BA339 Chapter 13 & 14, Operations and Supply Chain Management: THE CORE, F. Robert Jacobs, Richard B. Chase

What is Strategic Sourcing?

The development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business

What is specificity?

Refers to how common the item is and, in a relative sense, how many substitutes might be available

What is the Bullwhip effect?

A phenomenon of variability magnification as we move from the customer to the produce in the supply chain

What is continuous replenishment?

Inventory is replaced frequently, as part of an ongoing process to reduce variability

What are functional products?

Staples that people buy in a wide range of retail outlets

What are efficient supply chains?

Supply chains that utilize strategies aimed at creating the highest cost efficiency

What are risk-hedging supply chains?

Supply chains that utilize strategies aimed at pooling and sharing resources in a supply chain to share risk

What are responsive supply chains?

Supply chains that utilize strategies aimed at being responsive and flexible

What are agile supply chains?

Supply chains aimed at being responsive and flexible to customer needs

What is outsourcing?

Moving some of a firm's internal activities and decision responsibilities to outside providers

Allows a company to create a competitive advantage while reducing cost

What are reasons to outsource?

Financial: improve ROA by reducing inventory and selling assets, reduce costs through lower cost structure

Improvement: Improve quality and productivity, shorten cycle time

Organizational: Improve effectiveness by focusing on what the firm does best, increase flexibility

What are logistics?

The art and science of obtaining, producing, and distributing material and product in the proper place and in the proper quantities

What is total cost of ownership?

An estimate of the cost of an item that includes all the costs related to the procurement and use of an item, including any related costs in disposing of the item

Can be applied to internal costs or more broadly to costs throughout the supply chain

What is cross-docking?

Large shipments are broken down into small shipments for local delivery in an area

What are hub-and-spoke systems?

Systems in which the sole purpose of the warehouse is sorting goods to consolidation areas, where each area is designed for shipment to a specific location

What are factors that affect facility location?

Proximity to customers

Business climate

Total costs

Infrastructure

Quality of labor

Suppliers

Other facilities

What is the factor-rating system?

Most widely used plant location method.

A list of factor is developed, each site is then rated against each factor, sum of points, and the site with the highest points is selected

What is the linear programming transportation method?

Seeks to optimize and lower costs of shipping and maximize profits

What is the centroid method?

Used for locating single facilities that considers existing facilities, the distances between them, and the volumes of goods to be shipped between them.

Factors considered when selecting service facility location:

New service facilities are far more common than new factories and warehouses, and less expensive

Multiple sites close to customers

Location decision closely tied to the market selection decision

Decision more about maximizing profits than minimizing costs

Multimodal solutions:

Are the norm in logistics decisions