SCM 410 - Midterm #1 Multiple Choice Practice

What is Supply Chain Management (SCM)? - Multiple choice

• Encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all the logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers.

In essence, SCM integrates?

• Supply and demand management within and across companies.

What is Supply Chain (SC)?

• A minimum set of three or more entities organizations or individuals directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer.

• Lecture notes:

  • 4 walls of operations

  • dyad

  • 3 entities makes things a lot more complex

  • Supplier←→ mfg ←→ Retailer (3 or more entities)

What is Supply Chain Orientation (SCO)?

• The recognition by an organization of the systemic, strategic implications of the tactical activities involved in managing the various flows in a supply chain.

• Lecture notes:

  • ARE they all managed? No. Should they be? Yes. It is difficult to be achieved as you’re often working with suppliers and they try to cut corners and the other party ends up at fault.

  • Each organization/entity needs Supply Chain Orientation.

  • We are only as strong as our weakest link in the Supply Chain.

  • Supply chains often need to “take one for the team” to be properly managed, as in contracts or rewards of a kind.

What is Supply Chain Management (Short-write for midterms study this)?

• Is an integrating function responsible for linking major business functions and business processes within and across companies into a cohesive, high-performing business model.

• Lecture notes:

  • Long-production run = more output

  • Impacts a whole bunch of areas like inbound: planning/procurement

  • All other departments have to be involved

    • Suppliers bc you need stock/retailers

  • Integrating you’re not looking at the best interest it spreads across the entire supply chain not just your own company

Integrating?

• Across boundaries of several companies means that the supply chain needs to function similar to a single company in satisfying the ultimate customer.

Closed-Loop Supply Chain?

• A system that integrates both forward and reverse logistics to maximize product value and minimize waste. Enables products, materials, or components to circulate back into a supply chain after use, through reuse, repair, refurbishment, recycling, or remanufacturing.

Council of Supply Chain Management Professionals (CSCMP)?

• The process of planning, implementing, and controlling procedures for the efficient and effective transportation and storage of goods including services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.

Seven R’s of Logistics (Customer Perspective)?

• Getting the right product, to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and the right cost.

Logistics?

• In its simplest form, includes inbound logistics of materials management as well as the outbound logistics of physical distribution.

Materials Management (Inbound)?

• The movement and management of materials and products from procurement (suppliers) through the production process.

Physical Distribution (Outbound)?

• The movement and storage functions associated with finished goods from manufacturing plants to warehouses and to customers.

Triple Bottom Line (TBL)?

• Is a sustainability framework that expands upon the traditional measure of business success - profit - to include social and environmental performance.

Sustainability?

• The ability to meet present needs without compromising the ability of future generations to meet their own needs.

TBL People?

• The people dimension focuses on the social impact of a business or project. It evaluates how operations affect employees, communities, and society at large.

  • (wellness programs)

  • (fair wages)

  • (support schools)

  • (anti discrimination, no child labor)

  • (job creation)

TBL Planet?

• The planet dimension refers to a firm’s environmental responsibility. Measures how well a firm minimizes its ecological footprint and supports environment health.

TBL Profit?

• The profit dimension refers to economic performance but with a broader view than short-term financial gains. Considers long-term value creation that is financially viable and aligned with social and environmental goals.

  • (Customer retention)

  • (Energy savings)

  • (Small business partnerships)

  • (Green assets)

Logistics Activities?

• Essential components of supply chain management, and are responsible for ensuring the efficient movement, storage, and flow of goods, services, and information from origin to end customer.

Shipping?

• The act of conveying materials from one point to another; and (2) Functional area that prepares the outgoing shipment for transport.

Industrial packaging?

• Protects the product during the transportation and storage, includes materials such as cardboard boxes, stretch wrap, banding, bags, etc.

Warehouse?

• Storage place for products, key activities include receipt of product, storage, shipment, and order picking.

Warehousing?

• The storing (holding) of goods. Focuses on the storage facilities (number and location).

Inventory Management?

• The process of ensuring the availability of products through inventory administration. Processes include ordering, storing, using, and selling inventory (raw materials, components, and finished products), as well as their warehousing and processing.

Procurement?

• The activities associated with acquiring products or services. Requires managing a wide range of processes associated with a firm’s need to procure goods and/or services to manufacture a product (direct) or to operate the organization (indirect).

Returns Management?

• Supports closed-loop supply chain strategy. Logistics has a key role in product returns, materials substitution, re-using materials, re-manufacturing, recycling, refurbishing, & disposal.

Waste Management Hierarchy diagram?

• Prevent

• Reduce

• Reuse

• Recycle

• Recover

• Dispose

Closed-Loop Supply Chain?

