Section A: Introduction to Supply Chain Management

Question 1

What two platforms spearheaded the Supply Chain Management revolution of the 1970s and 1980s?

Answer 1

The two platforms that spearheaded the Supply Chain Management revolution are: 1. Innovators worked with suppliers as trusted partners to pursue sharing the reduction of costs, meeting customer needs, improving quality from the earliest stage of supply chain to the end product. 2. Computerizing management systems. It incorporated Manufacturing Resource Planning that connected activities across multiple functional groups and provide the associated views of each activity’s impact and conflict.

Question 2

What is ERP?

Answer 2

ERP is Enterprise Resource Planning Software systems for running business transactions. Manufacturing Resource Planning (MRP II) served as the core of developing these interconnected platforms between different functional groups. ERP allowed enterprises to replace slow paper-based forms with rapid information exchange.

Question 3

Core Competency

Answer 3

An organization’s ‘Core Competency’ is what it does best.

Question 4

Supply Chain

Answer 4

Supply Chain is the global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash.

Question 5

Service Industry

Answer 5

A Service Industry is 1. In its narrowest sense, an organization that provides an intangible product (e.g., medical or legal advice) 2. In its broadest sense, all organizations except farming, mining, and manufacturing. Includes retail trade; wholesale trade; transportation and utilities; finance, insurance, and real estate; construction; professional, person, and social services; and local, state, and federal governments.

Question 6

Supply Chain Management

Answer 6

Supply Chain Management is The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.

Question 7

Upstream

Answer 7

Upstream is Used as a relative reference within a firm or supply chain to indicate moving in the direction of the raw material supplier.

Question 8

Downstream

Answer 8

Downstream is Used as a relative reference within a firm or supply chain to indicate moving in the direction of the end customer.

Question 9

Echelon

Answer 9

Echelon is A distinct function within the supply chain. An echelon can comprise of multiple echelons. If an echelon adds more value than cost, it should be included. If it consumes more value than it costs, it should be eliminated.

Question 10

What are the three primary flows that need to be managed optimally from the perspective of the overall supply chain (instead of being managed optimally individually)?

Answer 10

The 3 primary flows managed in a supply chain are 1. Flow of information. (Both directions) 2. Flow of cash (Flows upstream) 3. Flow of materials (Flows downstream)

Question 11

Reverse logistics

Answer 11

Reverse Logistics is The supply chain for returns. This system needs its own planning and infrastructure to maintain efficiency and be separate from the forward supply chain.

Question 12

What’s the first step of an organization in forming a supply chain?

Answer 12

The first step of an org in forming a supply chain is Internally orienting to become more cross functional. After which, an organization can integrate externally.

Question 13

What are the characteristics of how departments function in a functional oriented organization?

Answer 13

Characteristic of a functional oriented org -Each operates in its own silo. -Slow/formal communication and conflicting metrics -Incentivized to maximize its own metrics for success

Question 14

What are a couple examples of functionally oriented organizations & their priorities?

Answer 14

Sales and marketing’s highest priority will be customer service, which results in requests for expedited orders or changes in what is being produced with lttle notice, maintaining high inventories and/or a distribution network with facilities near each market for rapid delivery –> signficant inventory, infrastructure, and labor costs.

Finance’s highest priority is to minimize inventory and physical assets, Reducing inventory or having a less extensive distribution network, high production efficiency to minimize costs.

Question 15

What is Value Chain Analysis (K)

Answer 15

Value Chain Analysis is An examination of all links a company uses to produce and deliver its products and services, starting from the origination point and continuing through delivery to the final customer. The end goal is: -effective collaboration -prioritizing processes over departmental goal -eyes on big picture win for company

Question 16

Logistics

Answer 16

Logistics is a unifying role… 1) In a supply chain management context, it is the subset of supply chain management that controls the forward and reverse movement, handling, and storage of goods between origin and distribution points. 2) In an industrial context, the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities. 3) In a military sense (where it has greater usage), its meaning can also include the movement of personnel.

