MGSC 487 EXAM 1 QUESTIONS AND ANSWERS |
LATEST UPDATE
supply chain evolution:
1900's - Answers - - supply function primarily regarded as a clerical and tactical activity
(railroads)
- attention was given to the organization, policies and procedures of the supply chain
and it emerged as a recognized managerial activity
WW2 factories: unlimited market
1970's: supply shortages
1990's: low cost labor
challenges:
- an international shortage of all basic raw materials needed to support operations
(availability of supply)
- rate of price increase far above the norm since the end of WW2 (cost management)
- the Middle East oil embargo during summer 1973 intensified both shortages and price
escalation
supply chain evolution:
early 21st century - Answers - - strategic orientation: shift from defensive strategies to
aggressive strategies where firms take an imaginative approach to achieving supply
objectives to satisfy short term and long term organizational goals. focus on strategy
now has an emphasis on process and knowledge management
- global supply chain
- executive level leadership
new challenges:
- sustainability (ethics)
- supply chain security
- risk management
spend in the supply chain - Answers - the amount of money organizations spend with
suppliers is staggering, at least 29 trillion US dollars are spent with suppliers.
increase in outsourcing over the last decade has increased the percentage of spend
significantly.
,in most manufacturing organizations, the supply area represents the largest category of
spend, ranging from 50% to 80% of revenue while labor is usually only 10% to 20% of
revenue
value add times are usually a very small percentage of the lead time
profit leverage effect - Answers - good illustration of the financial impact of the corporate
spend
this effect of supply savings is measured by the increase of profit obtained by a
decrease in purchase spend
if a company reduces its spend by 10%, this can greatly affect its profit, maybe more
easily that it would be to try to increase sales.
since sales already receives more attention, supply could be the last untapped "profit
producer"
return on assets effect - Answers - a good measurement of financial impact of corporate
spend/ performance. It can show how your ROA can greatly increase by decreasing
your costs and inventory while keeping sales the same
shows how much profit is generated from $1 of assets
it is the efficiency of generating profit from your assets
the higher the better and more attractive it is to investors
investment turnover x profit margin
sourcing can influence an organizations ultimate success through - Answers - cost
quality
sales
profits
product development time
technology & innovation
customer service
competitive advantage
operational vs. strategic contribution to organizational strategy - Answers - operational:
trouble avoidance. The transactional, day to day operations traditionally associated with
purchasing (quality assurance, quantity accuracy, delivery) . Can be organized in ways
designed to routinize & automate many of the transactions, making up time for the
supply manager to focus on strategic contribution. focus is on executing current tasks
as designed.
, strategic: opportunity maximization. future oriented and searches for opportunities to
provide competitive advantage. focuses on new and better solutions to organizational
and supply challenges.
direct vs indirect contribution to organizational strategy - Answers - direct (measurable &
tangible evidence): supply savings, profit leverage effect, ROA , inventory space, and
headcount all demonstrate the direct contribution supply can make to the company's
financial statement. some supply organizations have hired financial controllers to ensure
that supply savings actually make it to the bottom line instead of being used for other
things.
indirect (soft): information source, good supplier selection, customer satisfaction,
managing risk, strategic partner. Contributes by enhancing the performance of other
departments or individuals in the organization. These contributions come from supply's
role as the information source; how it effects efficiency, competitiveness, risk, company
image, developing management strategy and social policy
challenges for the future - Answers - supply chain management
performance measurement
risk management
sustainability
growth
contribution to organizational success
corporate level of strategic planning - Answers - decisions and plans that answer "what
business are we in?", "what business do we want to be in?", and "how will we allocate
our resources along these businesses?"
ex. is. railroad business the business of running trains constantly? Or is it a business of
moving things and people, creating time and space utility?
