Global Supply Chain Exam 1

What is the evolution of the supply chain?

The supply chain evolved from simple movement of goods to an integrated network focused on managing materials, information, resources, relationships, costs, and customer value across organizations.

What is the difference between raw materials, in-process materials, and finished products?

• Raw materials are inputs used to make a product.

• In-process materials are products currently being manufactured or transformed.

• Finished products are completed goods ready for the customer.

Why are companies forced to cut costs?

Increased competition and falling/flat product prices force companies to find savings in areas such as transportation, storage, inventory, production, and other supply chain activities.

What is the 6th mode of transportation?

The Internet can be considered the sixth mode of transportation because it moves digital products and information electronically.

What are the five traditional modes of transportation?

Air, road, water, rail, and pipeline.

What are some recent changes in the transportation market?

Transportation has experienced deregulation, increased competition, more transportation services, lower costs in many markets, and improvements in efficiency and technology.

What is deregulation?

Deregulation is the removal of unnecessary government restrictions and barriers to competition in a market.

What is the purpose of deregulation?

To increase competition, which can lead to lower prices and better service.

What is a deregulated transportation market?

A transportation market where government restrictions have been reduced so transportation companies can compete more freely.

Who is Malcolm McLean?

Malcolm McLean was a major pioneer of containerization. He helped develop the modern standardized shipping container system, making it much easier and more efficient to move goods between ships, trucks, and trains.

What technology has had a major impact on supply chains and logistics?

Containerization has had a huge impact because standardized containers make transferring goods between transportation modes faster, easier, and cheaper. Other important technologies include information systems and 3D printing.

What is containerization?

The use of standardized shipping containers to transport goods efficiently between different modes of transportation.

Are customer requirements increasing or decreasing?

Increasing. Customers increasingly expect products and services to be faster, cheaper, more convenient, reliable, and customized.

Are companies moving toward or away from silos?

Away from silos. Companies are increasingly integrating departments and organizations and sharing information rather than operating separately.

What is a silo?

A situation where departments or organizations operate separately and do not effectively share information or coordinate with each other.

What is logistics?

Logistics involves getting the right product, in the right way, in the right quantity and quality, to the right place at the right time, for the right customer at the right cost.

What is cargo/freight?

Cargo or freight is goods/products being transported from one location to another.

What is supply chain management (SCM)?

SCM is the management across and within a network of upstream and downstream organizations of relationships and flows of materials, information, and resources to create value, improve efficiency, and satisfy customers.

What is the difference between logistics and SCM?

Logistics focuses heavily on the movement and positioning of goods, while SCM is broader and manages the entire network, relationships, and flows across organizations.

What is upstream?

Upstream refers to activities and organizations closer to the suppliers/raw materials in the supply chain.

What is downstream?

Downstream refers to activities and organizations closer to the final customer.

What is an upstream flow?

The flow toward suppliers or earlier stages of the supply chain.

What is a downstream flow?

The flow toward customers or later stages of the supply chain.

What perspective does the book take toward supply chains?

The book views the supply chain as a network of organizations, relationships, nodes, and links that creates and delivers products/services to customers.

What are the three key flows in SCM?

• Physical/material flows

• Information/data flows

• Resource flows such as money, people, and equipment.

What is a node in a supply chain?

A location or organization within the supply chain, such as a supplier, factory, warehouse, retailer, or customer.

What is a link in a supply chain?

The relationship or connection between nodes in the supply chain.

What is a consignor?

The shipper/sender of the goods.

What is a consignee?

The receiver of the goods.

What is unionization?

Unionization is the process of workers organizing into a labor union to collectively represent their interests, such as wages, working conditions, and benefits.

What is happening to global trade?

Global trade has grown considerably over recent decades, although growth can be affected by recessions, pandemics, geopolitical conflicts, and other disruptions.

Why has global trade grown?

Trade barriers have decreased, regional trade agreements have expanded, and logistics and transportation have improved.

What is merchandise trade?

International trade involving physical goods/products, rather than services or financial flows.

What is derived demand?

Derived demand means the demand for transportation exists because there is a need to move goods from one place to another.

Example of derived demand?

People don't usually want transportation itself; they want the product moved. Therefore, demand for transportation is derived from demand for goods.

What is the concern for policymakers regarding transportation?

Policymakers want to decouple economic/GDP growth from transportation growth so economies can grow without creating the same increase in transportation and environmental impacts.

What does decoupling mean?

Decoupling means allowing GDP/economic growth without a corresponding increase in transportation demand and its negative environmental effects.

What is freight transport intensity?

The ratio of tonne-kilometres to GDP, showing how dependent an economy is on freight transportation.

What is transfer pricing?

Transfer pricing is assigning a price to goods or services transferred between divisions of the same company, often across countries.

Why might companies use transfer pricing?

Multinational companies can use transfer pricing to move work or materials between countries and potentially reduce their tax exposure.

What are regional trade agreements?

Agreements between countries/regions that reduce trade barriers and make it easier for members to trade with one another.

Examples of regional trade agreements?

EU, USMCA, and AFTA.

What is globalisation?

Globalisation is the increasing integration of countries and markets, where companies operate and compete across the world.

What does "think global, act local" mean?

Glocalisation — a company operates with a global perspective but adapts its products or strategies to local markets.

What is the difference between a multinational corporation (MNC) and a transnational corporation (TNC)?

An MNC operates in multiple countries but may retain stronger connections to its home country; a TNC operates across countries with a more integrated global approach and less emphasis on one home-country perspective.

What is ethnocentricity?

A company doing business abroad while thinking and acting as if it were still operating in its home country.

What is polycentricity?

A company adopts the host country's perspective and adapts its operations to the local country.

