Supply Chain Midterm 2

Cost associated with the loss of customer goodwill

Post-Transaction Cost

Cost for closing out the purchase order

Transaction Cost

Cost to understand suppliers needs and operations

Pre-Transaction Cost

Cost for a site visit to qualify a new supplier

Pre-Transaction Cost

Cost associated with investigating the need for a purchased material

Pre-Transaction Cost

Payment for the purchased materials

Transaction Cost

Cost associated with a late delivery

Transaction Cost

Cost to transport purchased materials

Transaction Cost

Cost for replacing defective finished goods

Post-Transaction Cost

Cost of warranty repairs

Post-Transaction Cost

If you want to develop strong supplier relationships, you would choose?

Single Supplier

If you want to reduce the risk of a supply disruption, you would choose?

Multiple Suppliers

If you wanted to obtain the most information, you would choose?

Multiple Suppliers

If you want to create transportation economies, you would choose?

Single Supplier

Co-Managed Inventory

An arrangement where a specific quantity of an item is stored at the buyer’s location. Once the inventory is used, the item is replaced by the supplier, with the full knowledge and approval of the buyer

Reverse Action

A sourcing technique where pre-qualified suppliers enter a website and at pre-designated time and date, and try to underbid competitors to win the buyer’s business

Vendor Managed Inventory

Suppliers directly manage buyer inventories to reduce the buyer’s inventory carrying costs and avoid stockouts for the buyer

Supplier Co-Location

An arrangement where a representative of the supplier is embedded in the buyer’s purchasing group to forecast demand, monitor inventory, and place orders.

Leverage

Item A is high value, low risk, and there are multiple potential suppliers.

Bottleneck

Item B is low value, high risk, and there are a small number of alternative suppliers.

Strategic

Item C is high value, high risk, and there are few suppliers, but they are excellent.

Non-Critical

Item D is low value, low risk, and there are lots of potential suppliers.

If holding too much inventory is a concern, your sourcing decision should be?

Buy/Outsource

If you want to take advantage of a particular brand name or reputation, your sourcing decision should be ?

Buy/Outsource

If you do not have the appropriate expertise, your sourcing decision should be?

Buy/Outsource

If you have idle capacity available in your operations, your sourcing decision should be?

Make

If you want to protect your company's proprietary technology, your sourcing decision should be?

Make

If you want to have more control over the quality of the material and product, your sourcing decision should be?

Make

If the item that you are considering is not a strategic item, your sourcing decision should be?

Buy/Outsource

If you are concerned about controlling lead-time, your sourcing decision should be ?

Make

If you have a temporary capacity constrain in your company's operations, your sourcing decision should be ?

Buy/Outsource

Non-Critical Items

Reduce the number of suppliers being used, simplify and streamline the purchasing and ordering process, and assign the buying responsibility to non-purchasing personnel

Strategic Items

Build and strengthen supplier relationships, increase the frequency of communications, foster innovation, seek integration, and ensure the availability of supply

Bottleneck Items

Maintain a higher level of safety stock, develop contingency plans in case of a shortage, and search for alternatives

Leverage Items

Consolidate the volume of purchases among fewer suppliers to negotiate reduced costs

Payment Bond

a debt secured by a bidder to protect against 3rd party lines not fulfilled by the bidder

Request for Proposal

A detailed capabilities document used to determine a supplier's capability and interest in producing a product or service.

Request for Information

A standard business process whose purpose is to collect written information about the capabilities of various suppliers.

Request for Quote

A document to solicit bids from interested and qualified suppliers for goods or services the organization needs to obtain.

Cost to pay the supplier invoice

Order cost

Cost to prepare a purchase order

Order

Taxes on Inventory

Carrying (or Holding) cost

Material handling cost

Order cost

Cost to inspect the material upon receipt

Order cost

Cost of Capital

Carrying (or Holding) cost

Storage Cost

Carrying (or Holding cost)

Cost to transport the material ordered

Order Cost

Obsolescence cost

Carrying (Or Holding) cost

Insurance Cost

Carrying (Or Holding) cost

Maintenance, Repair, and Operating (MRO) supplies

This type of inventory is needed to run the manufacturing operations and the business, but does not end up as part of the finished product.

Pipeline Inventory

This type of inventory is in the transportation network and the distribution system, being held by wholesalers, distributors, retailers, and consumers.

Strategic Stock

This type of inventory is generally used for a very specific purpose or future event, and for a defined period of time.

Safety Stock

This type of inventory is above and beyond what is actually needed to meet anticipated demand, and is maintained o protect against fluctuations in demand or supply

Cycle Stock

This type of inventory depletes gradually as customer orders are received, and is replenished cyclically when supply orders are received.

ABC System

A type of inventory system that classifies inventory based the degree of importance.

Single-Period Model

A type of inventory system in which inventory is only ordered for a one-time stocking

Radio Frequency Identification

The inventory control tool that does not require direct line of sight to read the tag on a product(s).

Base Stock Level System

A type of inventory system that issues an order whenever a withdrawal is made from inventory.

Linear Barcode

A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers.