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Supply Chain Management Ch. 1
Terms in this set (39)
Define the term supply chain management in your own words, and list its most important activities.
The Supply-Chain Council' s definition of supply chain management is "managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer.These are also the most important activities, however integration of key supply chain processes might also be included in there.
Supply Chain Management
The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities
the series of companies eventually making products and services available to consumers, including all the functions enabling the production, delivery and recycling of materials, components end products and services
Can a small business like a local sandwich or bicycle shop benefit from practicing supply chain management? What should they concentrate on?
Yes, any organization can implement at least some of the important concepts.
A good place to start is the rationalization or reduction of the supply base. Small businesses might also want to concentrate on customers as a starting point.
Describe and draw a supply chain for a bicycle repair shop.
parts suppliers, bicycle suppliers and other suppliers (ie, helmet suppliers) as 1st -tier suppliers and bicycle owners as 1st -tier customers.
What roles do " collaboration" and " trust" play in the practice of supply chain management?
This is essential for process integration. Sharing information and determining joint strategies is part of the integration/collaboration process, and to do this, trust must be present between the customer/focal firm/supplier.
What are the four foundation elements of supply chain management?
Purchasing, operations, distribution, integration
supplier assessment, supply base reduction, supplier management.
forecasting, JIT, quality, inventory management, information system design.
delivery network, transportation mode, warehousing, customer service.
Internal and external process integration, performance measurement
refers to the ineffective communication between buyers and suppliers and infrequent delivery of materials, combined with production based on poor forecasts along a supply chain that results in either too little or too much inventory at various points of storage and consumption
What are the benefits of supply chain management?
Reduction of the bullwhip effect, better buyer/supplier relationships, better quality, lower costs, better customer service, higher demand, more profits.
Can nonprofit, educational, or government organizations benefit from supply chain management? How?
All services and organizations can benefit in terms of at least better customer service, better inventory management, and cheaper purchase prices.
the focal firm's suppliers' suppliers' suppliers. Company A sells wood to Company B. Company B sells furniture to Company C. Company C sells furniture to Target, Company A is the 3rd tier supplier
Third -Tier Customer
the focal firms customers' customers' customers
fourth party logistics provider
a company hired to manage all of the firms logistics and supply chain management capabilities
Third Party Logistics
for hire outside agents that provide transportation and other services including warehousing, document prep, customs clearance, packaging, labeling and freight bill auditing.
End product manufacturer such as Target
First Tier Suppliers
the focal firms direct suppliers
Could a firm have more than one supply chain? Explain.
Yes. Each product manufactured or sold by a firm can potentially belong to a separate set of supply chain trading partners. Wal-Mart has thousands of supply chains.
When did the idea and term, supply chain management, first begin to be thought about and discussed?
The 1980s were the breakout years for supply chain management. One of the first widely recorded uses of the term supply chain management came about in a paper published in 1982. Intense global competition beginning in the 1980s (and continuing today) provided an incentive for U.S. manufacturers to offer lower-cost, higher quality products along with higher levels of customer service.
Why were JIT and TQM strategies created?
to improve quality, manufacturing efficiency and delivery times
Just In Time Manufacturing
Used to improve manufacturing efficiency, and delivery times. In a JIT manufacturing environment with little inventory to cushion scheduling and/or production problems, firms began
to realize the potential benefits and importance of strategic and cooperative supplier-buyer- customer relationships.
Do you think supply chain management is simply the latest trend in management
thinking and will die out in a few years? Why or why not?
No. I think it will always have to be used now that it was integrated
Is the use of a large number of suppliers a good idea? Why?
This somewhat depends. Certainly SCM suggests fewer suppliers and longerterm
relationships, however there can always be exceptions to this rule. Purchasing a
widely available common product like soap or tissue paper might be better done with a large number of suppliers competing for this business. But this works against ever creating trusting and lasting supply chain partnerships. In most cases though, use of a few key suppliers for an item is considered a good idea, since it means larger supply
quantities, leading to lower prices and better service.
Do you think the proper way to choose a supplier is to always find the one that will
give you the lowest price? When might this not be a good idea?
Absolutely not. Low price is sometimes fine, if quality or service is not an issue,
as in buying some MRO items. But when quality and service matter, price should
only be one of the purchase criteria.
Why don't firms just buy out their suppliers and industrial customers, forming conglomerates, instead of practicing supply chain management?
This is the " old way"— to control the supply chain. This is probably not a good
idea any longer, since it detracts and takes time away from what the firm does best. Since competition is continually increasing, this would be an unwise strategy, unless it was the ONLY way to assure a continued source of supply for instance
What is the difference between and MRP system and an ERP system?
MRP systems are the older materials management system software applications, and are used for essentially basic assembly and purchase decisions. ERP systems came about a number of years later and tied all of a company' s geographically distant units together by having one central database to track system inventories
What role do information systems play in supply chainmanagement? Give some examples.
Information systems play very important roles in most supply chains. They give
supply chain members information visibility, tracking capabilities, and quick communication capabilities
Briefly describe the terms lean and Six Sigma systems .
Lean refers to low waste and inventories and used to be referred to as JIT. Six
Sigma originated at Motorola and refers to a quality management philosophy.
What are 3PLs and what role do they play in SCM?
Third-party logistics service providers; These allow firms to concentrate more
on their capabilities while allowing 3PLs to perform logistics activities like delivery
What does process integration mean and what does this have to do with SCM?
This refers to collaborations which occur between suppliers and buyers in a
supply chain. Working together is what allows supply chains to be effective.
Vertically Integrated Firm
a firm whose business boundaries include former suppliers and/or customers
determining the current capabilities of suppliers
a close working relationship that develops among trading partner relationships
Material Requirements Planning (MRP)
software that performs an analysis of the firms existing internal conditions and repots back what the production and purchase requirements are for a given finished product manufacturing schedule
Lean Production System
organizing work and analyzing the level of waste existing in operating machinery, warehouses and systems to fit a lean process flow. The goals are to reduce productions throughput times and inventory levels, cut order lead times , increase quality and improve customer responsiveness
Six Sigma Quality
a system that stresses a commitment by top management to enable a firm to identify customer expectations and excel in meeting and exceeding those expectations
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