Supply Chain Strategy

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Chapter 10
Supply chain Strategy

Review and Discussion Questions

1. What recent changes have caused supply chain management to gain importance?

2. With so much productive capacity and room for expansion in the United States, why would a company based in the United States choose to purchase items from foreign firm? Discuss the pros and cons.

The use of foreign firms can provide a U.S. firm more alternatives in selecting a supplier. The pros are more choices, potentially reduced costs in the areas of materials, transportation, production, and distribution, and potentially moving closer to a foreign market. The cons are the distance is generally increased, communications problems are increased due to distance, culture, and technology. There may be problems with customs, government regulations, political stability, etc.

3. Describe the differences between functional and innovative products.

Functional products are staples that people buy in a wide range of retail outlets. Typically, they do not change much over time, have low profit margins, stable predictable demand and long life cycles. Innovative products, on the other hand, give customers additional reasons to buy. Fashionable clothes and personal computers are examples of innovative products. Innovative products have short life cycles, high profit margins, and volatile demand.

4. What are characteristics of efficient, responsive, risk-hedging and agile supply chains? Can a supply chain be both efficient and responsive? Risk-hedging and Agile? Why or Why not?

5. As a supplier, which factors would you consider about a buyer (your potential customer) to be important in setting up a long-term relationship?

The financial stability and credit worthiness of the company is of primary importance. The reputation of the company visavis their supplier is also very important. For example, is this a company that is fair with its suppliers and honors its payables in a timely...
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