business unit level of strategic planning - Answers - these decisions shape the plans of
a particular business unit in order to contribute to the corporate strategy
functional unit level of strategic planning - Answers - these plans concern the "how" of
each functional area's contribution to the business strategy and involve the allocation of
internal resources
major challenges of supply strategy - Answers - assurance of supply
cost reduction
LATEST UPDATE
supply chain evolution:
1900's - Answers - - supply function primarily regarded as a clerical and tactical activity
(railroads)
- attention was given to the organization, policies and procedures of the supply chain
and it emerged as a recognized managerial activity
WW2 factories: unlimited market
1970's: supply shortages
1990's: low cost labor
challenges:
- an international shortage of all basic raw materials needed to support operations
(availability of supply)
- rate of price increase far above the norm since the end of WW2 (cost management)
- the Middle East oil embargo during summer 1973 intensified both shortages and price
escalation
supply chain evolution:
early 21st century - Answers - - strategic orientation: shift from defensive strategies to
aggressive strategies where firms take an imaginative approach to achieving supply
objectives to satisfy short term and long term organizational goals. focus on strategy
now has an emphasis on process and knowledge management
- global supply chain
- executive level leadership
new challenges:
- sustainability (ethics)
- supply chain security
- risk management
spend in the supply chain - Answers - the amount of money organizations spend with
suppliers is staggering, at least 29 trillion US dollars are spent with suppliers.
increase in outsourcing over the last decade has increased the percentage of spend
significantly.
,in most manufacturing organizations, the supply area represents the largest category of
spend, ranging from 50% to 80% of revenue while labor is usually only 10% to 20% of
revenue
value add times are usually a very small percentage of the lead time
profit leverage effect - Answers - good illustration of the financial impact of the corporate
spend
this effect of supply savings is measured by the increase of profit obtained by a
decrease in purchase spend
if a company reduces its spend by 10%, this can greatly affect its profit, maybe more
easily that it would be to try to increase sales.
since sales already receives more attention, supply could be the last untapped "profit
producer"
return on assets effect - Answers - a good measurement of financial impact of corporate
spend/ performance. It can show how your ROA can greatly increase by decreasing
your costs and inventory while keeping sales the same
shows how much profit is generated from $1 of assets
it is the efficiency of generating profit from your assets
the higher the better and more attractive it is to investors
investment turnover x profit margin
sourcing can influence an organizations ultimate success through - Answers - cost
quality
sales
profits
product development time
technology & innovation
customer service
competitive advantage
operational vs. strategic contribution to organizational strategy - Answers - operational:
trouble avoidance. The transactional, day to day operations traditionally associated with
purchasing (quality assurance, quantity accuracy, delivery) . Can be organized in ways
designed to routinize & automate many of the transactions, making up time for the
supply manager to focus on strategic contribution. focus is on executing current tasks
as designed.
, strategic: opportunity maximization. future oriented and searches for opportunities to
provide competitive advantage. focuses on new and better solutions to organizational
and supply challenges.
direct vs indirect contribution to organizational strategy - Answers - direct (measurable &
tangible evidence): supply savings, profit leverage effect, ROA , inventory space, and
headcount all demonstrate the direct contribution supply can make to the company's
financial statement. some supply organizations have hired financial controllers to ensure
that supply savings actually make it to the bottom line instead of being used for other
things.
indirect (soft): information source, good supplier selection, customer satisfaction,
managing risk, strategic partner. Contributes by enhancing the performance of other
departments or individuals in the organization. These contributions come from supply's
role as the information source; how it effects efficiency, competitiveness, risk, company
image, developing management strategy and social policy
challenges for the future - Answers - supply chain management
performance measurement
risk management
sustainability
growth
contribution to organizational success
corporate level of strategic planning - Answers - decisions and plans that answer "what
business are we in?", "what business do we want to be in?", and "how will we allocate
our resources along these businesses?"
ex. is. railroad business the business of running trains constantly? Or is it a business of
moving things and people, creating time and space utility?
business unit level of strategic planning - Answers - these decisions shape the plans of
a particular business unit in order to contribute to the corporate strategy
functional unit level of strategic planning - Answers - these plans concern the "how" of
each functional area's contribution to the business strategy and involve the allocation of
internal resources
major challenges of supply strategy - Answers - assurance of supply
cost reduction
