w8 - Distribution Strategy Flashcards
What does the Cost, Insurance, and Freight (CIF) pricing scheme entail?
The seller bears the cost of maritime freight, cost of insurance, and other associated costs
In the Delivered Duty Unpaid (DDU) pricing scheme, who is responsible for import duties?
The buyer
What is the objective of distribution network planning?
Minimize the cost of distribution while maintaining required service levels, flexibility, delivery targets, and inventory requirements
Fill in the blank: The _______ price includes manufacturing cost plus the manufacturer’s margins.
Ex-factory
What are the three hierarchical steps of network planning?
- Network design
- Inventory positioning
- Resource allocation
What does inventory positioning include?
- Identifying stocking points
- Selecting facilities that produce to stock
- Facilities that produce to order
What must network planning consider regarding demand?
Demand and demand uncertainties at different points of sales
True or False: The ex-factory price includes all transportation costs to the destination.
False
What is the typical planning horizon for network design?
A few years
What does resource allocation in network planning include?
- Determining production and packaging facility
- Plants sourcing strategies
- Capacity to meet seasonal demand
What costs are included in warehouse costs?
- Fixed costs
- Storage costs
- Handling costs
Fill in the blank: The _______ margin is the percentage added by the distributor after costs.
Distributor’s
What is the purpose of matching supply and demand under uncertainty in network planning?
To utilize available resources efficiently
What are the components of transportation costs in network planning?
- Transportation costs
- Transportation lead times
What is a key factor in selecting suppliers during network planning?
Supplier locations
Fill in the blank: The _______ includes all costs until the destination in the Delivered Duty Paid (DDP) scheme.
Seller
What is a significant consideration for network planning related to suppliers?
Supply capacities and constraints
What type of network design connects each source directly to each destination?
Point-to-point distribution network
What is a hub-and-spoke design used for?
High frequency or high volume of transportation
What is a centralized inventory system?
Manages bulk inventory at centralized hubs or warehouses
What is an advantage of centralized inventory systems?
Reduces overall system-level inventory
True or False: The hub-and-spoke design is effective when supply and demand are localized.
False
What are the two types of inventory positioning?
Centralized and decentralized.
What is a centralized inventory system?
It manages the bulk of the inventory at centralized hubs or warehouses, supplying retail stores on a need basis.
What are the advantages of centralized inventory?
- Acts as a hub of distribution and manages purchasing
- Coordinates information flow
- Manages material flow with multiple links
What are the disadvantages of centralized inventory?
Lacks responsiveness and agility.
What is decentralized inventory positioning preferred for?
When variety is not a major concern and flexibility and responsiveness are important.
What are the primary differences of international distribution from domestic distribution?
- Relatively higher distances
- Risk of currency fluctuation
- Additional steps required for border crossing
- Tariffs and duties add to costs
What are trade agreements in the context of international distribution?
Considerations for network designs that may affect packaging, labeling, and the number of agents involved.
What is the definition of Network Design in supply chain management?
An important aspect that often involves complex and multiple interdependent factors.
What is remanufacturing?
The process of collecting used products, classifying them, refurbishing, and selling them at a lower price than new products.
What are the motivations for remanufacturing?
- Extend the usable life of products
- Generate economic rents from remanufactured products
- Reduce cost of raw materials and inputs
What are the environmental and regulatory motivations for remanufacturing?
- Reducing landfills
- Extend Producer Responsibility (EPR) regulations
What is a challenge of remanufacturing related to product life cycles?
Tracing products throughout their life cycle.
What is the impact of high variability in quality of returned cores?
It prohibits standardization of the manufacturing process.
What are the advantages of using existing manufacturing facilities for remanufacturing?
No further major investment required.
What is a disadvantage of investing in specialized manufacturing units for remanufacturing?
Requires major new investment.
What is Green Supply Chain Management (GSCM)?
The process of incorporating environmental concerns into supply chain management.
What are traditional motivations for green supply chains?
- Regulatory Compliance
- Minimize Risk
- Maintain Health
- Protect the Environment
What are emerging values for green supply chains?
- Reduce Cost
- Boost Employee Satisfaction
- Improve Productivity
- Improve Brand Equity
- Support Innovation
- Enable Growth
What is the total carbon footprint of a product?
The total amount of greenhouse gases emitted directly and indirectly during its life cycle.
What is the definition of the carbon footprint of a product?
Total amount of greenhouse gases emitted by a product, factory, or supply chain.
List the sources of carbon footprint in supply chains.
- Manufacturing processes
- Transportation of products
- Energy consumption
- Usage
- Disposal of products
What are some initiatives to improve the environmental friendliness of supply chains?
- Choose environmentally friendly materials
- Choose transportation modes that use cleaner energy
- Transit in bulk as much as possible
- Minimize packaging requirements
- Reduce transit distances
What are additional initiatives to improve environmental friendliness in supply chains?
- Consolidate logistics of multiple locations
- Closer contact with customers
- Build a robust reverse logistics network
- Leasing of products with repurchase options
- Use newer and more energy-efficient technologies
- Collaborate with suppliers who focus on green operations
True or False: Green supply chain management is becoming less important.
False
What is vertical integration in supply chain management?
Supply chain integration achieved by financial ownership of assets through legal contractual agreements.
Provide an example of forward vertical integration.
Zara owning and operating its own retail stores.
What distinguishes virtual integration from vertical integration?
Virtual integration is achieved through long-term relationships and information sharing, not asset ownership.
What is a key enabling factor of virtual integration for Dell?
The modular design of the products.
List the advantages of vertical integration.
- Greater control over supply chain entities
- Greater access to scarce resources
- Reduces dependence on suppliers
What are the disadvantages of vertical integration?
- Expensive to reverse
- Greater financial risks
- Demand fluctuations can be detrimental
- Often reduces flexibility
- Technology changes can make assets obsolete
What are the advantages of virtual integration?
- Provides benefits of vertical integration without financial risks
- Enables partners to work as an integrated entity
- Minimizes inventory levels while providing high frontend variety
What challenges are associated with virtual integration?
- Requires long-term commitment from all partners
- Creation of a shared information technology infrastructure
What makes IT integration difficult in vertical integration?
Variation in IT capabilities and infrastructure across partners.
Fill in the blank: A key enabling factor of virtual integration is the _______.
[modular design of products]
What is a significant challenge in redesigning products for virtual integration?
It takes time and investment.
