Supply Chain Management Exam #2 Cheat Sheet

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Ch 10
Outsourcing- ↑flexibility, focus on core competencies, deve comp advantage. Increasing rapidly.
Can enable: leveraging of supplier’s expertise, ↑in innovation. Results in: lower staffing levels, ↓costs, ↑flexibility. Strategic- Not outsourced: an item that is critical to success of product. Item requiring specizd design, mfging skills or equip. item that fits well w/in firm’s core comp. Make or Buy Tactical- poor supplier perf, changing sales demand, restricted mfging capability, mod of product, ↑mfging capability, imp. supplier capability. Favor Making: cost considerations, desire to integrate plant ops, use of excess plant capacity, control over prod and/or qlty, design secrecy reqrd, unreliable suppliers, desire to keep stable work force. Elements in Make Cost Analysis: delivered purchased material costs, direct labor costs, +costs from qlty & related probs, +inv carrying costs, +factory OH costs, +managerial costs, +costs of capital. Favor Buying: limited prod facilities, cost consids (less expensive), small-vol reqrmnts, suppliers specialized know-how, stable work force, multiple-source policy, indirect mngrial control consids, procurement & inv. consids. Elements in Buy Costs Analysis: purch price of part, transport costs, rec’ing & inspection costs, +purch costs, added costs related to qlty or service. Cost Consids: Time (short-term- focus on direct measurable costs. Long- measures hidden costs like storage, inspect, tooling, qlty, etc) Capacity (fixed costs issue if need to ↑ capacity). Other factors influencing: prod requirements, quality require, business process outsourcing issues (can speed up innovative change, orgs can outsource entire functions, secrecy issues), Tech Risk & Maturity, unreliable suppliers, supplier’s speclzd knowhow, small vol’s, limited facilities, workforce stability, multiple-source policy, mangrial control consids, procurement inv consds (paperwork). Dangers of outsourcing: loss of; control, client focus, clarity, cost control, secrecy. Ineffective mgmt, double outsourcing. Ch 11

Strategic Sourcing Plan: Stages: discovery>eval>selection>devel>mgmt Bidding vs Negotiation should be decided by using objective criteria, total cost perspec & sound supply mgmt logic. ESI: early supplier involve is approach in supply mgmt to bring expertise & collab synergy of suppliers into design process. ESI Opportunities: materials, service, tech, specs & tolerances, stds, order qtys, lead time, processes, pkging, transport, redesigns, assbly changes, design cycle time, inv↓. Reasons for ESI: get supplier inputs b4 design is frozen, capitalize on latest tech, save time, team relationships. Supply Base Redctn: achvd thru ↓variety & ↑consolidation. Benefits: ↑leverage w/ suppliers, better focus. Consids for Single Sourcing: ↓total cost from ↑vol. Qlty consids dictate. Buyer obtains more influence w/ supplier. ↓costs to source, process, expedite, inspect. JIT reqrmnts. ↓freight costs. Special tooling req. ↓total system inv. Supplier will have ↑commitment. ↑interdependency & risk sharing, time to mkt critical. Dual sourcing use 70/30 approach: 70% of vol awarded to 1 supplier. 30% to 2nd. Econ of scale obtained from big supplier. Little provides competition. Consids for Mult Sourcing: protect buyer during bad times. Maintain competition. Provide back-up source. Meet local content req. Meet cust’s vol reqs. When cust is small player in mkt for specific item. Avoid complacency on part of supplier. When tech path is uncertain. Suppliers tend to leapfrog in tech. Local buying adv: closer cooperation btwn buyer & seller. Delivery dates more certain. ↓prices from merged transp & ins. ↓lead times ↓inv. Rush orders filled faster. Disputes easier resolved. Implied social respons. to community fulfilled. National buying adv: econ of scale. ↑tech assistance. Better handling of changing demand. Shortages less likely. Distributor over mfgr: econ of scale, ↓of...
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