1. What is supply chain?

 A sequence of organizations—their facilities, functions, and activities—that are involved

in producing and delivering a product or service.

2. What are some recent trends in supply chain management?

 Measuring supply chain ROI
 “Greening” the supply chain
 Reevaluating outsourcing
 Integrating IT
 Managing risks
 Adopting lean principles
 Being agile

3. What are the elements of supply chain management?

 he elements of supply chain management are customers, forecasting, design, capacity
planning, processing, inventory, purchasing, suppliers, location, and logistics.

4. What are the strategic, tactical, and operations responsibilities in supply chain management?
Strategic Responsibilities:
 Supply chain strategy alignment: Aligning supply and distribution strategies with
organizational strategy and deciding on the degree to which outsourcing will be
employed.
 Network configuration: Determining the number and location of suppliers, warehouses,
production/operations facilities, and distribution centers.
 Information technology: Integrating systems and processes throughout the supply chain
to share information, including forecasts, inventory status, tracking of shipments,
and events.
 Products and services: Making decisions on new product and services selection
and design.
 Capacity planning: Assessing long-term capacity needs, including when and how much
will be needed and the degree of flexibility to incorporate.
 Strategic partnerships: Partnership choices, level of partnering, and degree of formality.
 Distribution strategy: Deciding whether to use centralized or decentralized distribution,
and deciding whether to use the organization’s own facilities and equipment for
distribution or to use third-party logistics providers.
 Uncertainty and risk reduction: Identifying potential sources of risk and deciding the
amount of risk that is acceptable.
5. What is the bullwhip effect, and why does it occur? How can it be overcome?
 The bullwhip effect is the phenomenon in the supply chain where forecasting of demand
was too much, hence suppliers tend to react heavily, causing other suppliers to also
supply too much.
 Good supply chain management can overcome the bullwhip effect by strategic buffering
of inventory, information sharing, and inventory replenishment based on needs. An
example of strategic buffering would be holding the bulk of retail inventory at a
distribution center rather than at retail outlets. That way, inventories of specific
retail outlets can be replenished as needed based on point-of-sale information from
retail outlets as well as information on retail outlet inventories.

6. Explain the increasing importance of the procurement function.

 Procurement is important since this will be defining the whole product. The operations
involved dictate how efficient the materials are going to be when used in creating the
product and to what standard can these resources comply.

7. What is meant by the term inventory velocity and why is this important? What is information
velocity, and why is it important?
 The rate at which material moves through a supply chain is referred to as
inventory velocity. The greater the velocity, the lower the inventory holding costs and
the faster orders are filled and goods are turned into cash.
 Information velocity is the speed at which information is communicated in a supply
chain. It is important because a better information flow allows decisions to be made
much faster and accurately. Even if a chain is long, the supply chain member from both
ends will still be able to communicate more efficiently with greater information velocity.
With this, adjustments to unpredicted changes can be done more quickly.
8. Explain strategic partnering.
 Strategic partnering occurs when two or more business organizations that have
complementary products or services that would strategically benefit the others
agree to join so that each may realize a strategic benefit.

9. What impact has e-business had on supply chain management?

 The spread of e-business dramatically increased the demand for goods and services due
to the convenience the Internet brings to consumers when ordering. However, some
companies do not have enough capacity to accommodate the large flow of orders,
resulting in a shortage of supply and failure to meet customer demand. As a response,
the expansion of storage to carry a much larger inventory was prioritized such that the
inventory will be enough when demand rises once again. Some companies that are
mainly operating on the Internet pursued strategic partnerships with companies owning
good facilities to boost their businesses.

10. What are some of the advantages of e-business?

11. What are some of the trade-offs that might be factors in designing a supply chain?
12. Why is managing returns important?
 returns do not have value in companies so they typically discard all returns. However,
more companies are recognizing that the returns may still have some value left in them.
Some returns just need to be repaired or some product components can be replaced.
Some returns can also be transformed into another different product. Some do not need
to be repaired at all and can be sold to other markets where the item is needed. In
summary, managing returns can transform unusable and unsellable items into profit.

13. Explain the importance of supply chain visibility.

 With supply chain visibility, the management will have more control over the inventory.
If they recognize that the inventory is already insufficient in one component, then they
can take immediate measures to replenish.

14. Describe what purchasing managers do.

 Among the duties of purchasing are identifying sources of supply, negotiating contracts,
maintaining a database of suppliers, obtaining goods and services that meet or exceed
operations requirements in a timely and cost-efficient manner, and managing suppliers

15. Describe how purchasing interacts with two other functional areas of an organization.
16. Discuss the importance of RFID for supply chain management.
 RFID eliminates the need for manual counting and bar-code scanning of goods at
receiving docks, in warehouses, and on retail shelves. This eliminates errors and greatly
speeds up the process. Tags could reduce employee and customer theft by placing
readers at building exits and in parking lots. Still other advantages include increased
accuracy in warehouse “picking” of items for shipping or for use in assembly
operations, increased accuracy in dispensing drugs to patients in hospitals, and
reduced surgical errors.

17. Discuss centralization versus decentralization in purchasing. What are the advantages of each?
 Centralized purchasing may be able to obtain lower prices than decentralized units if the
higher volume created by combining orders enables it to take advantage of quantity
discounts offered on large orders. Centralized purchasing may also be able to obtain
better service and closer attention from suppliers. In addition, centralized purchasing
often enables companies to assign certain categories of items to specialists, who tend to
be more efficient because they are able to concentrate their efforts on relatively few
items instead of spreading themselves across many items.
 Decentralized purchasing has the advantage of awareness of differing “local”
needs and being better able to respond to those needs. Decentralized purchasing
usually can offer quicker response than centralized purchasing. Where locations are
widely scattered, decentralized purchasing may be able to save on transportation costs
by buying locally, which has the added attraction of creating goodwill in the community.

18. Describe vendor analysis.

 Evaluating the sources of supply in terms of price, quality, reputation, and service.

19. Describe supplier certification and explain why it can be important.

 supplier certification is a detailed examination of the policies and capabilities of a
supplier. The certification process verifies that a supplier meets or exceeds the
requirements of a buyer. This is generally important in supplier relationships, but it
is particularly important when buyers are seeking to establish a long-term relationship
with suppliers. Certified suppliers are sometimes referred to as world class suppliers.
 One advantage of using certified suppliers is that the buyer can eliminate much or all of
the inspection and testing of delivered goods. And although problems with supplier
goods or services might not be totally eliminated, there is much less risk than with
noncertified suppliers.

20. Compare viewing suppliers as adversaries with viewing them as partners.

 Viewing suppliers as adversaries means that the organization will treat other suppliers
as enemies. Given this, there will be no trust established between them. The
implementation of their activities will be aimed solely for their own benefit, and not for
the benefit of both parties involved. Hence, problems or issues arising in the supply
chain may not be addressed properly. Additionally, no proper communication will be
established, which may also affect how they perform their duties or commitments to
each other.
 In contrast, viewing suppliers as partners will allow them to work closely to accomplish
all their goals. They will be more willing to communicate and share information with
each other to improve their activities. Given this, issues and problems in the supply
chain will also be addressed immediately and properly. Their partnership will result to
the benefit of both parties.

21. Explain the benefit of cross-docking.

 Cross-docking is a technique whereby goods arriving at a warehouse from a supplier are
unloaded from the supplier’s truck and immediately loaded on one or more outbound
trucks, thereby avoiding storage at the warehouse completely.