MAR 3203 Exam 4 UCF

Supply Chain Management (SCM)

the coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer.

make or buy decision

a decision concerning whether an item should be produced internally or purchased from an outside supplier

Outsourcing

obtain (goods or a service) from an outside or foreign supplier, especially in place of an internal source.

Vertical Integration

An approach typical of traditional mass production in which a company controls all phases of a highly complex production process.

Keiretsu

a Japanese consortia of businesses that is coordinated by a large trading company to gain a strategic advantage

Virtual Companies

Companies that rely on a variety of supplier relationships to provide services on demand. Also known as hollow corporations or network companies.

cross sourcing

using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other

Bullwhip effect

occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain

Pull Data

accurate sales data that initiate transactions to "pull" product through the supply chain

Single-stage control of replenishment

designating a member in the chain as responsible for monitoring and managing inventory in the supply chain based on the "pull" from the end user

Vendor-managed inventory (VMI)

an inventory management system whereby the supplier determines the product amount and assortment a customer (such as a retailer) needs and automatically delivers the appropriate items

Collaborative Planning, Forecasting, and Replenishment (CPFR)

members of the supply chain share planning, demand, forecasting, and inventory information.

blanket order

an agreement between buyer and seller, whereby the buyer agrees to buy a certain quantity of goods within a specified time period at a mutually agreeable price; and the goods are delivered as needed by the buyer

postponement

the strategy of delaying final activities in the provision of a product until the orders are received

drop shipping

the supplier will ship directly to the end consumer, rather than to the seller, saving both time and reshipping costs

E-procurement

purchasing through electronic connections between buyers and sellers - usually online

logistics management

Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants

Channel assembly

postpones final assembly of a product so the distribution channel can assemble it

reverse logistics

the processes for sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal

closed-loop supply chain

refers more to the proactive design of a supply chain that tries to optimize all forward and reverse flows.

Supply Chain Operations Reference (SCOR) model

A framework developed and supported by the Supply Chain Council that seeks to provide standard descriptions of the processes, relationships, and metrics that define supply chain management.

Supply Chain

the group of firms that make and deliver a given set of goods and services

Upstream Supply Chain

Firm's suppliers, suppliers' suppliers, processes for managing relationships with them. Towards the supplier

Downstream supply chain

Organizations and processes responsible for delivering products to customers

Goal of Supply Chain Management

to match supply to demand as effectively and efficiently as possible

Materials and Services flow

Downstream

Material involved in repairs, servicing and disposal flow

Upstream

Information and planning flow

In both directions

Finance flows

Upstream

Consignment

a promise to pay, and can change hands in either direction

Credits Flow

Downstream

value-added processing

the more complex and technology-driven the manufacturing is, the higher value applied to the finished product

Bubble Marginalization

increasing profit margins for each supply chain entity

Why is it important for businesses within a supply chain to avoid bubble marginalization?

Because it is a suboptimal outcome for the entire network

Sourcing Strategies

1. Many suppliers

2. Few suppliers

3. Vertical integration

4. Joint ventures

5. Keiretsu networks

6. Virtual companies

Opportunities that result in effective supply chain management

1. Accurate "pull" data

2. Reducing lot sizes

3. Controlling replenishment with one stage

4. Vendor-managed inventory

5. Collaborative, Planning, Forcasting, and Replenishment(CPFR)

6. Blanket orders

7. Standardization

8. Postponement

9. Electronic ordering & transferring funds

10. Drop shipping

Strategic Sourcing

An intrgrated approach to supply chain management that permits an organization to leverage its purchasing power to identify and improve procurement processes. Uses negotiation w/ suppliers periodic assessment of transactions, and constant evaluation of purchasing activities to optimize supplier relationships and increase value

How is Strategic sourcing different from purchasing?

Extends beyond initial purchasing price and is concerned with the total cost of ownership throughout the products life cycle

backward integration

sends information entered into a given system automatically to all upstream systems and processes

forward integration

takes information entered into a given system and sends it automatically to all downstream systems and processes

joint ventures

when two or more companies join forces - sharing resources, risks, and profits, but not actually merging companies - to pursue specific opportunities

Keiretsu Networks

A Japanese term that describes suppliers who become part of a company coalition

Virtual Company

Organization using networks to link people, assets and ideas to create and distribute products and services without being limited to traditional organizational boundaries or physical location.

Process of building the supply base

1. evaluating and selecting suppliers

2. Integrating suppliers into the system

3. Negotiating purchase prices

4. Establishing contracts

5. Procuring materials

Supplier Evaluation

determining the current capabilities of suppliers

Type of Negotiations

1. Cost-based price model

2. Market-based price model

3. Competitive bidding

4. Contracting

5. Procurement

Common types of contracts

Revenue sharing and

buybacks

revenue sharing system

each organization in the supply chain purchases the materials at cost from its supplier

Buybacks

Are a repurchase that occurs when a company buys back its outstanding inventory

procurement

A strategy where companies will obtain goods and services from their vendors

online auction

a buyer will offer out a contract for bidding

Dutch Auction

If something is sold by setting a price, then reducing it until someone buys it sold in a Dutch auction.

online catalogs / exchanges

Allows organizations to choose from standardized industry items on specific websites

group purchasing

small buyers aggregate demand to get a large volume; then the group conducts tendering or negotiates a lower price.

Logistics

the management of the details of of supply chains day-to-day operations

lean inventory management

Minimizing inventory by eliminating sources of waste.

Distribution

the process of getting a product or service to consumers

Decisions to make when setting up a distribution network

1. Will the product be shipped to the consumer or will the buyer pick it up from a prearranged place

2. Will the product go through an intermediate facility?

Criteria to keep in mind when designing a distribution network

1. Response time

2. Product choice

3. Service

total logistics cost

consists of the expenses associated with transportation, materials handling and warehousing, inventory, stockouts (being out of inventory), order processing, and return goods handling.

Issues in Managing the Integrated Supply Chain

1. Local optimization

2. Incentives

3. Large lots