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Supply Chain Management

Online Examination Preparation By Prof. Prasad Kulkarni

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Module 1:introduction to Supply Chain Management

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Important points
I1. Functions of supply chain 1. Distribution 2. Operation 3. Finance 4. Customer service 5. Marketing 6. New product development
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I2. value of supply chain= worth of product to customer cost. I3. supply chain profitability= supply chain surplus. I4. decision phases in supply chain 1. Supply chain strategy 2. Supply Chain planning. 3. Supply Chain operation
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I5. Cycle view of supply chain a. Customer order cycle b. Replenishment cycle c. Manufacturing cycle d. Procurement cycle.

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I6. pull process= customer demand is certain I7 Pull process= reactive process. I8. Push process= demand is uncertain. I9 Push process= speculative

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I10 a. CRM= customer relationship management b. ISCM= Internal Supply Chain management c. SRM= Supplier relationship management.
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I11. SRM includes a. Source b. Negotiate c. Buy d. Design collaboration e. Supply collaboration
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I12. ISCM includes a. Strategic planning b. Demand planning c. Supply Planning d. Fulfillment e. Field service
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I13. CRM includes a. Market b. Price c. Sell d. Call center e. Order management.
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I14.steps in strategic fit a. Understanding customer and supply chain uncertainty b. Understanding supply chain capability c. Achieving strategic fit.

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I15. Customer and supply chain uncertainity depends on a. Quantity b. Response time c. Variety d. Service level e. Price f. Innovation
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I16. Responsive spectrum= lies between Highly efficient and Highly responsive decision.

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I17. Drivers of supply chain a. Facilities b. Inventory c. Transportation d. Information e. Sourcing f. Pricing
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I18. facility matrix a. Capacity b. Utilization c. Cycle time of production d. Product variety e. Idle time f. Batch size.
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I19. Inventory components a. Cycle inventory b. Safety inventory c. Seasonal inventory

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I20. cycle inventory= average amount of inventory used to satisfy demand between receipts of supplier shipments.

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I21. Safety inventory= demand exceeds expectation I22. transportation Metrics includes a. Average inbound transportation cost. b. Average incoming shipment size c. Average outbound transportation cost. d. Average outbound shipment size
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I23 EDI= electronic data interchange I24 ERP= enterprise resource planning I25 RFID= Radio frequency identification device I26 EDLP= every day low pricing

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I28 Obstacle to achieving strategic fit a. Increasing variety of products. b. Decreasing product life cycle. c. Increasing demanding customers. d. Fragmentation of supply chain ownership e. Globalization
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Module 2: Designing supply chain network

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I29: Factors influencing distribution network design


a.

b.
c. d. e. f. g.

Response time Product variety Product availability Customer experience Time to market Order visibility returnability
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I30. Distribution network design costs a. Inventories b. Transportation c. Facilities and handling d. Information

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I31 If number of facilities increases inventory cost also increases I32 if number of facility increases transportation cost decrease to some point then it increases. I33. If number of facility increases facility cost also increases.
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I34. Design option for distribution network


a. b.

c. d. e.

f.

Manufacturer storage with direct shipping Manufacturer storage with direct shipment and in transit merge Distributor storage with package carriage delivery. Distributor strategy with last mile delivery Manufacturer/ distributor storage with customer pickup. Retail storage with customer pick up
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I35. Strategic factors influencing network design a. Offshore facility= low cost facility for export production b. Source facility= Low cost facility for global production c. Server facility= regional production facility
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d. Contributor facility= regional production facility with developmental skills e. Outpost facility= regional production facility built to gain local skills f. Lead facility= facility that leads in development and process technologies
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I36; macro economic factors influence network design a. Tariffs and tax incentives b. Exchange rate and demand risk

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I37: Factors influencing network design


a. b.

c.
d. e. f. g.

Strategic factors Technological factors Macro economic factors Political factors. Infrastructure factors. Competitive factors. Logistics and facility costs
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I38: Models for facility location and capacity allocation a. Network optimization model b. Gravity Location Models.

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Module 3: Designing and Planning transportation network

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I39: Shipper= party that requires the movement of the product between two points in the supply chain. I40: Carrier= The party that moves or transports the product.

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I41: Transportation Modes


a. b.

c.
d. e. f. g.

