Introduction To Supply Chain Management Flashcards
Supply Chain
The sequence of processes involved in the production and distribution of an offering
Actors in supply chain management
- Supplier raw material
- Manufacturer
- Manufacturer warehouse
- Retail warehouse
- Consumer
Competitive strategy in context of supply chain management
The set of customer needs a firm seeks to satisfy through its product and services to make profit on
Product development strategy in context of supply chain management
Specifies the portfolio of new products that the company will try to develop
Marketing and sales strategy in context of supply chain management
Specifies how the market will be segmented and product positioned, price and promoted
What function in the value chain must be adjusted in order to achieve a strategic fit with the company’s objectives
All functions in the value chain must support the business strategy to achieve a strategic fit with the company’s objectives
Objectives of every supply chain
- Maximize perceived value of product or service for consumer
- Maximize the short- and long term value for the company
- Optimisation of conflicting interests (sales, production, consumer, company, …)
- Optimisation at different levels (strategical, tactical, operational)
Name Porters generic business strategies
- Cost-leadership strategy
- Differentiation strategy
- Focus strategy (low cost)
- Focus strategy (differentiation)
Differentiation strategy
a type of competitive strategy with which a company seeks to distinguish its products or services from that of competitors: the goal is to be unique.
Cost-leadership strategy
a type of competitive strategy with which a company aggressively seeks efficient large-scale production facilities, cuts costs, uses economies of scale, gains production experience and employs tight cost controls to be more efficient in the production of products or the offering of services than competitors: the goal is to be the low-cost producer in the industry.
Focus strategy
a type of competitive strategy that emphasizes concentration on a specific regional market or buyer group: a niche. The company will either use a differentiation or cost leadership strategy, but only for a narrow target market rather than offering it industry-wide.
Which of porters generic business strategies are broad (industry wide) and focused on low cost?
Cost-leadership strategy
Which of porters generic business strategies are narrow (market segment) and focused on low cost?
Focus strategy (low cost)
Which of porters generic business strategies are broad (industry wide) and focused on product/service uniqueness?
Differentiation strategy
Which of porters generic business strategies are narrow (market segment) and focused on product/service uniqueness
Focus strategy (differentiation)
What are the three types of Tracy and Wiersema value strategies
- Product Leadership
- Customer Intimacy
- Operational excellence
What does product leadership within Tracy and Wiersema value strategies focus on?
- Technological innovation
- Superior brand image
- Rapid product development (time-to-market)
What does customer intimacy within Tracy and Wiersema value strategies focus on?
- High client-satisfaction
- Optimal service-providing
- Integration client system
What does operational excellence within Tracy and Wiersema value strategies focus on?
- High trust
- limited product range
- Low cost (Total cost of ownership)
What is the primary goal of efficient supply chains?
Supply demand at the lowest cost
What is the primary goal of responsive supply chains
Respond quickly to demand
What product design strategy do efficient supply chains use?
Maximise performance at a minimum product cost
What product design strategy do responsive supply chains use?
Create a structure of networks (modularity) to allow postponement of product differentiation
What pricing strategy do efficient supply chains use?
Lower margins because price is a prime customer driver
What pricing strategy do responsive supply chains use?
Higher margins because price is not a prime customer driver
What manufacturing strategy do efficient supply chains use?
Lower costs by means of high utilization
What manufacturing strategy do responsive supply chains use?
Maintain capacity flexibility to buffer against demand/supply uncertainty
What inventory strategy do efficient supply chains use?
Minimise inventory to lower cost
What inventory strategy do responsive supply chains use?
Maintain buffer inventory to deal with demand/supply uncertainty
What lead-time strategy do efficient supply chains use?
Reduce lead-time, but not at the expense of costs
What lead-time strategy do responsive supply chains use?
Reduce lead-time aggressively, even if the costs are significant
What supplier strategy do efficient supply chains use?
Select based on cost and quality
What supplier strategy do responsive supply chains use?
Select based on speed, flexibility, reliability and quality
Which of Tracy and Wiersema’s value strategies align with efficient supply chains?
- Cost-leadership strategy
Which of Tracy and Wiersema’s value strategies align with responsive supply chains?
- Product-leadership
- Customer intimacy
Value chain
Integrated approach of all internal & external partners with the focus of creating value
Different levels within a company in context of Supply chain management
- Strategic level
- Tactical level
- Operational level
KPI
Key performance indicator
Drivers of supply chain performance
a) Facilities
b) Inventory
C) Transportation
d) Sourcing
E) Pricing
Role of facilities in supply chain performance
Increase responsiveness by increasing number of facilities
Role of Inventory in supply chain performance
- Exploit economies of scale
- Reduce costs
- Improve product availability
- Mismatch between supply and demand
- Affects assets, costs, responsiveness, material flow time, financial results, …
Role of Transportation in supply chain performance
- Moves the product between stages in the supply chain
- Affects responsiveness and efficiency
- Affects inventory and facilities
- Faster transportation = Increase in responsiveness, Decrease in efficiency
- Allows a firm to adjust the location of its facilities and inventory to find the right balance between responsiveness and efficiency
Role of sourcing in supply chain performance
- Set of business processes required to purchase goods and services
- Internal source vs. Third party
- Single source vs. Multiple choice sourcing
- Chain thinking: increasing size of total surplus to be shared across the supply chain
Role of pricing in supply chain performance
- Pricing determines the amount to charge customers for goods and services
- Objective: Increase firm profit
- Affects the supply chain level of responsiveness required and the demand profile the supply chain is targeting
- Pricing strategy — used to match demand and supply, influences expected responsiveness and market profile
Decisions to be made concerning facilities
- Location (size & number)
- Level of automation
- Offshoring
What is the purpose of centralised locations for facilities in supply chain management
Economies of scale
What is the purpose of decentralised locations for facilities in supply chain management
Responsiveness
Offshoring
Transferring activities or ownership of a complete business process to a different country from the countries where the company receiving the service is located
Name 2 reasons why moving operational activities (offshoring) often fail
1) Company focus misdirected towards unit cost and not total cost
2) Neglecting potential critical risks linked to movement of activities
Economic Order Quantity (EOQ)
Ideal quantity of units a company should purchase to meet demand while minimising inventory costs
Assumptions made when using EOQ model
1) Demand rate is constant
2) Lot size has no constraints
3) Only costs of relevance are holding & ordering/setup
4) No uncertainty in lead time/supply
