Exam Flashcards
Upstream vs. downstream
Upstream: all stages in bringing raw materials to the company
Downstream: all stages in bringing product to the customers
Bullwhip effect
Small fluctuations in demand at retail level –> progressively larger fluctuations at other SC stages (distributor, manufacturer, supplier)
Fluctuation / distortion of information increases as it moves up the supply chain
Supply chain management
Design and management of flows of products, information, and funds throughout the supply chain
Supply chain stages
Different trading partners in supply chain; suppliers, producers, distributors, retailers, customers etc.
Driving force of SC
Final customer is driving force of supply chain (demand drives supply)
Products are pulled backwards through the SC (from customer –> raw material supplier)
Each stage is a customer for their supplier. Final customer demand spills down into each stage
Activities of SCM
Coordination, information sharing, collaboration
Consequences of poor SCM (activities)
- Differing / conflicting objectives between different stages
- Distorted view of customer demand / requirements
- Shortages or excess inventory
Trends in SCM
- Globalisation
- Outsourcing
- Postponement
- Lean supply chain
- Managing disruptions
Types of production
Make-to-stock: produces in anticipation of sale; high inventory, high waste, fast delivery
Assemble-to-order: partially completed (generic form), finalised/customised after order; high intermediate goods inventory, not fast delivery
Make-to-order: for customised products or infrequent demand; low inventory, low waste, slow delivery
Competitive advantage matrix
Cost-productivity advantage: low-cost producer with highest sales volume
Value advantage: product quality, perceived value of brand, higher service level, scarcity / limited addition / only select customers
Building blocks of SC strategy
Sourcing strategy: outsourcing vs. retaining in-house –> identify strengths, expertise, unique features, strategic differentiators
Operations strategy: how company produces goods and services –> make-to-stock / assemble-to-order / make-to-order
Distribution strategy: getting products/services to customer –> using channel intermediaries (distributor, retailer) or sell directly
Customer service strategy: based on volume/profitability of market segments (matrix) –> how to meet demand, which segments to prioritise
Single-sourcing vs. multiple-sourcing
Single: close relationships, easy scheduling, consistent quality
Multiple: geographical diversification, high negotiation power
Competitive bidding vs. negotiation
Competitive bidding: for set performance criteria, standard products, high volume, many qualified suppliers exist
Negotiation: for new or complex product, customised product, few suppliers
Functions of SCM
Sourcing function: responsible for linking organisation to suppliers
Operations function: organises transformation of raw materials –> finished goods/services
Logistics function: responsible for moving/positioning inventory throughout SC
Marketing function: responsible for linking organisation to its customers (identifying needs)
Opportunities of international SCs
- Large markets
- Economies of scale (production, distribution)
- Lower select costs (labour, marketing, supply)
- Better ability to target markets
- Leverage good ideas quickly, efficiently
Barriers of international SCs
- Longer, more varied lead time
- Political risk and instability
- Higher overall costs (transportation, tariffs etc.)
- Infrastructure access (facilities, transportation, labour)
- Exchange rate and VAT risks
Global environmental factors
Economic, cultural, political, demographic
Global vs. local marketing
Global approach: standardisation (distribution, sourcing, packaging, operations)
Local approach: localised differentiation, micro-segmentation –> adds complexity
Postponement: strategy for merging global and local approaches; product kept in generic form as long as possible in distribution process –> adapted last minute
Sustainability risks
Social risks: unmet community expectations –> violence, riots, economic damage
Political risks: governmental influences/interventions –> damage to company’s economic value
Environmental risks: unpredictable/uncontrollable –> geological or meteorological (weather)
Sustainability in SCM
- Product design, waste management
- Packaging
- Sourcing, supplier selection
- Process design
- Marketing sustainability
Scope vs. criticality
Scope: variety of services/products provided by supplier
Criticality: impact of sourced item/task on ability of firm to perform its core competencies (relevance)
Non-strategic transactions
- Low scope, low criticality
- Standardised products, supplier can be substituted
- Must still comply with minimum requirements
- Example: Office supplies, work wear
Contractual relationships
- High scope, low criticality
- Supplier of generic direct materials, supplier can be substituted
- Low degree of relationship management, moderate communication frequencies
Partnerships
- Low scope (narrow variety), high criticality
- Highly specialised, difficult to substitute
- High degree of relationship management needed
- Much communication, high degree of trust –> commitment from both sides
- Opportunity for customisation
- Example: transport solutions provider,
Alliances
- High scope (broad variety), high criticality
- Supermarket’s manufacturer for private label products (same for all cereals, dairy products)
- Automotive companies with high innovation/sustainability standards focus on few suppliers
- High degree of relationship management needed
- Much communication, both parties are dependent on the other
Trust-based relationships
- Building collaboration and long-term relationships/partnerships
- Moving away from transactional / arms-length adversarial relationships
- Finding win-win solutions, development of joint objectives
- For high-criticality suppliers
Power-based relationships
- Transaction focus
- Leveraging power, win-lose relationship
- Power balance might shift
- Negotiation power dynamics (supply vs demand factors, dependencies)
- For low-criticality suppliers
Sources of conflict
- Relationship
- Data
- Interests
- Structural
- Values
Position vs. interest
Position: surface statements; requirements, expectations etc. – ‘what’
Interest: underlying reasons, motivations, values, incentives – ‘why’
Adversarial vs. problem-solving negotiation style
Adversarial: hostile negotiations, zero-sum game i.e. win-lose situation
Problem-solving: Non-zero-sum game i.e. win-win situation possible
