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64 Cards in this Set
- Front
- Back
supply chain management
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the planning and control of all activities across the supply chain
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5 core processes in supply chains
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1. plan
2. source 3. make 4. deliver 5. return |
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strategy
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an integrated and coordinated set of commitments and actions pertaining to resources designed to exploit and/or develop core competencies and gain a competitive advantage
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strategic competitiveness
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achieved when a firm formulates and implements a value-creating strategy for its stakeholders
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shareholder value
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created by achieving above average or superior returns to those an investor expects to earn from other investments with a similar amount of risk
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customer value
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created by offering a product or service that has a price/performance ratio superior to products or services by competitors
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performance attributes valued by customers
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1. exceptional service
2. higher quality 3. faster delivery 4. flexibility |
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performance attributes/cost
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customer value
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resources
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inputs into a firm's value-creating process such as plant and equipment, the skills of individuals, finances, patents, and talented managers
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capability
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the capacity for a set of resources to perform a task or activity in an integrated manner
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core competencies
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resources and capabilities that serve as a source of competitive advantage of a firm over another
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business or corporate strategy
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1. the primary task of the organization is market terms
2. the organization's competitive properties |
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1. cost
2. quality 3. delivery 4. flexibility |
in general, competitive priorities
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differentiation
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when a business focuses on achieving superior performance in one of the dimensions
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positioning
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-defining a point in the consumers' mind about what you do and who you are
-very important tool in determining strategies -must be supported by product, price, place, and promotion |
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supply chain strategy
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consists of developing a long-term plan for determining how to best utilize the resources of the organization to implement and support the firm's long-term business or corporate strategy
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-a statement of a firm's unique purpose and the scope of its operations in product and market terms
-defines the firm to both its employees and its external environment -provides boundaries and focus |
mission statement (3)
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business or corporate strategy
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provides vision, establishes future goals, and keeps the organization moving in the right direction consistent with the company's mission. it defines how the company is going to get there
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76%
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percentage of service sector in total U.S. employment
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customer contact
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refers to the presence and interaction of the customer in the system
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degree of contact with customer
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the percentage of time the customer must be involved in the system relative to the total time it takes to perform the service
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degree of labor intensity
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-the degree of labor involved in the delivery of the service
-usually expressed as the ratio of labor cost compared to capital cost |
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criteria for competition
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1. cost
2. quality 3. dependability 4. flexibility |
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cost
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the cost of providing the service, including both capital and operating expenses
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quality
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derived from the relationship between a customer's prior expectations of the service and his assessment of the service experienced during and after the service delivery
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dependability
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relates to the availability of the service when needed
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flexibility
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measures the degree of customization provided to accommodate any individual requirments
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1. material flows
2. process flows 3. information flows 4. cash flows |
success in SCM requires the synchronization and optimization in these four flows...
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electronic data interchange (EDI)
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used by Levi Strauss Company for a successful supply chain network
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ERP
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an accounting oriented information system for identifying and planning the enterprise wide resources needed to manufacture and account for customers
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MRP II
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system built around material requirements planning that includes the additional planning functions of sales and operations
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direct materials spend
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expenses that a company incurs making their product or providing their service that are captured in the cost of goods sold section of the income statement
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indirect material spend
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miscellaneous (overhead) expenses a company incurs that are not associated with building the firm's core products that are captured in the sales, general, and administrative section of the income statement
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make-or-buy decision
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decision of whether a firm should make a product (or perform a service) internally or utilize an external supplier or provider
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vertical integration
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when a firm decides to perform a function internally
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outsourcing
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when a firm decides to have a function performed externally
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offshoring
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when a firm moves an operation to a foreign country, but still retains ownership of that facility
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virtual or hollow corporation
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firms that outsource most of the functions across the supply chain network, choosing instead to focus their resources on new product development and marketing
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50% of total spend in 2010
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researchers expect global sourcing to account for approximately...
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four key reasons for sourcing globally
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1. superior quality
2. lower total cost 3. access to advantaged technology 4. expanded supply base |
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four potential problems with sourcing globally
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1. long lead-times
2. cultural differences 3. higher inventories 4. higher cost of doing business |
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20%
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approximate percentage of price reduction that supply management professionals have been able to realize by sourcing globally
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12%
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approximate net reduction in total cost of ownership (TCO) by firms due to global sourcing
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strategic sourcing
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the procurement process of evaluation, selecting, and partnering with key suppliers in order to achieve operational performance improvements that support both the organization's supply chain strategy and its even broader corporate objectives
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strategic sourcing steps
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1. spend analysis
2. supply market assessment 3. total cost analysis 4. supplier identification/evaluation 5. sourcing strategy 6. supplier negotiation/selection 7. sourcing strategy implementation 8. compliance assessment/return to step 1 periodically |
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spend analysis
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a detailed analytical assessment of how much the company is spending in a particular category or commodity classification, who their top suppliers are in the category, and from where the purchases are originating
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spend visibility
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the amount of the applicable spend data that a firm can access through its information technology systems
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1. spend data is often obscured in legacy systems
2. information systems don't have a standardized name for a particular company 3. product descriptions and part numbers are not uniform across devisions or countries |
3 impediments to spend visibility
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legacy systems
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information technology infrastructure leftovers from previous mergers and acquisitions
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total cost analysis
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-detailed analysis of how much it "should cost" the supplier to produce a desired produce or service
-focuses on the total cost of ownership over life of the product |
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supplier identification/evaluation
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-when a strategic sourcing analyst compiles a list of suitable suppliers
-primary objective is to reduce the compiled supplier selection pool down to only the most qualified suppliers |
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detailed financial condition analysis
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-quick way to reduce a compiled supplier selection pool to the most qualified supplier
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qualities that are evaluated at site visits
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1. quality
2. technology 3. capacity 4. flexibility |
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demand aggregation
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a methodology where a buying firm consolidates its requirements across the entire enterprise, in a particular commodity classification, or between related classification groups, into a single purchasing request, so as to maximize their buying strength in the marketplace
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1. demand aggregation
2. supplier rationalization |
two ways to enhance a buying firm's leverage in the marketplace
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supplier rationalization
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-process by which a buying firm determines the optimal number of suppliers in a particular supply network and who those suppliers will be
-involves reducing the number of suppliers utilized in a particular supply category |
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demand aggregation + supplier rationalization
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leveraged spend
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leveraged spend
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when a firm maximizes its buying strength in the marketplace
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e-procurement systems
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-strategy that many firms have implemented in the market quadrant of the portfolio matrix
-computerized systems designed to reduce costs associated with processing purchase orders by supply management personnel -prices are negotiated in advance and company personnel can buy products directly from the supplier through an on-line catalog |
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supplier selection criteria
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1. price
2. availability 3. lead-time 4. quality 5. total cost of ownership (TCO) |
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two key factors that cause most companies to fail to realize all of the potential savings from a new supply contract
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1. maverick spend
2. spend leakage |
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maverick spend
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when purchasing personnel buys outside of the supply contract where product prices are often significantly higher
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spend leakage
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failure of a supplier to adhere to the supply contract terms and conditions
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causes of spend leakage
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failure of the vendor to
1. provide rebates as stipulated in the contract 2. correctly price items on the purchase order according to the quantity discount schedule 3. charging for shipping when the contract specifies that the vendor will be responsible for these charges |