Principles of supply chain management a balanced approach pdf download

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.

What is supplier management? What are some of the activities of supplier management? Thus, one of the key activities in supplier management is supplier evaluation, or determining the current capabilities of suppliers. 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 demand management and why is this an important part of supply chain management?

In a recent survey of supply chain managers, stockouts were considered the most pressing issue in the use of demand management activities, followed closely by excess inventories and long lead times.

What role do information systems play in supply chain management? Give some examples. They give supply chain members information visibility, tracking capabilities, and quick communication capabilities. Briefly describe the terms lean and Six Sigma systems. Six Sigma originated at Motorola and refers to a quality management philosophy. What is logistics? What is the objective of logistics? The objective is to deliver products to customers at the right time, quality, and volume which requires a high level of planning and cooperation between the firm, its customers, and the various logistics elements or services employed such as transportation, warehousing, and break-bulk or repackaging services.

In contrast, services are produced and delivered to the customer simultaneously in most cases, so services are extremely dependent upon server capacity and successful service delivery to meet customer requirements. What tradeoffs must be considered in designing a distribution system?

Motor carriers trucks for example, are more expensive to use than rail carriers, but offer more flexibility and speed, particularly for short routes.

Air carriers are even more expensive but much faster than any other transportation mode. Water carriers are the slowest but are also the least expensive. Finally, pipeline transportation is used to transport oil, water, natural gas, and coal slurry. Many transportation services offer various modal combinations, as well as warehousing and customs-clearing services.

What are the advantages and risks involved with global supply chains? Some of the risks include fluctuating exchange rates affecting production, warehousing, and purchasing and selling prices; government intervention or political instabilities causing supply disruptions; security concerns; and potential changes in subsidies, tariffs and taxes.

What does process integration mean? Can supply chain management succeed without it? Working together is what allows supply chains to be effective. Processes in a supply chain are said to be integrated when members of the supply chain work together to make purchasing, inventory, production, quality, logistics, and other decisions that impact the overall profits of the supply chain.

If one key process activity fails or is performed poorly, then the flow of goods moving along the supply chain is disrupted, jeopardizing the effectiveness of the entire supply chain. Why are performance measurement systems important when trying to manage supply chains? It is crucial for firms to know whether certain strategies are working as expected—or not—before they become financial drains on the organizations.

Firms work together to develop long-term supply chain management strategies and then devise tactics to implement these strategies. Performance measurements help firms decide the value of these tactics and should be developed to highlight performance within the areas of purchasing, operations, logistics, and integration.

What is back-shoring or near-shoring, and why is this happening today? Volatile fuel costs, a desire to reduce delivery times and hence improve on- time capabilities, and the deceasing labor cost differentials when comparing labor costs in China, India, and the U.

Some of these firms have also found that demand in their foreign markets is contracting, or their foreign suppliers have gone out of business. Further, security concerns are growing in many foreign markets, prompting a concern that it might be time to concentrate on doing what the firm does best, back in its domestic market. How would you define supply chain risk? Provide an example not listed in the textbook. Examples will vary. Describe supply chain visibility and why supply chain managers like it.

All players but the retailer should answer this question. How did your customer orders vary throughout the game? Hopefully, their guesses will be nothing like the relatively constant demand pattern actually experienced by the retailer. What happened to the current inventory levels as we move backward, up the supply chain from retailer to manufacturer?

This is due to the bullwhip effect. How could the supply chain members reduce total inventory and back order costs in the future? Report on your experiences playing the game. If possible, try playing it first prior to assigning this question to the class.

Describe the steps in a traditional manual purchasing system. The user initiates the purchase by issuing a purchase requisition. If the item is not available in the storeroom, a buyer issues a purchase order to a qualified supplier. Describe the e-procurement system and its advantages over the manual system.

Are there any disadvantages to the electronic system? Do you think the e-procurement system will ultimately replace the manual system? Other advantages include very fast execution time and the ability to handle mass communication effectively. Its disadvantages include additional capital investment to buy the hardware and software, training, and that it is a rapidly growing technology.

Thus, new equipment and technology may become obsolete very quickly. Many savvy businesses are switching over to an e-procurement system because its advantages far outweigh the disadvantages. How can purchasing help to improve the competitive edge of an organization? What is the profit-leverage effect of purchasing? What is the return-on-assets effect of purchasing?

It is widely used to show that decreases in purchase spend directly increase profits before taxes by the same amount. Table 2. How does a merchant differ from an industrial buyer? Describe the purpose of a material requisition, a purchase order, a request for quotation and a request for proposal. Does the material requisition serve the same purpose as the purchase order?

Purchase order — a document used to buy materials from suppliers. It usually contains the terms and conditions of the sale and delivery. It is legally binding on the buyer and seller when the seller accepts the terms of the sale. Why are small value purchase orders problematic? How can purchasing more effectively deal with this problem? There are many ways to deal with this problem, including the use of corporate purchasing cards commonly known as p-cards , blank check purchase orders, blanket purchase orders, and Petty Cash.

Should unit price be used as the sole criterion for selecting suppliers? A firm should always consider the total costs of acquisition, which include purchase price, transportation cost, storage cost and quality cost, among others. Explain backward vertical integration. What are the advantages of outsourcing compared to backward vertical integration? An example would be an automobile manufacturer buying a supplier who is supplying car seats or other component parts.

Outsourcing enables the buying firm to focus on core competencies and to acquire better quality components and materials from qualified suppliers who can produce the components at a lower price due to higher volume and technology. When should a firm outsource instead of making the items in-house? Generally, if the volume is too small, the equipment is very expensive or it lacks the expertise to produce the items, a firm should outsource.

Strategically, a firm should outsource its non-core activities to focus on core competencies. What factors should be considered while choosing suppliers? Describe the difference between sole source and single source. With single source, the buying firm chooses among multiple suppliers to select a single supplier that best meets its need. What are the reasons to use a single supplier? Is this the most efficient way to purchase materials in general? In general, this is true for many savvy corporations.

Describe centralized and decentralized purchasing and their advantages. Advantages of centralized system include quantity purchases, which lead to better bargaining power, and a consistent system for the entire corporation. Advantages of a decentralized system include flexibility, easier to source locally, faster delivery, and less bureaucracy.

Describe how the hybrid purchasing organization works. The hybrid purchasing organization allows the firm to exploit the advantages of both the centralized and decentralized systems. Describe how blanket orders and blanket order releases can be used to manage the procurement system of a business that owns a dozen large restaurants in a city.

Then, the firm can use blanket order releases to release orders at the firm level. How does public procurement differ from corporate purchasing? Moreover, public procurement is subjected to special rules and regulations that are established by the federal, state, and local governments. Consequently, the procedures for public procurement differ from the public sector — in addition to ensuring that purchases for goods and services are in strict compliance with statute and policies, public procurement procedures are generally designed to maximize competition.

Describe the different types of bid bonds. Reading, MA: Addison-Wesley Author : Vinod V. Wagner , H. Author : James B. Anderson, Frank F. Britt, and Donavon J. Each of the first five chapters addresses one Author : Michael W. Author : David B. McGraw - Hill Companies , Inc. NY , NY Solomon