Supply Chain Management

Question 1

Importance of supply chains and their management

Answer 1

-As product life cycles become shorter, buyers are forced to source suppliers rapidly and will have less time to instigate cost reduction programmes

COMPLETE

Question 2

Pareto Analysis

Answer 2

• Used to identify the 20% of highest value (Class A) items which account of 80% of the spend and to differentiate these “critical few”, from the 50% of the range (Class C) which often account for less than 2% of the total spend (i.e the “trivial many”)
• Pareto while popular, only addresses basic financial issues, ignoring relative importance of items purchase.
• Low value components without production would halt what the Pareto would identify as trivial Class C items.
• Comparatively, Class A items may be readily and rapidly available from a number of sources.

Question 3

Marketplace Analysis - Supply Positioning

Answer 3

Determining the criticality of a purchased product can be more appropriately addressed by the application of supply positioning

Question 4

Marketplace Analysis - Supplier Preferences

Answer 4

• Just as purchases have become sophisticated in their dealings, with suppliers, many suppliers have moved away form the traditional volume lead sales to systems which measure the true costs of sales and therefore the profitability of individual accounts
• It’s possible that while purchasing organisation is carrying out its supply positioning exercise that the supplier is doing something similar

Question 5

Marketplace Analysis -Vulnerability

Answer 5

-Not given enough attention, and can lead to exposing organisations to considerable supply-side risks.
-Very time consuming and can only realistically be applied to those items previously identified as strategic security or strategic critical
-Might be assessed with:
>supply-demand balance
>raw-materials availability
>raw-materials cost trends
>complexity of the market
>the supplier
>production, shipping and distribution methods

-Use Failure Mode and Effect Analysis (FMEA), quantifying:
>probability of event occurring
>duration of problem
>impact on the business

Question 6

Balance of Power

Answer 6

• It’s possible for the buying organisation to evaluate its strengths and weaknesses with respect to the supply market for a particular item
• From such an analysis of competitive advantage appropriate purchasing strategies can be further developed

Question 7

Requirements for real partnerships

Answer 7

• Careful consideration of relationships with customers and suppliers
• Build the most responsive and effective supply chain
• I win, you win concept

MAYBE ADD MORE

Question 8

Why partnerships might fail?

Answer 8

• Resources necessary to create and maintain a partnership can be considerable
• Trust is not easy to generate in an environment that has previously been based on adversarial relationships
• Cultural resistance in many individuals and organisations towards the concept of partnership
• Basic ethos of commercial organisations has been built to take as much of the cake as possible, as quick as possible. Old habits die hard