• A system that integrates both forward and reverse logistics to maximize product value and minimize waste. Enables products, materials, or components to circulate back into a supply chain after use, through reuse, repair, refurbishment, recycling, or remanufacturing.

Materials Handling?

• The physical handling of products and materials between procurement and shipping. Also concerned with mechanical equipment used for short-distance movements and includes equipment such as conveyors, forklift trucks, and overhead cranes.

Order Fulfillment?

• The complete process of receiving, processing, and delivering customer orders. From a logistics standpoint, it involves the transportation and handling of goods from the point of inventory to the customer’s doorstep. Directly impacts the lead time.

Forecasting?

• Predictions of how much of a product will be purchased by customers.

Forecast?

• An estimate of future customer demand; typically made using scientific techniques based on historical usage and adjustments.

Inventory Quality Control?

• Processes and procedures used to ensure both the quantity and quality of inventory meet established standards and requirements. Involves monitoring and managing inventory to minimize defects, reduce waste, and maintain optimal stock levels.

3PL Legal Definition?

• Person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but does not take title to the product.

3PL Defined?

• External supplier that performs or manages the performance of all or part of a company’s logistics functions.

Asset-Based 3PL?

• Assets are necessary to perform activities for a client’s supply chain.

Leveraged 3PL?

• Uses the facilities and/or assets of another company (often client) either in full or to enhance their offerings.

The 3PL serves as the organization’s private fleet and devotes a management team, drivers, and equipment to a?

• Customer.

TL Carriers?

• Provide direct service from the origin point to delivery point, without stopping at freight handling terminals.

LTL Carriers?

• Use hub-and-spoke network of terminals to sort and consolidate shipments moving to a particular area.

Contract warehousing is a customized version of public warehousing in which an external company provides?

• A combination of distribution services (originally in-house).

Warehouse?

• Mainly a storage facility.

Distribution Center (DC)?

• Performs various value-added activities and order fulfillment (storage is secondary).

Wholesalers?

• Buys goods in large quantities from manufacturers and resells to retailers (not consumers).

Cross-docking?

• Is a process where goods are transferred directly from inbound to outbound without long-term storage (typically < 24 hours).

Freight Forwarder?

• Company that provides logistics services as an intermediary between the shipper and the carrier, typically on many international shipments.

A freight forwarder organizes shipments to get goods from a manufacturer or producer to a market, customer, or final point of distribution Forwarders contract with carrier/s to move the goods, but?

• They do not move them, but rather, act as experts in the network.

Includes wide range of companies that purchase shipping capacity from asset-based providers?

• Consolidating small shipments into economical sizes (e.g., DHL; CH Robinson)

Financial-based 3PLs?

• Responsibilities include freight payment and/or auditing; as well as cost accounting and control.

• Resources may include logistics management tools for monitoring, book-keeping, tracking, tracing, and managing inventory, and financial consulting.

Informational-based 3PLs?

• Represents alternative sources for firms that are in search of purchasing various logistics services.

• Growth and development of Internet-based, B2B markets for spot buying for logistics services has been significant in recent years (newer 3PL type).

Advantages of 3PLs?

• Buyer can concentrate on its core business processes.

• Flexibility – seasonality, geography, test new markets.

• Cost reduction (total logistics costs and activity costs).

• Gain management expertise and dedicated resources.

Maersk?

• Invested heavily in green methanol-powered ships; eco-delivery ocean services with verified emissions reductions.

DHL?

• Committed to net-zero emissions by 2050; operates carbon-neutral warehouses with solar panels and energy management systems; uses electric delivery vehicles, sustainable aviation fuel, carbon offsetting.

Disadvantages of 3PLs?

• Loss of internal control (i.e., visibility).

• Lack of acceptance - managers and labor.

• Possible increase in costs (i.e., cost creep).

• Performance improvements are not realized.

A strategic issue is how customers feel 3PLs should position themselves in view of depth and breadth of service offerings?

• Two-thirds of customers view their 3PLs as tactical service providers (meaning only one-third view them as strategic).

4PL Defined?

• A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.

The primary value-adding service offered by 4PLs is?

• Managing several distinct providers of 3PL services.

Organizations have been dedicating much attention toward working more closely with supply chain partners, including customers, suppliers, and 3PLs (External Relationships)?

• Types of Relationships

• Intensity of Involvement

• Supply Chain Collaboration

By its nature, logistics focuses on processes that cut across traditional functional boundaries; particularly interfacing with internal functional departments (Internal Relationships)?

• Manufacturing (Supply Side)

• Marketing (Demand Side)

Vertical Relationships?

• Refers to traditional linkages between organizations that make up the supply chain such as retailers, distributors, manufacturers, and raw parts/materials suppliers.

Horizontal Relationships?

