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Chapter 11

Terms in this set (32)

Supply Chain
A network of firms and locations that begins with raw materials and ends with final users
Tier 2 suppliers
Provides inputs to the first tier supplier
Tier 1 suppliers
Primary suppliers to the manufacturers
Brick-and-Mortar Business
Traditional businesses with actual stores in which trade or retail occurs, it does not exist solely on the internet.
mail-order retailers
firms that sell through catalogs and the internet
Online retailers
companies that use e-commerce technologies to sell over the Internet; includes Internet-only retailers and the online arm of store-based retailers
Distrubutor
a person who buys products from manufacturers and then resells them to retailers.
Distribution centers (fulfillment centers)
A building used to receive products from suppliers and then redistribute them to retail stores
Lead time
Time to receive an order
Breaking bulk
dividing larger quantities of goods into smaller lots in order to meet the needs of buyers
Four key costs associated with a supply chain (Cost Metrics)
Procurement
Labor
Inventory
Transportation
Procurement
The cost of goods purchased from suppliers
Labor
Wages of those involved in the supply chain
Service Metrics
Lead time
Inventory availability
In-stock probability
the probability that all demand is served within an interval of time
Stockout probability
the probability that demand for an item exceeds its inventory during a period of time
Fill rate
the fraction of demand satisfied
Tactical Decisions
Impact short-term performance
Strategic Decisions
Impact long-term performance
Functional products
Do not experience a considerable amount of variability
Innovative products
Do experience substantial variability
Physically efficient supply chains
Designed to minimize costs
-Use cheap transportation
-Low inventory
Market-responsive supply chain
Emphasize flexibility over cost
Demand Variability
Level - total demand across the supply chain
Variety - how demand is allocated among various types of flavors/etc.
Location - how demand is allocated according to location along the supply chain
Bullwhip effect
The tendency for larger order size fluctuations as orders are relayed through the supply chain
Supply chain partners can increase the variability in the supply chain in these ways:
Failure in quality
Failure in quantity
Failure in finances
Failure in operating in an acceptable manner
Failure due to disruptions
Natural disruptions - natural disasters
Political/Economic disruptions - war
Mode of transportation
Reduces inventory but is expensive
Trade-off between speed and inventory
On-order inventory
The inventory that the supplier has shipped but that has not been received.
On-hand inventory
Physical inventory held in stock
Made to order
Meaning the production of an item occurs before the demand for that item has been identified
Delayed Differentiation
A supply chain in which product differentiation is delayed as late as possible in the process
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