Question 17

Risk management

Answer 17

Risk Management is The identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Examples include insurance, geographic diversification, redundancy of operations, having multiple suppliers.

Question 18

Bullwhip Effect

Answer 18

The Bullwhip Effect is an extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain. Inventory can quickly move from being backordered to being excess. This is caused by the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. The bullwhip effect can be eliminated by synchronizing the supply chain.

Question 19

What are the core functions within the supply chain?

Answer 19

Core functions within the supply chain are Manufacturing and Materials Management

Question 20

What is the role of Manufacturing?

Answer 20

The role of manufacturing Manufacturing adds value to society by transforming raw materials and labor into products and services that are in demand.

Question 21

Operations Management

Answer 21

Operations Management 1) The planning, scheduling, and control of the activities that transform inputs into finished goods and services. 2) A field of study that focuses on the effective planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the operation.

Question 22

Materials Management

Answer 22

Materials Management is the grouping of management functions supporting the complete cycle of material flow, from the purchase and internal control of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product.

Question 23

What is the second major responsibility of a Materials Manager?

Answer 23

The 2nd major responsibility of a Materials Manager In addition to making the best use of organizational resources, a materials manager has a second major responsibility, which is to ensure meeting a predetermined level of customer service.

Question 24

Customer Service

Answer 24

Customer Service is 1) The ability of a company to address the needs, inquiries, and requests of customers. 2) A measure of the delivery of a product to the customer at the time the customer specified.

Question 25

Customer expectations for delivery can be expressed as Demand Lead time, otherwise defined as…

Answer 25

Demand Lead Time the amount of time potential customers are willing to wait for the delivery of a good or a service.

Question 26

Objectives of Manufacturing (the 7 rights)

Answer 26

The seven “rights” of logistics define the objectives of manufacturing: Provide the right number of the right products and services at the right time, the right place, and the right cost and at the right quality level.

Question 27

Order Qualifiers

Answer 27

Order Qualifiers are those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace. The minimum customer expectations for lead times, and other specifics. For example, a firm may seek to compete on characteristics other than price, but in order to “qualify” to compete, its costs and the related price must be within a certain range to be considered by its customers.

Question 28

Order Winners

Answer 28

Those competitive characteristics that cause a firm’s customers to choose that firm’s goods and services over those of its competitors. Order winners can be considered to be competitive advantages for the firm. Order winners usually focus on one (rarely more than two) of the following strategic initiatives: price/cost, quality, delivery speed, delivery reliability, product design, flexibility, after-market service, and image. Order winners can be a unique capability or quality no competitor has or a combination of price, product features, quality, and related services that customers will see as a superior value.

Question 29

Specifically, materials managers perform two major organizational functions:

Answer 29

Material Managers perform: 1) Manufacturing planning and control (MPC). MPC is a blanket term that encompasses high-level planning, master scheduling, material requirements planning (MRP), and execution control along with the related checks on available capacity. 2) Logistics. Materials managers are responsible for incoming physical supply and outgoing physical distribution. They monitor and control purchasing, warehouses, and raw materials, work-in-process, and finished goods inventories.

Question 30

Demand Lead Time

Answer 30

Demand Lead Time The amount of time potential customers are willing to wait for the delivery of a good or a service.

Question 31

Sustainability

Answer 31

Sustainability is an organizational focus on activities that provide present benefit without compromising the needs of future generations.

Question 32

United Nations Global Compact

Answer 32

UNGC is a voluntary initiative whereby companies embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anti-corruption.

Question 33

UN Global Compact Management Model

Answer 33

The UNGC management model is a framework for guiding companies through the process of formally committing to, assessing, communicating the United Nations Global Compact and its principles.

Question 34

Strategic Plan

Answer 34

The plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization. Generally includes an organization’s explicit mission, goals, and objectives and the specific actions needed to achieve those goals and objectives.

