% of integration)

Question 7

Please explain the terms Strategic, tactical and operating in their time range.

Answer 7

Strategic – long term and dealing with supply chain design

• Determining the number, location and capacity of facilities
• Make or buy decisions
• Forming strategic alliances

Tactical – intermediate term
Determining inventory levels

• Quality related decisions
• Logistics decisions

Operating – near term
Production planning and control decisions

• Goods and Service delivery scheduling
• Some make or buy decisions (when I make my own pen, do or make or buy the ink?)

Question 8

Enumerate the Key issues in supply chain management: Also give a short definition of:

1. Distribution network configuration
2. Inventory control
3. Distribution strategies

Answer 8

1. Distribution network configuration

How many warehouses do we need?
Where should these warehouses be located?
What should the production levels be at each of our plants?
What should the transportation flows be between plants and warehouses?

2. Inventory control

Why are we holding inventory? Uncertainty in customer demand? Uncertainty in the supply process? Some other reason?
If the problem is uncertainty, how can we reduce it?
How good is our forecasting method?

3. Distribution strategies

Direct shipping to customers?
Classical distribution in which inventory is held in warehouses and then shipped as needed?
Cross-Docking in which transhipment points are used to take stock from suppliers’ deliveries and immediately distribute to point of usage?

Question 9

Please explain how imformation technology enhance decision support systems? Give 5 Statements.

Answer 9

1. Helps communicating and collaborating.
2. What data should be shared (transferred)
3. How should the data be analysed and used?
4. What infrastructure is needed between supply chain members?
5. Should e-commerce play a role? Supply Chain Management is relevant to e-commerce. = In E-commerce we have already implemented our IT infrastructure.

Question 10

Explain the push and pull models in Supply Chain.

Answer 10

Push model:

• Organisation produces goods based on historical sales patterns
• Slow to respond to changes in demand
• Leads to buffer inventory (Zwischenspeichern)
• Rely less of Information systems support. (Often only producing)
• Pushing the product to the people.

Pull Model:

• Driven by e-commerce capabilities
• Production & distribution are demand driven (you ask the customer what they want)
• Consumer requests for product & pulls it through the delivery channel
• Need accurate & quick information