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Chapter 17 Reviewer
Chapter 17 Reviewer
Is the management of the interconnection of organizations that relate to each other through
upstream and downstream linkages between the processes that produce value to the ultimate
consumer in the form of products and services.
Supply Network
o All the operations that were linked together so as to provide goods and services through to
the end customers
Supply Chain
o Strands of linked operations under an organization
1. Quality - the quality of a product or service when it reaches the customer is a function of
the quality performance of every operation in the chain that supplied it.
2. Speed
Two Meanings
1. How fast customers can be served
2. The time taken for goods and services to move through the chain
3. Dependability
Dependability of throughput time
Often measured as 'on-time, in full
4. Flexibility
The chain's ability to cope with changes and disturbances
'Supply Chain Agility'
5. Cost
The supply chain as a whole incurs costs that derive from each operation in a chain
doing business with each other
Cost of finding the appropriate suppliers, setting up contractual agreements,
monitoring supply performance, transporting products between operations, holding
inventories, etc.
o Multi Sourcing
Source each individual product or service from more than one supplier
Pros:
Purchaser can drop the price down by competitive tendering
Can switch sources in case of supply failure
Wide sources of knowledge and expertise to tap
Cons:
Difficult to encourage commitment by supplier
Less easy to develop effective SQA
More effort needed to communicate
Suppliers are less likely to invest in new processes
More difficult to obtain scale economics
Benefits of E-Procurement
1. Convenient and Efficient Electronic Ordering (It's easier to buy from them)
2. Shorter Requisition and Fulfillment Cycles (It's faster to buy from them)
3. Centralized Spending Controls (It's easier to keep track of what you are buying
from them)
4. Standardized Global IT Catalogue (It’s less confusing to buy from them)
Electronic Marketplaces
Also known as Infomediaries/ Cybermediaries
An information system that allows buyers and sellers to exchange information about
prices and product/service offerings
Global Sourcing
Global Sourcing
The process of identifying, evaluating, negotiating, and configuring supply across
multiple geographies.
5. Transportation Costs
Transportation and freight costs
Costs of moving products or services from where they are produced to where
they are required
Disadvantages
Supply Uncertainties
Choosing who to buy from takes time and effort
Strategic risks
Over reliance on outsourcing can hollow out the companies. Leaving it with no
internal capabilities
Virtual Operations
An extreme form of outsourcing
Rely on a network of suppliers who can provide products and services on demand.
A network may be formed only for one project and then disbanded once the project
ends
Advantages:
Virtual operations are flexible and the risks of investing are far lower than in a
conventional operation
Disadvantages
Has no solid base of resources
May find it difficult to hold onto and develop a unique core of technical
expertise
Resources will also be available to the competition
Partnership Operations
Relatively enduring inter-firm cooperative agreements, involving flows and
linkages that use resources and/or governance structure from autonomous
organizations, for the joint accomplishment of individual goals linked to the
corporate mission of each sponsoring firm.
Factors that determine the degree of partnership (ISLTMFJJJ - Imelda Sanay Tayo'y
Laging Maging Friends Joke Joke Joke)
Information Transparency
Open and efficient information exchange
Sharing Success
Both partners work together in order to increase the total amount of joint
benefit they receive
Trust
The willingness of one party to relate to the other on the understanding
that the relationship will be beneficial to both
Long Term Expectations
Partnerships imply relatively long-terms commitment
Multiple Points of Contact
Communication may take place between many individuals in both
organizations
Few Relationships
Commitment on both partners to limit the number of customers/suppliers
they do business
Joint Learning
Partners are committed to learn from each other's expertise and
perceptions of the operations in the chain
Joint Problem Solving
Jointly approaching problems can increase closeness over time
Joint Co-ordination of activities
Joint coordination of activities such as the flow of materials/service,
payment, etc
Bullwhip Effect
Used to describe how a small disturbance at the downstream and of a supply chain
causes increasingly large disturbances, errors, inaccuracies and volatility as it works its
way upstream.
Bullwhip Effect can be reduced by information sharing, aligning planning and control
decisions. Improving flow efficiency and allowing better forecasting
2. Benchmarking Performance
Performance metrics in the SCOR model are also structured by level, as is
process analysis.
Level 1 Metrics
Yardsticks by which an organization can measure how successful it is
in achieving its desired positioning within the competitive
environment, as measured bu the performance of a particular
supply chain
Channel Alignment
The adjustment of scheduling, material movements, stock levels, pricing and other sales
strategies so as to bring all the operations in the chain into line with each other.
Operational Efficiency
The efforts that each operation in the chain can make to
1. Reduce its own complexity
2. Reduce the cost of doing business with other operations in the supply chain
3. Increase throughput time