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MGMT 421: Globalization, Offshoring, Outsourcing > Week 10: Global Supplier Selection > Flashcards

Week 10: Global Supplier Selection Flashcards

1
Q

Global Supply Chain Functions 1

Global Logistics

A

Core activities

  1. Global distribution center
  2. Inventory management
  3. Packaging and materials handling
  4. Transportation
  5. Reverse logistics
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2
Q

Global Supply Chain Functions 2

Global Logistics continued

A

Global distribution center
• A facility that positions and allows customization of products for
delivery to worldwide wholesalers, retailers, or directly to consumers anywhere in the world
• The foundation of a global supply network

Global inventory management
• The decision-making process regarding the raw materials, work-in-
process, and finished goods inventory for an MNC

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3
Q

Global Supply Chain Functions 3

Global Logistics continued

A

Packaging: three different categories:

• Primary packaging holds the product itself
• Secondary packaging is designed to contain several primary
packages
• Transit packaging is used when primary and secondary packages
are assembled for transportation

• The functions of packaging are to perform, protect, and inform

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4
Q

Perform

A

refers to:
(1) the ability of the product in the package to handle being
transported between nodes in the global supply chain,

(2) the ability of the product to be stored for typical lengths of time for a particular product category, and

(3) the package providing the convenience expected by both the supply chain partners and
the end-customers.

Protect refers to the package’s ability to:

(1) contain the
products properly,

(2) preserve the products to maintain their freshness or
newness, and

(3) provide the necessary security and safety to ensure that the
products reach their end destination in their intended shape.

Inform refers to the package’s inclusion of:
(1) logical and sufficient instructions for the use of the products inside the package, including specific requirements to satisfy local regulations;

(2) a statement of a compelling product guarantee; and
(3) information about service for the product if and when it is needed.

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5
Q

Global Supply Chain Functions

Global Logistics continued

A

Transportation
• The movement of raw material, component parts, and finished
goods throughout the global supply chain

  • Largest percentage of any logistics budget
  • Ocean is the least expensive and air is the most expensive

Reverse logistics
• The process of moving inventory from the point of consumption to
the point of origin for the purpose of recapturing value or proper disposal

• The ultimate goal is to optimize the after-market activity or make
it more efficient

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6
Q

Managing a Global Supply Chain 1

Efficient supply chain management can have a substantial impact on a firm’s profitability

A

Four important areas

  1. Just-in-time inventory
  2. Information technology
  3. Coordination
  4. Interorganizational relationships
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7
Q

Managing a Global Supply Chain 2

Role of Just-in-Time Inventory

A

Economizes on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process, and not before

• Can result in major cost savings from reduced warehousing and inventory holding costs

• Can help firms spot defective parts, take them out of the
manufacturing process, and boost product quality

• Leaves firms without a buffer stock of inventory, which makes it difficult for a company to respond quickly to problems

Note: To reduce the risks associated with depending on one supplier for an important input,
some firms source these inputs from several suppliers located in different countries.
Strategically, all global companies need to build in some degree of redundancy in supply
chains by having multiple options for suppliers

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8
Q

Managing a Global Supply Chain 3

A

Role of Information Technology

• Information systems allow firms to optimize production

• Electronic Data Interchange (EDI): refers to the electronic
interchange of data between two or more companies.

• Less expensive systems now exist, making it easier for
companies of all sizes to access

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9
Q

Managing a Global Supply Chain 4

A

Coordination in Global Supply Chains

Global supply chain coordination
• Shared decision-making opportunities and operational
collaboration of key global supply chain activities
• A more integrated, coherent, efficient, and effective supply chain

Operational objectives
• Responsiveness
• Variance reduction
• Inventory reduction
• Shipment consolidation
• Quality
• Life-cycle support
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10
Q

Responsiveness definition

A

refers to a global firm’s ability to satisfy customers’

requirements across global supply chain functions in a timely manner.

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11
Q

Variance reduction definition

A

refers to integrating a control system across global supply

chain functions to eliminate global supply chain disruptions.

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12
Q

Inventory reduction

A

refers to integrating an inventory system, controlling asset
commitment, and turning velocity across global supply chain functions.

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13
Q

Shipment consolidation

A

refers to using various programs to combine small
shipments and provide timely, consolidated movement. This includes multiunit
coordination across global supply chain functions.

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14
Q

Quality definition

A

refers to integrating a system so that it achieves zero defects
throughout global supply chains.

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15
Q

Life-cycle support

A

refers to integrating the activities of reverse logistics, recycling, after-market service, product recall, and product disposal across
global supply chain functions.

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16
Q

Managing a Global Supply Chain 5

A

Interorganizational Relationships
• Trust and commitment between interacting organizations
are important to an efficient and effective global supply
chain

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17
Q

Figure 15.5 Upstream/Inbound

Relationships

A

Vendor, Supplier, Partner

Note: A global company should allocate 20 percent of its efforts to the vendor category, 30
percent to the supplier category, and 50 percent to the partner category in the
upstream/inbound portion of the global supply chain.

Likewise, a global company should allocate 20 percent of its efforts to the buyer category, 30 percent to the customer category, and 50 percent to the client category in the
downstream/outbound portion of the chain

18
Q

Figure 15.6 Downstream/Outbound Relationships

A

Buyer, Customer, Client

Note: A global company should allocate 20 percent of its efforts to the vendor category, 30
percent to the supplier category, and 50 percent to the partner category in the
upstream/inbound portion of the global supply chain.

