SCM 300 ASU REVISED EXAM 2 STUDY GUIDE 2025

SCM 300 ASU REVISED EXAM 2 STUDY GUIDE 2025 Supply chain management - -extracting materials from the ground, selling them to raw material manufacturers, turn raw materials into materials that are usable by component manufacturers, then final manufacturers make and sell intermediate components, the final manufacturers assemble finished products and sell them to wholesalers or distributors, resell them to retailers who sell to end customers Thus, the series of companies that eventually make products and services available to consumers, including all of the functions enabling the production, delivery, and recycling of materials, components, products, and services, is called a supply chain Primary goals of SCM - -sustainable long term profits and maximize ROI Value - -customer perspective-what do I get?/what is the price? Productivity - -organizational perspective-outputs/inputs Shigeo Shingo's-7 Types of Waste - -1. Defects 2. Overproduction- production used to mask shortcomings 3. Transportation- no added value 4. Motion- movement of employees and machines 5. Waiting- wasted resources during waiting 6. Inventory (not providing a return)- excess inventory is not providing a return 7. Over processing- more work than required is done in creating a service/good Competitive Priorities - -cost, quality, speed/time, and flexibility Business models - -a mechanism by which a business intends to generate revenue and profits. Summary of how a company plans to serve its customers at a strategic level B2C - -business to consumer- Amazon, Best Buy, Dillards B2B - -business to business- DHL, Boeing, Consulting/marketing agencies Both B2B and B2C - -Apple, Dell, Ford, and Verizon Brick and Mortar- land based commerce only Internet retailer only- Amazon Click and Mortar - -both land based and internet (Best Buy, Barnes and Noble) SCM 300 SCM 300 P&G Example - -3 priorities= reliable service, agile, demand driven supply, and affordable differentiation Vertically integrated firm - -a firm whose business boundaries include one-time suppliers and/or customers What is occurring at many of these firms today is an effort to par down the organization to focus more on core capabilities while trying to create alliances or strategic partnerships with suppliers, transportation and warehousing companies, distributors, and other customers who are good at what they do. This team approach to making and distributing products and services to customers is becoming the most effective and efficient way for businesses to stay successful -and is central to the practice of SCM. Supplier Management - -this means getting your firm's suppliers to do what you want, and there are a number of ways to do this. This involves assessing your suppliers' current capabilities and then figuring out how to improve them Supplier Evaluation - -determining the capabilities of suppliers. This occurs both when potential suppliers are being evaluated for a future purchase and when existing suppliers are periodically evaluated for performance purposes Strategic partnerships - -organizations creating alliances, one of the foundations of SCM Reverse logistics activities - -along the supply chain, intermediate and end customers may need to return products, obtain warranty repairs, or may just throw products away or recycle them Focal firm - -end product manufacturer, Ex. Coca-Cola, Boeing, General Motors 1st tier suppliers/customers - -- First tier supplier supplies a business directly. (EA Sports distributes Madden to Best Buy; EA is a 1st tier supplier to Best Buy). 2nd tier suppliers/customers - -the suppliers' suppliers and the customers' customers. (Hershey's buys cocoa from an American company who bought it from a Brazilian company, The Brazilian company is a 2nd tier supplier to Hershey's). Grebson Example - -Grebson is experiencing the bullwhip effect, meaning there is a problem in safety stock, forecasting, and production problem. Grebson is not sure on how many units they demand, they ultimately affects the supply chain in a major way. Business process re-engineering (BPR) - -the radical rethinking and redesigning of business processes to reduce waste and increase performance, was introduced in the early 1990s and was the result of a growing interest during this time in the need for cost reductions and a return to an emphasis on the key competencies SCM 300 SCM 300 3PLs (third party logistics providers) - -firms use them to ensure a continuous, uninterrupted supply of goods Wal-Mart Example- -inventory turnover has risen from 4.1 to 7.6 from -Wal-Mart has no work-in-process or finished goods inventories, all purchased materials -Developed cross docking, a truckload of an incoming item goes not into storage but directly into multiple trucks in small lots for immediate transfer to retail stores -Wal-Mart developed the best SCM IT system saving them millions of dollars, increasing profit margins Supplier evaluation - -determining the current capabilities and them figuring out how they need to improve them Supplier certification - -allows buyers to assume the supplier will meet certain product quality and service requirements covered by the certification, thus reducing duplicate testing and inspections and they need for extensive supplier evaluations MRP - -firms use this software to manage their inventory Inventory visibility - -allows companies to be informed about their inventory in order to make their supply chain as effective as possible Demand management - -used to minimize costs, strategies and systems with the objective of matching demand to available capacity either by improving production, scheduling, curtailing demand, using a back order system, or increasing capacity -If demand does not materialize as forecasted, then the firm is left with either too much inventory (or service capacity) or not enough. JIT (just-in-time production system) - -results in faster delivery times, lower inventory levels, and better quality. Actual orders provide a time of when the goods should be manufactured. Sometimes called the Toyota Production System. Global Perspective Example - --Financial supply chain is the key to a corporation and banks survival -Means to further eliminate paper from the world of international trade -An outgrowth of the long established concept of the physical supply chain in the trade business 4 Trends of SCM - - 1. Expanding the supply chain 2. Increasing