Supply Chain Management Flashcards
What is the definition of Supply Chains?
A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system. It spans procurement, internal transformation, and distribution.
What is Vertical Integration?
The proportion of the supply chain that the company owns. Also termed “make or buy.” This is when an organization owns a supplier or distributor to control it’s supply chain.
Why would an organization not want to “outsource”? (do things themselves instead)
“Control” (strategic process, intellectual property, “messy” coordination, etc.)
What is an example of Vertical Integration?
Tesla’s battery supply chain. They built their own battery factory to drive down their costs and further control their supply chain.
What is Procurement?
Purchasing. Buying services or materials we elect not to develop internally.
What are the 3 types of purchasing?
- Centralized purchasing = single purchasing location
- Stockless Purchasing = supplier delivers to production
- Blanket Purchase Orders (POs) = long term purchase commitment
What is the concept of “Purchasing Units” used by Arcteryx?
They use a purchasing unit system where their contract specifies an order of 50,000 garment units, where procurement then selects the mix of units down the line. Ex) Shirt = 0.1 units, Jacket = 1 unit, etc.
What is Vendor Managed Inventory (VMI)?
This is when vendors manage the customer’s inventory of the products they supply (ordering, stocking shelves, etc.)
What are the benefits to the customer that uses Vendor Managed Inventory?
Less administration (ordering) costs
Less chance of stockouts
What are the downfalls to the customer that uses Vendor Managed Inventory?
Trusting the vendor
Potential staff layoffs
What are the benefits to the manufacturer that uses Vendor Managed Inventory?
Knowledge of demand
Potentially more sales (due to less stockouts)
What are the downfalls to the manufacturer that uses Vendor Managed Inventory?
Increased staffing and use of technologies (vehicles, remote technology, etc.)
What is Supplier Consolidation?
Working closer with fewer suppliers. This entails strenghtening the relationship of the supplier you work with to reap the benefits in supply chain.
What is time utility?
WHEN: provides goods to customers when wanted, not when produced. Ex) Winter Coats
What is place utility?
WHERE: provide goods where they are needed, not where they are produced. Ex) Coffee at Coffee Shops
What is form utility?
WHAT: physical/chemical change in goods and/or packaging. Ex) Colour addition to toys
What are the benefits of intermodal shipping containers?
Convenient (Less handling)
Extensive network
Optimal cost
Increased security
What is Shipping Consolidation?
Strengthening distribution by having all suppliers deliver to one warehouse, to then ship to retail locations
What is cross-docking?
In shipping consolidation, when we ship to one warehouse, we then immediately ship to retail locations rather than storing the product.
Cross docking = receiving AND shipping all at once
What is drop shipping?
When an order of a product goes directly from a supplier to the customer, rather than the supplier to the retailer to the customer. Here, the retailer never touches the products.
Describe Postponement of Place Utility.
This refers to delaying the distribution of a product until the last possible moment, keeping inventory at one warehouse then shipping to retail locations based on demand.
Describe Postponement of Form Utility.
This refers to delaying the assembly of a product until the last possible moment, keeping the product and adding specific components based on demand. Ex) Colour Addition on Toys
Describe Labeling Postponement.
When products are completed with the exception of labeling, which is applicable when a manufacturer produces a generic product that is sold under multiple labels. Ex) Labeling Cans in International Markets
Describe Packaging Postponement.
When products are completed but stored in bulk without packaging. Ex) Batteries
