Lecture 9 - Supply Chain Management Flashcards
What are supply chains?
A chain is a network of partners who collectively convert a basic commodity (upstream) into a finished product (downstream) that is valued by end-customers and who manage returns at each stage
What is a supply network?
The supply network includes the chains of suppliers providing inputs to the operation, the chain of customers who receive outputs from the operation, and other operations who may at times compete and other times cooperate
What is vertical integration?
Is the combination of technologically distinct production, distribution, selling and/or other economic processes within the confines of a single firm, represents a decision by firm to utilise internal or administrative transactions rather than market transactions to accomplish its economic purpose
What are the features of a traditional publishing supply chain?
- Supply chain for physical made-to-stock books
- Vertically integrated publisher with in-house printing and warehouse operations
- Upstream inputs from materials suppliers and authors
- Downstream sales via wholesalers and retailers
What are the features of an outsourcing and disintermediation supply chain?
- Outsourced printing/binding
- Online booksellers
- Disintermediation of traditional retail channels
What is outsourcing?
Is the activity of taking activities that could or have been carried out in-house and moving them to outsourced suppliers
What are motivations to outsourcing?
+ Cost reduction
+ Core focus
+ Access to skills/expertise
+ Business process improvements
+ Technical reasons
+ Political reasons
- Concern for security/ IP
- Fear of losing control
What are sourcing options?
Internal:
- in-house provision, insourcing
- Shared services
Hybrid:
- Staff augmentation, contract labour
- Management consulting
- Joint ventures, strategic partnerships
External:
- ‘Traditional’ outsourcing
- Cloud services
- Crowdsourcing
What are some advantages of outsourcing?
- Strategic focus
- Gain access to complimentary, external competencies
- Reduce and control costs
- Regain control of internal departments
- Strategic flexibility
What are disadvantages of outsourcing?
- Hollowing out
- Limited learning and innovation
- Increased transaction costs/ risks
- Vulnerable to opportunism
- Dependence on supplier
What are reasons for location decisions?
- Changing demand
- Consumer demand
- business-to-business demand
- Changes in supply
- Cost
- Availability
What are location options?
- Maintaining current facilities but add additional facility(ies) elsewhere
- Close current facility and move to another location
- Expand existing facility without moving
What are factors for location decisions on a country scale?
- Political stability
- Access to markets
- Access to suppliers
- Labour supply, skills, productivity, costs
- Currency/ exchange rate
- Economic stability, tax environment
- Logistics costs
What are factors for location decisions on a state/ community decisions scale?
- regional attractiveness
- Labour availability, costs
- Cost and availability of infrastructure and utilities
- Local regulatory environment
- Local government incentives and fiscal policies
- Access to suppliers, materials, etc
- Access to markets
What are factors for location decisions on a site decision?
- Site size and cost
- Air, rail, road infrastructure
- Proximity to suppliers/services
- Environmental impact issues
- Customer density/ demographics
- Site image
What is locating capacity?
- Quantitative location techniques typically try to maximise some measure of benefits e.g.:
- utilisation of facility
- Minimise average distance travelled per customer visit
- Minimise cost of transportation for deliveries
- Different organisations may have different criteria
- Different optimisation criteria may lead to different solutions
What is the weighted score method?
- Identify relevant criteria against which possible locations will be evaluated
-Cost
- Accessibility for customers
- Potential for expansion
- Image of the site - Decide the relative importance of each and given each a weighted factor
- Rate each location against criterion
- Calculate the weighted scores for each criterion for each location
- Calculate the total weighted score for each location by summing the weighted scores for each criterion
- Interpret the results
What is offshoring?
A firm’s decision to relocate production capacity from its home country to an overseas destination
What is reshoring?
The action of moving business activities that had been moved overseas back to the country from which they were originally relocated
What are drivers for reshoring?
- Global competitive dynamics
- Supply chain drivers
- Host country drivers
- Home country drivers
Reshoring: What are examples of global competitive dynamics?
- Political risks
- Eroding comparative advantage
- Exchange rate fluctuations
Reshoring: What are examples of supply chain drivers?
- Coordination costs
- Risk of disruption
- Problems coordinating innovation/ manufacturing
- Increased importance of speed and dependability of delivery
- Increased demand for customisation
- Ability to respond to variable demand
- Increased transportation costs
Reshoring: What are examples of host country drivers?
- Inadequate quality
- Theft of or risk to intellectual property
- Reputation risk
- Lack of trust/ commitment from staff/ suppliers
Reshoring: What are examples of home country drivers?
- Political incentives
- Promote domestic goodwill/ improve brand image
- Increased automation
- Increased awareness of sustainability implications
What is lean supply?
‘Means developing a value stream to eliminate all waste, including time, to ensure a level schedule
What is agile supply?
‘means using market knowledge and… to exploit profitable opportunities in a volatile marketplace’
What is leagile supply?
‘is the combination of lean and agile paradigms within a total supply chain strategy by positioning the decoupling point so as to best suite the need for responding to volatile demand downstream, yet providing level scheduling upstream from the market place’
What are key sourcing approaches?
- Single sourcing
- Multiple sourcing
- Delegated sourcing
- Parallel sourcing
What are advantages and disadvantages of single sourcing?
+ Lower transaction costs
+ Long-term relationship
- Risk of lock-in/supplier dependency
- Reduced bargaining power
- Risk of supply disruption
What are advantages and disadvantages of multiple sourcing?
+ Maintain (price) competition
+ Reduce supplier dependency
+ Reduce supply risk
+ Increase flexibility
- Difficult to develop long-term relations
- Lack of supplier commitment
What are advantages and disadvantages of delegated sourcing?
+ Reduce number of (tier-1) suppliers
+ Focus on strategic partners
- Creation of ‘mega suppliers’
- Loss of oversight of sub-suppliers
What are advantages and disadvantages of parallel sourcing?
+ Maintain competition
+ Allow for switching
- Complex to manage
What is the process for supplier selection?
- Initial supplier selection
- Agree measurement criteria
- Obtain relevant information
- Make selection
What are the total costs of Ownership (TCO)?
- Acquisition costs
- Ownership costs
- Post-ownership costs
TCO: What are examples of acquisition costs?
- Supplier price
- Supplier terms
- Taxes and duties
- Delivery costs
- Incoming quality costs
- Management costs
TCO: What are examples of ownership costs?
- Inventory costs
- Warehousing costs
- Manufacturing costs
- Production quality costs
- Cycle time costs
- Mark-down costs
TCO: What are examples of post-ownership costs?
- Reputation
- Warranty and product liability costs
- Environmental costs
- Intellectual property loss
- Supplier capabilities
What factors can influence the success likelihood of outsourcing?
+ Communication
+ Effective knowledge sharing
+ Partnership view
+ Prior working relationship
+ Trust