Air Package carriers Truck Rail Water Pipeline Intermodal


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I42: Package carriers= small package carriers that takes letters and small shipments. I43 Package carriers are preferred mode for e- business. I44 LTL= less than truck load I45 FTL= full truck load
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I46heavy load= railways I47 Rail problems: vehicle scheduling, track and terminal delays and poor on time performance. I48 cars grains and apparel are transported via water. I49: Pipelines are used by petroleum companies.
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I50: Intermodal transportation= more than one transport modes. I51: Design options for a transportation network a. Direct shipment netowrk b. Direct shipping with milk runs c. All shipments via central Dc d. Shipping Via Dc using Milk runs
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I52. Milk run= route on which a truck either delivers product from single supplier to multiple retailers I53 DC = distribution center. I54 trade off in transportation decision a. Transportation and inventory cost trade off. b. Transportation cost and customer responsiveness trade off.
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I55: Transportation and inventory cost trade off includes a. Choice of transportation mode b. Inventory aggregation

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I56: tailored transportation includes a. Customer density and distance b. Size of customer c. Product demand and value.

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I57: Risks in Transportation a. Delay b. Do Not reach c. Hazardous material d. Jettison e. Regulation
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Module 4: Sourcing and Pricing

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I58 Purchasing= procurement I59 Procurement is the process by which companies acquire raw materials, components, products, services and other resources.

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I60: Capacity aggregation= aggregated demand across multile firms and gaining production economies of scale I61: inventory aggregation= aggregating inventories across large number of customers. I62: Transportation aggregation= meeting FTL
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I63: warehouse aggregation: several customers warehouse at one place. I64: Procurement aggregation= small players ask third party to source. I65: Information aggregation= Third party information aggregation In house. I66:Receivables aggregation= reducing risk level by third party
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I67: Risks of using a third party a. The process is broken b. Underestimation of cost of coordination c. Reduced customer/supplier contact. d. Loss of internal capability e. Leakage of sensitive data and information.
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I68: 3PL = third party logistics I69 : 4PL= fourth party logistics. I70 Basic services of 3PL a. Inbound and outbound logistics. b. Storage and facility management c. Information system d. Reverse logistics
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I71: supplier scoring= vendor scoring I72: supplier evaluation= vendor rating. I73: replenishment= refill the inventory. I74: VMI= vendor managed inventory I75: CPFR= collaborative planning, forecasting and replinishment.
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I76: Supplier scoring parameters a. Replinishment lead time b. On time performance c. Supplier flexibility d. Delivery frequency e. Supply quality f. Inbound transportation cost
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f. Pricing terms g. Information coordination capability h. Design collaboration capability i. Exchange rates, taxes and duties. j. Supplier viability

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I77: Sealed bid auction= submit bid in selaed form I78: English auction: bids are lower than the previous I79: dutch auction: bids are higher than the previous. I80: Vickery auction: second lowest price quote bidder.
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I81: contracts for product availability and supply chain profits a. Buyback or returns contracts. b. Revenue sharing contracts c. Quantity flexibility contracts.

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I82: Product categorization by value and criticality a. Critical items b. Strategic items c. General items d. Bulk purchase items
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I83: the role of IT in sourcing a. Design collaboration b. Source c. Negotiate d. Buy e. Supply collaboration.
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I84: Revenue Management= use of pricing to increase the profit generated from a limited supply of supply chain assets. I85: Dynamic pricing: varying price over time on the basis of demand. I86; Over booking; good while customer cancel the orders.
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I87: Bulk contract: B2B I88 spot contract: Stock market.

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Module 5: Information Technology in Supply Chain

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I89: Requirements of information a. Accurate b. Accessibility c. Right kind

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Module 6: coordination in Supply chain

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I90: supply Chain Coordination= all stages of the chain take actions that together increases total supply chain profits.

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I91: The effect on performance of Lack of coordination


a.

b.
c. d. e. f.

Manufacturing cost. Inventory cost. Replenishment lead time Transportation cost. Labor cost. Level of product availability
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I92: Obstacles to coordination in a supply chain a. Incentive obstacles. b. Information processing obstacles c. Operational obstacles d. Pricing obstacles e. Behavioral obstacles.
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I93: Incentive obstacles a. Local optimization within functions of supply chains. b. Sales force incentives

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I94: Information processing obstacles a. Forecasting based on orders and not customer demand. b. Lack of information sharing.

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I95: Operational obstacles a. Ordering in large lots. b. Large replenishment lead times. c. Rationing and shortage gaming.

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I96: Pricing obstacles a. Lot size based quantity discounts. b. Price fluctuations

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I97: managerial levers to achieve coordination


a.

b.
c. d.

e.

