Final Exam MGT301 NAU
The bullwhip effect - ✔️✔️The increasing fluctuation in orders that often occurs as
orders move through the supply chain. The bullwhip effect occurs as orders are relayed
from retailers, to distributors, to wholesalers, to manufacturers, with fluctuations
increasing at each step in the sequence. The bullwhip fluctuations in the supply chain
increase the costs associated with inventory, transportation, shipping, and receiving,
while decreasing customer service and profitability.
Blanket order - ✔️✔️A long-term purchase commitment to a supplier that are to be
delivered against short-term releases to ship. Blanket orders are unfilled orders with a
vendor and are also called "open orders" or "incomplete orders". It is a contract to
purchase certain items from a vendor. It is not an authorization to ship anything.
Vendor-managed inventory - ✔️✔️a system in which a supplier maintains material for
the buyer, often delivering directly to the buyer's using department.
Postponement - ✔️✔️Delaying any modifications or customization to a product as long
as possible in the production process. The concept is to minimize internal variety while
maximizing external variety.
Drop shipping - ✔️✔️Shipping directly from the supplier to the end consumer rather
than from the seller, saving both time and reshipping costs
Reverse logisitics - ✔️✔️The process of sending returned products back up the supply
chain for value recovery or disposal. Reverse logistics involves resale, repair, reuse,
remanufacture recycling, and disposal. The operations manager's goal should be to limit
disposal and strive for reuse.
Outsourcing - ✔️✔️Transferring a firm's activities that have traditionally been internal to
external suppliers
The supply chain management's strategic importance - ✔️✔️The objective is to build a
chain of suppliers that focuses on maximizing value to the ultimate customer.
Make-or-buy decision - ✔️✔️a choice between producing a component or service
within the firm or purchasing it from an outside source.
sourcing strategy: many suppliers - ✔️✔️The order goes to the lowest bidder. One
supplier is put against another. In order to receive the order, the supplier must meet the
buyer's needs in terms of technology, expertise, forecasting abilities, as well as cost,
quality, and delivery competencies. Long term partnering is not the goal.
, sourcing strategy: Vertical integration - ✔️✔️developing the ability to produce goods or
services previously purchased or actually buying a supplier or a distributor.
sourcing strategy: joint ventures - ✔️✔️Formal collaboration. Adv: secure supply or
reduce costs. Disadv: could dilute the brand or lose competitive advantage
sourcing strategy: Keiretsu - ✔️✔️Company coalition that is part collaboration, part
purchasing from few suppliers, and part vertical integration. These manufacturers are
often financial supporters of suppliers through ownership or loans. Adv: long-term
relationships, collaboration as partners, technical expertise, and stable quality
production
sourcing strategy: virtual companies - ✔️✔️In a virtual company the supply chain is the
company. Virtual companies rely on a variety of supplier relationships to provide
services on demand. Also known as hollow corporations or network companies. Adv:
specialized management expertise, low capital investment, flexibility, and speed
resulting in efficiency.
Supply chain risk - ✔️✔️-supplier failure to deliver
-supplier quality failures
-outsourcing
-logistics delays or damage
-distribution
-information loss or distortion
-political
-economic
-natural catastrophes
-theft, vandalism, and terrorism
Supplier selection: supplier evaluation - ✔️✔️The first step of supplier selection.
Involves finding potential suppliers and determining the likelihood of their becoming
good suppliers. As firms move toward long term suppliers, the issues of financial
strength, quality, management, research, technical ability, and potential for a close, long
term relationship play an increasingly important role.
includes supplier certification, certifications to qualify potential suppliers
supplier selection: supplier development - ✔️✔️The second stage in supplier selection.
During this stage the buyer makes sure the supplier has an appreciation of quality
requirements, product specifications, schedules and delivery, and procurement policies.
May include: training, engineering and production help, to procedures for information
transfer.