Question 35

Product differentiation

Answer 35

Product differentiation a strategy of making a product distinct from the competition on a nonprice basis such as availability, durability, quality, or reliability.

Question 36

Business Plan

Answer 36

1) A statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement. A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. 2) A document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.

Question 37

SMART

Answer 37

SMART is an abbreviation for organizational goals that are specific, measurable, achievable/attainable, relevant/realistic, and timely.

Question 38

What-if Analysis

Answer 38

What-if Analysis is the process of evaluating alternate strategies by answering the consequences of changes to forecasts, manufacturing plans, inventory levels, and so forth.

Question 39

Tactical Plans

Answer 39

Tactical Plans is the set of functional plans (e.g., production plan, sales plan, marketing plan) synchronizing activities across functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization’s strategic plan.

Question 40

Performance Standard

Answer 40

Performance Standard In a performance measurement system, the accepted, targeted, or expected value for the criterion.

Question 41

Metrics

Answer 41

Metrics can determine the extent to which strategy is being realized. Need three things to be useful: 1) What to measure and how to measure 2) The target value or goal a.k.a. performance standard 3) The result or measurement

Question 42

Metrics

Answer 42

Metrics can determine the extent to which strategy is being realized. Metrics need three things to be useful: 1) Performance criterion - what to measure/how to measure it 2)Target value or goal, which is called a performance standard. 3) An actual result or measurement.

Question 43

Performance Standard (K)

Answer 43

Performance Standard is a performance measurement system, the accepted, targeted, or expected value for the criterion.

Question 44

Key Performance Indicator (KPI)

Answer 44

Key Performance Indicator (KPI) A financial or nonfinancial measure that is used to define and assess measures. A metric used to measure the overall performance or state of affairs. SCOR level 1 metrics are considered KPIs.

Question 45

Supply Chain Operations Reference (SCOR) model

Answer 45

SCOR model The standard cross-industry diagnostic tool for supply chain management. The SCOR model describes the business activities associated with satisfying a customer’s demand, which include plan, source, make, deliver, return, and enable. Use of the model includes analyzing the current state of a company’s processes and goals, quantifying operational performance, and comparing company performance to benchmark data.

Question 46

The Balanced Scorecard

Answer 46

The Balanced Scorecard A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of the balanced scorecard might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements.

Question 47

The Balanced Scorecard (Modified by Kaplan & Norton)

Answer 47

Kaplan and Norton added three other perspectives to The Balanced Scorecard to help organizations focus on the long term: 1. The customer perspective helps organizations stay focused on their customers’ changing needs. 2. The business process perspective helps organizations measure the cost and efficiency of their processes and continually improve them. 3. The innovation and learning perspective helps spur investment in future growth and workforce maturity.

Question 48

Participative Design/Engineering (or Current Engineering) (K)

Answer 48

Participative Design/Engineering (or Current Engineering) A concept that refers to the simultaneous participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included. The intent is to enhance the design with the inputs of all the key stakeholders. Such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs.

Question 49

Fixed cost

Answer 49

Fixed cost : An expenditure that does not vary with the production volume; for example, rent, property tax, and salaries of certain personnel.

Question 50

Variable cost (K)

Answer 50

Variable cost : An operating cost that varies directly with a change of one unit in the production volume (e.g., direct materials consumed, sales commissions).

Question 51

Make-or-buy Decision

Answer 51

Make-or-buy Decision The act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing.

Question 52

Outsourcing

Answer 52

Outsourcing The process of having suppliers provide goods and services that were previously provided internally. Outsourcing involves substitution—the replacement of internal capacity and production by that of the supplier.

Question 53

Subcontracting (K)

Answer 53

Subcontracting Sending production work outside to another manufacturer.

Question 54

Scrap

Answer 54

Scrap Material outside of specifications and possessing characteristics that make rework impractical.

Question 55

Service

Answer 55

Service Used to describe those activities that support the production or distribution functions in any organization, such as customer service and field service.