Likewise, a global company should allocate 20 percent of its efforts to the buyer category, 30 percent to the customer category, and 50 percent to the client category in the downstream/outbound
portion of the chain

19
Q

Revised Breakeven Analysis

A

Revised Breakeven Analysis

20
Q

Breakeven Analysis

A
  • F: fixed cost
  • p: price per unit
  • c: cost per unit
  • x: number units

Equation: (p-c)x - F

Examples:

Outsourcing option 1: ($10-$5)2,000-$4,000=$6,000
Outsourcing option 2: ($10-$2)2,000-$6,000=$10,000

21
Q

Breakeven Analysis under Production

Reliability

A
  • F: fixed cost
  • p: price per unit
  • c: cost per unit
  • x: number units
  • r: disruption in production

Equation: (1-r)xp-cx-F = ((1-r)p-c)*x-F

Option 1: ($10-$5)2,000-$4,000=$6,000
Option 2: ((1-40%)10-2)*2,000-$6,000=$2,000

22
Q

MCDM

A

Multiple-Criteria Decision Making

23
Q

MADM (1 of two types of MCDM)

A

Multiple Attribute Decision-Making (MADM):

 Predetermined and limited set of decision alternatives

24
Q

MODM (1 of two types of MCDM)

A

Multi-Objective Decision-Making (MODM):
 The decision alternatives are not given.
 Large number of potential decision alternatives can be
considered.
 Defined decision set by constraints
 Best decision can be found by optimization techniques

25
Q

Basics of MCDM/MADM (Decision Matrix)

A

See excel sheet / slide 24 for this week

You need to normalize the numbers

Score
Larger = better

26
Q

MCDM Methods

A

On the shoulder of decision makers

Based on expert’s experience

Includes designer preference

Example:

  • best worst method
  • AHP

Decision makers has no rule

Decision maker not available

Limited information

Example
-SAW methid
STD method

27
Q

AHP

A

AHP Procedure:

1) Determine the relative weights of the decision
criteria

  1. 1) Develop a hierarchy structure
  2. 2) Establish pairwise comparison

There are two questions in comparison:
• Which alternative is more important
with respect to the criterion?
• How strongly it is?

Comparison matrix is an illustration of all such comparisons
It Usually uses a 1-9 as a ranking scale based on the following table.

(LOOK A THE TABLE HERE, For inverse too)

28
Q

Pairwise Comparisons

A

Example:
• Consider the car selection example in which there are three criteria as below:

Cost, Safety, Capacity

The goal is finding the weights of the criteria mentioned above.

Note: AHP compares each two criteria at a time.

See slide 31
Ex: Cost vs Safety
Ex Capacity vs cost
Ex Safety vs capacity

29
Q

Example of pairwise comparisons

A

• AHP does this comparison for all criteria and as a result a set of comparisons
gives the following matrix:

KALE SEE SLIDE 31 For the CHART

30
Q

Consistency

A
  • John thinks cost is more important than safety: A>B
  • John thinks safety is more important than capacity: B>C
  • As A>B & B>C we expect A>C (i.e., cost> capacity).
  • If John thinks cost is more important than capacity his judgment is consistent.
  • Otherwise his answer is inconsistent.
31
Q

Inconsistency example

A

See slide 34

32
Q

Test consistency index

A

For testing consistency index in AHP method there are two scenarios:
 If CI < 0.1 0r 10% = Consistent
 If CI > 0.1 or 10% = Inconsistent
Test consistency:

See slide 35 to click the link

33
Q

Adjust pairwise comparison matrix

A

See slide 38

34
Q

AHP Procedure: 2) Prioritize the alternative

A

• This step is related to compare pairs of alternatives with respect to each criteria.

For example, the comparison matrix for three alternatives of car selection example due to the cost is as below:

See slide 40

35
Q

AHP Procedure: 2) Prioritize the alternative

A

• Similarity, the comparison matrix for three alternatives of car selection
example due to the safety is as below :

36
Q

AHP Procedure: 2) Prioritize the alternative

A

Finally, the comparison matrix for three alternatives of car selection
example due to the capacity is as below:

See slide 41

37
Q

AHP Procedure: 3) Select the best choice

A

See slide 42

38
Q

AHP Procedure: 3) Select the best choice

A

See slide 43

39
Q

AHP Procedure: 3) Select the best choice

A

See slide 44

40
Q

AHP Procedure: 3) Select the best choice

A

The prioritize of alternatives with respect to the goal can be calculated as below:

41
Q

Reverse Logistics Videos

A

Business does not stop once the product is sold

The resources used in your product today can be recovered and resold tomorrow

One option: To create a reverse logistics operations yourself where you take back the product (i.e. taking back the glass from making a drink)
-Best for business-to-business operations

Pool resources, if you product is too small or complex. (i.e. place in France who collect mobile homes to recycle them)

Extended producer Responsibility (EPR)

  • You are responsible for the product you place in the market (i.e. batteries, electronics, packaging)
  • You must takeback the product you sell or join an organization who recycles them

Reverse logistics feed loops for better supply (heart of the circular economy)

Government create regulations every year to impose companies and manufacturers to join reverse logistics and general economy saving activities

MGMT 421: Globalization, Offshoring, Outsourcing (9 decks)

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