• Includes business agreements between firms that have “parallel” or cooperating positions in the logistics process (e.g., service agreement between two or more 3PLs).

Vendor (Arm Length)?

• Represented simply by a seller or provider of a product or service, such as there is little or no integration or collaboration with the buyer or purchaser.

Strategic Alliance?

• Two or more independent organizations cooperate and willingly modify their business objectives and practices to help achieve long-term goals and objectives.

Collaboration refers to a business practice that encourages individual organizations to share information and resources for the benefit of all. It is a business practice that requires:

• Parties involved to dramatically share information.

• Benefits gained by parties to exceed individual benefits.

• All parties to modify their business practices.

• All parties to conduct business in a new/different way.

• All parties provide a mechanism/process for collaboration.

A classic logistics-manufacturing interface relates to the?

• Length of the production run.

A production run is a?

• Quantity of units that are produced contiguously by a production line. It is common for a factory to produce one type of item until desired levels of inventory are achieved. This process of producing units for a period of time is known as a production run.

The physical attributes of products (i.e., shape, weight, size, and consumer packaging) is often determined by marketing, but affects the logistics system?

• Modes of transportation

• Equipment needed

• Damage rates

• Storage ability

• Materials-handling equipment

• Industrial packaging

What is easily defined with no calculations and with simple dimensions?

• Measure (units shipped)

What needs definition, involves calculation or a combination of measurements, and often a ratio?

• Metric (order accuracy).

What combines two or more supply chain performance metrics into a single value?

• Index (perfect order index, delivered on time/full, no damage)

Defined and Mutually Understood?

• Measure/metric has been defined by and/or agreed upon by the main process parties (both internal and external parties).

Easy to Understand?

• Individuals better understand a measure/metric when they are involved in its definition and calculation – there is often greater buy-in as well.

Encourages Appropriate Behavior?

• A basic principle of management is that the measures/metrics will drive behaviors (productive vs. playing games with system).

Facilitate Trust?

• If a measure/metric does not facilitate trust between departments or supply chain partners, complying with the other characteristics makes no difference.

Measure What is Important?

• Firms will often measure performance for operational activities and/or processes in which large amounts of data are readily available.

Cost-Benefit Analysis?

• In many cases, too much time and effort are devoted to collecting data to generate the specific metric, while the resulting actions are minimal.

Which metrics are suited to measure perceptions or assign performance categories (excellent, good, or poor)?

• Qualitative.

Time?

• How quickly the service is provided and/or is performed.

Dependability?

• Service performance reliability and consistency.

Convenience?

• Ease to which customers can access the service.

Communication?

• Clarity, quality, and responsiveness associated with interactions between the service provider and the customer.

Key Performance Indicator (KPI)?

• Performance measure, metric and/or index that are of strategic importance to a company.

Internal KPI?

• Measurable value used within an organization to evaluate individuals, departments, and/or key operational processes on their effectively achieving business objectives.

External KPI?

• Measurable value used to evaluate how well an organization is performing in areas that are visible to or directly impact external stakeholders (i.e., their customers).

Distribution Efficiency?

• Focus on the total distribution expense per unit of a measure (cost per pallet).

Resource Utilization?

• Focus on how effective physical resources are used to support activities (space usage).

Resource Productivity?

• Focuses on maximizing throughput and service quality (number of units processed per labor hour).

Timeliness?

• Focus on the time duration and reliability of distribution operations.

Order Accuracy?

• Percent of customer orders delivered without errors.

Order Completeness?

• Percent of customer orders delivered in full.

Scorecard?

• Performance measurement tool used to capture a summary of KPIs. Scorecards have color-coded indicators to flag when a company is not meeting its metric targets.

Cash-to-cash?

• Defined as the time between when a company pays its suppliers for inventory to when their customer pays them for the finished goods.

(+) Days of Inventory?

• Inventory * 365 / COGS

(-) Days of Payables?

• AP * 365 / COGS

(+) Days of Receivables?

• AR * 365 / Net Sales

Bullwhip Effect?

• Oscillating demand magnification upstream a supply chain.

Why It Happens?

• SC members order based on perceived demand from their immediate customer, not the actual end demand, resulting in stockpiling and overacting to demand changes; thereby magnified demand variability that flows upstream the SC.

Bullwhip effect diagram?

• Supplier ← Manufacturer ← Retailer

• ← Demand Variability

Relevant?

• Logisticians only need to pertinent information to make decisions. They must have access to information that is applicable to their current situation.

Relevant Goal?

• Avoid being overwhelmed by extraneous data that are not valuable to the decision-makers and essentially waste their time.

Transferable?

• Logisticians need the integrated IT systems to transfer supply chain data in the same format to make it useful.

  • Incompatible formats hinder seamless data sharing and inhibits easy access to relevant operational information.