lecture 10

Question 1

core competencies

Answer 1

a company’s core competencies are a combination of resources and skills that distinguishes a firm in the marketplace

Question 2

insourcing

Answer 2

doing business activities in-house e.g. owning a car

Question 3

outsourcing

Answer 3

relying on external supplier e.g. hailing a cab

Question 4

make or buy decision

Answer 4

whether to insource/outsource the production of parts or components

Question 5

offshoring

Answer 5

moving work from one country to another

Question 6

pros and cons of outsourcing

Answer 6

pros :
- can be cheaper due to supplier’s economies of scale
- requires less capital investment
- flexibility to scale capacity up or down

cons :
- can be risky to depend on supplier to produce key product/service
- reduction of control and ability to differentiate product/service

Question 7

factors that drives outsourcing

Answer 7

1. it is not the company’s current business focus
2. the company doesn’t have expertise in that area
3. it is not exclusive to the company
4. other companies can perform the activity better

Question 8

supply chain risks

Answer 8

1. one vs more suppliers
2. the spectrum of supplier relationships
3. supply chain resilience –> the capability to resist and recover from supply chain disruptions

Question 9

ways to increase supply chain resilience

Answer 9

1. hold higher inventory levels for critical materials
2. build a strategic relationship with key suppliers
3. reguler communication and close monitoring of key suppliers
4. use more than one key supplier for critical materials
5. requires key suppliers to have geographically dispersed operations

Question 10

functional (physical efficient) vs innovative products (market-responsive)

Answer 10

purely functional products –> established products –> new model of existing products –> entirely new products

comparison based on :
- product life cycle
- demand uncertainty
- profit margin
- product value
- product variety

functional : long, low, low, low, low
innovative : short, high, high, high, high

Question 11

physically efficient vs market-responsive push or pull

Answer 11

physically efficient –> functional products
- push (make to stock –> high inventory costs & short lead time)

market-responsive –> innovative products
- pull (make to order –> low inventory costs & long lead time)

Question 12

stock keeping units (SKU) proliferation and delayed differentiation

Answer 12

more variety of products –> more stockouts/higher invetory levels
solution –> delayed differentiation
principle –> produce a generic product that is later differentiated into spesific end-products based on consumer’s needs

Question 13

push pull boundary

Answer 13

• push inventory control system –> produce the products or order the inventory based on demand forecast
• pull inventory control system –> produce the products or order the inventory based on customer orders
• push pull boundary –> when a company switches the supply chain from push to pull
• e.g. starbucks decides to only make to stock brewed decaf before noon because the demand for decaf lessens after noon –> after noon they make the decaf drinks make-to-order

Question 14

mass customization

Answer 14

• a hybrid production strategy, more flexible at a reasonable price
• cheaper than individual customization but more flexible than mass production