supply chain responsiveness 3. The Greening of Supply chains 4. Reducing supply chains costs Procurement - -term used in place of purchasing SCM 300 SCM 300 Goals of purchasing - -to ensure uninterrupted flow of raw materials at the lowest total cost, to improve quality of the finished goods produced, and to optimize customer satisfaction Profit leverage effect - -purchasing measures the impact of a change in purchases spent on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged ROA - -profit before taxes/total assets Inventory turnover - -shows how many times a firm's inventory is utilized and replaced over an accounting period cost of goods sold/average inventory cost Purchase Orders - -should be pre-numbered and issued in duplicate, and buyers should not be authorized to pay invoices -the buyer's offer becomes a legally binding contract when accepted by the supplier -Goes from buyer to supplier Material requisition - -the material user initiates a request for a material. The product, quantity, and delivery due dates are clearly described on the material requisition -Goes from user to buyer RFQ (request for quotation) - -if there is no current supplier for the item, the buyer must identify a pool of qualified suppliers and issue the RFQ RFP (request for proposal) - -may be issued instead of RFQ for a complicated and highly technical component part E-Procurement Advantages - -time saving, cost saving (the manual task of matching bids to materials requisitions is eliminated), accuracy (eliminates double key inputs), real time (the system enables buyers to initiate bids and supplier to respond in real time), mobility (geographic location does not matter), track ability, management (summary statistics and supplier performance reports can be generated), and benefits to suppliers (access to more buyers, and the ability to adjust market conditions) Backward vertical integration - -- refers to acquiring upstream suppliers -Buying a tire company to make tires for your cars (Toyota) -Instead of buying bread to make sandwiches, we are making the bread Forward vertical integration - -refers to acquiring downstream customers -Acquiring a distributor SCM 300 SCM 300 Reasons for Buying or Outsourcing - --Cost advantage- Sometimes the quantity needed is so small that it does not justify the investment to make the item -Insufficient capacity- a firm may be running at or near capacity, making it unable to produce the components in house. This can happen when demand is higher than expected or operations under very strict terms -Lack of expertise- the firm may no have the necessary technology or knowledge to manufacture the item -Quality- purchased components may be better in quality Reasons for Making - --Protect proprietary technology- a firm may have developed an equipment, product, or process that needs to be protected for the sake of competitive advantage -No competent supplier- there are no suppliers available for a certain product -Better quality control- the make option allows for the most direct control over the design, process, labor, and inputs to ensure higher quality -Use existing idle capacity- there is excess capacity to make some of its components. -Control of lead-time, transportation, and warehousing cost- management controls all phases of the design, manufacturing, and delivery. The firm isn't relying on another firm. -Lower Cost- lower variable cost because it avoids suppliers' profits Supply Base- refers to the list of suppliers that a firm uses to acquire its materials, services, supplies, and equipment Factors in choosing a supplier - --Product and process technologies- suppliers should have up to date and capable products and process technologies to produce the items needed -Willingness to share technologies and information-by increasing the involvement of the supplier in the design process, the buyer is free to focus more attention on core competencies -Quality -Cost -Reliability -Order system and Cycle Time- placing orders with the supplier should be easy, quick, and effective SCM 300 SCM 300 -Communication capability - good communication between companies, reliable way to communicate. -Location- impacts delivery lead time and logistical costs -Service- Suppliers must be able to back up their products by providing good services when needed Total cost of ownership - -includes the unit price of material, payment terms, cash discount, ordering cost, carrying cost, logistical cost, and maintenance cost Single supplier - -establish a good relationship with a supplier creates trust, quality levels don't vary, cheaper per unit due to bigger shipments Multiple Suppliers - -when demand exceeds the capacity of a single supplier, spread of risk of supply interruption, and creates competition (could lower cost) Centralized purchasing - -where a single purchasing department, usually located at the firm's corporate office, makes all the purchasing decisions, including order quantity, pricing policy, contracting, negotiations, and supplier selection and evaluation Decentralized purchasing - -where individual, local purchasing departments, such as at the plant or field office level, make their own purchasing decisions Global sourcing - -- international purchasing Reasons- can include lower prices, better quality, overseas supplier holds the patent, better service, better technology Challenges- dealing with duties, tariffs, customs clearance, currency exchange, political and legal problems Independent demand - -- demands are unrelated and required quantities of each must be separate, influenced by market conditions (automobiles) Dependent demand - -- requirement of any one item is the direct result for some other item (tire) SKU- stock keeping unit - -- unique identifying number used to track each unique product customers can purchase Lead time - -time elapsed between customer placing the order and order being received by customer Lot size - -order size Safety stock - -- inventory your keeping "just in case" SCM 300 Types of Inventory - -raw materials, work in process, finished goods Inventory classifications - -long term, seasonal, perishable Anticipation Inventory - -used to absorb uneven rates of demand/supply Market Inventory - -inventory readily available on the shelf Pipeline Inventory - -- orders that have been placed buy not yet received nor paid by the customer, "on its way", DL= periodic demand x lead time Why Keep Inventory? - -This is why we keep