Aligning of goals and incentives. Improving information accuracy Improving operational performance Designing pricing strategies to stabilize orders. Building partnership and trust.
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I98: Aligning of goals and incentives a. Aligning incentives across functions b. Pricing of coordination c. Altering sales force incentives from sell in to sell through

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I99: Improving information accuracy a. Sharing point of sales data. b. Implementing CPFR c. Designing single stage control of replenishment.

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I100: Improving operational performance a. Reducing replenishment lead time b. Reducing lot size c. rationing

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I101: Designing pricing strategies to stabilize orders a. Volume based quantity discounts. b. Stabilizing pricing

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I102: Designing a relationship with cooperation and trust. a. Assessing the value of the relationship b. Identifying the operational roles c. Creating effective contracts. d. Designing effective conflict resolution mechanisms.
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I103: effect of interdependence on supply chain relationship a. Partner relatively powerful b. Effective leadership c. Low level of interdependence d. Organizations relatively powerful. I104: CRP= continuous replenishment program.
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I104:ECR=Efficient Customer Response.

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Module 7:Dimensions of logistics

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I105 : Business Logistics supply chain process that plans, implements, and controls the efficient, effective flow of goods, services, and related information from the point of origin to the point of use or consumption in order to meet customer requirements
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I106: four economic utilities


Form utility (what) Place utility (where) Time utility (when) Possession utility (why)

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I107: Logistics interface with operation a. Length production run b. Seasonal demand c. Supply side interfaces d. Protective packaging e. Foreign and third party alternatives
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I108: Carrier pricing


Generally, since the larger the shipment, the cheaper the transportation rate, shipment sizes should be tailored to the carriers vehicle capacity where possible

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I109: Logistics activities


a) b) c)

d)
e) f) g) h) i) j)

Transportation Storage Packaging Materials handling Order fulfillment Forecasting Production planning Purchasing Customer service Site location
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I110: Four different classifications of logistics


systems Balanced system - e.g., consumer products Heavy inbound - e.g., aircraft, construction Heavy outbound - e.g., chemicals Reverse systems - e.g., returnable products

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I111: Physical distribution Frequently the movement and storage of raw materials is far different from the movement and storage of finished goods

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I112: Cost Centers Treating logistics activities as cost centers makes it easier to study cost trade-offs between the centers. I113: Nodes versus Links Nodes are spatial points (warehouses, plants, etc.); Links are the transportation network (rail, motor, air, pipe and water). I114: Logistics Channel The network of intermediaries involved in the logistics system.
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I115: A Multi-Echelon Logistics Channel

Chapter 2

Management of Business Logistics, 7th Ed.

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Module 8: Demand management and customer Service

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I116: four ways of managing demand a. Capacity reservation b. differential pricing c. advertising and sales promotions d. complementary products

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I117: managing supply a. inventory based alternatives b. capacity adjustment alternatives c. capacity augmentation

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I118: managing demand and supply together a. Level strategy b. Chase strategy c. Mixed strategy

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I119: Level strategy not to disturb existing production system at all; maintain a steady rate of regular time output while meeting demand variations largely thro inventories

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I120: Chase strategy by matching capacity to demand and dont carry inventories; planned output for a period is set at expected demand for that period( with lead-times built)

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I121: Forecasting factors


a. b.

c.
d. e.

f.

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Time required in future Availability of historical data Relevance of historical data into future Demand and sales variability patterns Required forecasting accuracy and likely errors Planning horizon/lead time for operational moves
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I122: Types of forecasts


a.

b.

c.

d. e.

Economic Forecasts- projections of economic growth, inflation rates, money supply based on economic and fiscal data trends along with policy interventions Demographic Forecasts- projections of population in aggregate and disaggregate form forecasts using birth and death rates in each case Technological Forecasts- predicting technological change e.g. in cloud computing or electronics sectors et al Other Forecasts- weather, earthquakes, tsunami et al Business Forecasts- involving demand and sales forecasts our primary interest
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I123:Elements of customer Service


a. b.

c.

d.

e.

Order cycle time- the time taken between placing the order and receipt of delivery Order cycle consistency- the extent to which order cycle time varies Order accuracy- the degree to which items shipped meet order specifications Order completeness- the extent the items ordered are totally filled when the order is assembled for shipment Order condition- damage level at the time of receipt

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I124: Order processing 1. Order collection 2. Status reporting 3. Internal order communication 4. Credit checking 5. Order processing
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I125:Factors affecting order processing time


1. Interaction with consumer 2. Processing priorities Relative order size Relative order volume Relative order placement time Order placement sequence Customer per sequence 3. Order filling accuracy 4. Order batching

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