What is geocentricity?

A company adopts a global perspective, operating independently of geography while adapting to local conditions when appropriate.

Ethnocentric vs. polycentric vs. geocentric?

Ethnocentric = home country. Polycentric = host country. Geocentric = global.

What should companies consider when locating overseas facilities?

Factors can include labor costs and availability, transportation, infrastructure, taxes, government policies, access to markets, suppliers, customers, political risk, and other site-selection factors.

What is FDI?

Foreign Direct Investment (FDI) is investment by a company or individual from one country into a business, facility, or operation in another country.

Why is FDI important?

FDI can contribute to economic growth, and countries often compete to attract foreign investment.

What is a Free-Trade Zone (FTZ)?

A geographic area where goods can be imported, stored, handled, manufactured, transformed, and re-exported under special customs rules and tax exemptions.

What is a TEU?

TEU = Twenty-foot Equivalent Unit. It is a standard measurement used for shipping containers based on a 20-foot-long container.

What is a directional imbalance?

A mismatch between the volume or type of freight moving in opposite directions in a transportation market.

Example of a directional imbalance?

If 1,000 containers travel from Country A to Country B but only 300 containers travel back, there is a directional imbalance.

What is trade facilitation?

The simplification, harmonization, and automation of international trade procedures to make trade more transparent, predictable, and efficient.

Why is trade facilitation important?

It makes international trade easier, faster, more predictable, and more efficient.

What is the Logistics Performance Index (LPI)?

A measure used to evaluate a country's logistics performance.

What are the six LPI categories?

• Customs,

• Infrastructure

• International shipments

• Logistics competence and quality

• Timeliness

• Tracking/tracing

What are shipping containers used for?

They allow goods to be transported efficiently between ships, trucks, and trains without having to unload and reload the individual goods.

What happens during an inbound shipment?

Goods/materials come into a company or facility, usually from suppliers.

What happens during an outbound shipment?

Goods/products leave a company or facility, usually going to customers, retailers, or other destinations.

What is additive manufacturing?

3D printing. It creates a product by adding material layer by layer.

Why is additive manufacturing important to supply chains?

Products such as spare parts can potentially be produced where and when they are needed, reducing transportation, inventory, and waiting.

What is process reengineering?

Process reengineering is fundamentally rethinking and redesigning a process to significantly improve performance, such as cost, quality, speed, or service.

What is the difference between push and pull?

Push = produce based on forecasts and push products toward customers. Pull = produce in response to actual customer demand.

What is make-to-stock (MTS)?

Products are produced before the customer orders them, usually based on predicted/forecasted demand.

What is make-to-order (MTO)?

Products are produced after the customer places an order.

What is lean production?

A production approach focused on eliminating waste, improving flow, responding to customer demand, and continuously improving processes.

What is Just-in-Time (JIT)?

An inventory approach where materials/products arrive or are produced when they are needed, reducing unnecessary inventory.

What are the classic 7 wastes of lean?

• Overproduction

• Waiting

• Transportation

• Inappropriate processing

• Unnecessary inventory

• Unnecessary motion

• Defects

What is the 8th waste of lean?

Underutilisation of resources — failing to effectively use people's skills, knowledge, or other resources.

What is overproduction?

Producing more than is needed or producing it before it is needed.

What is waiting?

Time when people, machines, or materials are unnecessarily idle.

What is unnecessary transportation?

Moving products or materials more than necessary.

What is inappropriate processing?

Using unnecessary or incorrect processes or doing more work than the customer requires.

What is unnecessary inventory?

Keeping more raw materials, work-in-process, or finished products than necessary.

What is unnecessary motion?

Unnecessary movement by employees or equipment.

What are defects?

Products or services that fail to meet requirements and must be corrected, replaced, or discarded.

What is underutilisation of resources?

Failing to make effective use of available people, skills, equipment, or other resources.

What are the five key principles of lean?

• Identify value from the customer's perspective.

• Map the value stream.

• Create flow and eliminate waiting.

• Use pull based on customer demand.

• Pursue perfection through continuous improvement.

What does "identify value" mean?

Determine what the customer actually considers valuable.

What is a value stream?

All the activities/processes needed to create and deliver value to the customer.

What does flow mean in lean?

Making sure work moves through the process efficiently without unnecessary delays or interruptions.

What does pull mean in lean?

Producing in response to actual customer demand instead of simply producing based on forecasts.

What does pursuing perfection mean?

Continuously identifying problems, finding their root causes, and improving the process.

What are the 5S steps?

Sort, Set in Order, Shine, Standardize, Sustain.

What is the primary goal of Lean Six Sigma?

To reduce waste, variation, and defects while improving process quality and efficiency.

What is TQM?

Total Quality Management — an organization-wide approach focused on continuously improving quality and satisfying customers.

What is Kaizen?

Continuous improvement, usually through ongoing small improvements.

What is Pareto analysis?

A method of identifying and prioritizing the most important causes of problems by focusing on the few causes that create most of the effects.

What is the 80/20 rule?

The idea that approximately 80% of results/problems often come from 20% of causes.

How is the 80/20 rule related to Pareto analysis?

Pareto analysis uses the idea that a small number of causes account for a large proportion of problems, helping companies focus their improvement efforts where they will have the biggest impact.

What is servitisation?

Combining products and services to provide a complete solution to customers.

Example of servitisation?

Instead of only selling a machine, a company sells the machine along with maintenance, repairs, monitoring, and support.

What is XaaS?

Anything as a Service — providing products/capabilities as an ongoing service rather than simply selling a physical product.

What is MaaS?

Mobility as a Service.

What is SCaaS?

Supply Chain as a Service.