Supply Chain Management Flashcards

Flashcards covering key concepts, strategies, risk management, logistics, Incoterms, performance metrics, and benchmarking from Chapter 11 Supply Chain Management.

What is the primary objective of supply chain management?

To structure the supply chain to maximize its competitive advantage and benefits to the ultimate consumer.

How is the percentage of total assets invested in inventory calculated?

$$\text{Percentage invested in inventory} = \left( \frac{\text{Average inventory investment}}{\text{Total assets}} \right) \times 100$$

Under a response corporate strategy, what are the primary supplier selection criteria?

Capacity, speed, and flexibility.

What inventory strategy should a firm pursue if it adopts a low-cost corporate strategy?

Minimize inventory to hold down costs.

What are the six primary sourcing strategies identified in supply chain management?

1. Many suppliers, 2. Few suppliers, 3. Vertical integration, 4. Joint ventures, 5. Keiretsu networks, and 6. Virtual companies.

What is the difference between backward integration and forward integration?

Backward integration moves towards suppliers (such as Apple buying chipmakers), whereas forward integration moves towards the customer (such as Pepsi buying bottling operations).

What is a keiretsu network?

A network of independent Japanese businesses that work closely together through shared ownership, financial ties, and long-term partnerships, representing a middle ground between few suppliers and vertical integration.

What is the bullwhip effect in supply chain management?

The phenomenon where order fluctuations increase at each step as orders are relayed upstream through the supply chain.

What is postponement in supply chain operations?

The practice of withholding product modification or customization as long as possible in the production/distribution process.

What tactic did Tyson use to address product quality and safety concerns related to independent farmers in China?

Taking over chicken farm production directly (mitigating outsourcing risk by taking over production).

What are the four stages of building a supply base?

Stage 1: Supplier evaluation, Stage 2: Supplier development, Stage 3: Negotiation, and Stage 4: Contracting.

What are the three main price models used during supplier negotiations?

1. Cost-based price model, 2. Market-based price model, and 3. Competitive bidding.

Under Incoterms 2020, what does FOB stand for and where does the transfer of risk occur?

FOB stands for Free on Board, and the transfer of risk occurs at the port of loading when goods are delivered on board the vessel.

Under Incoterms 2020, which term requires the seller to bear all costs and risks, including import duties and taxes, to the buyer's destination?

DDP (Delivered Duty Paid).

What components make up Total Logistics Cost?

$$\text{Total logistics cost} = \text{transportation cost} + \text{inventory cost} + \text{facility cost}$$

How is inventory turnover calculated?

$$\text{Inventory turnover} = \frac{\text{Cost of goods sold}}{\text{Average inventory investment}}$$

How is weeks of supply calculated?

$$\text{Weeks of supply} = \frac{\text{Average inventory investment}}{\frac{\text{Annual cost of goods sold}}{52}}$$

What are the six core processes in the SCOR (Supply Chain Operations Reference) Model?

Plan, Source, Make, Deliver, Return, and Enable.

In the SCOR model, how is Cash-to-cash cycle time calculated?

$$\text{Cash-to-cash cycle time} = \text{Inventory days of supply} + \text{Days of receivables outstanding} - \text{Days of payables outstanding}$$

If a company has COGS of $90 million and average inventory of $6 million, what is its inventory turnover?

\text{Inventory turnover} = \frac{\90\text{ million}}{\6\text{ million}} = 15

If a company has COGS of $90 million and average inventory of $6 million, how many weeks of supply does it hold?

\text{Weeks of supply} = \frac{\6\text{ million}}{\frac{\90\text{ million}}{52}} \approx 3.47\text{ weeks}