Review Outline for Final Exam
5. Supply Management
Concepts
Supply management: identification, acquisition & management of inputs & supplier relationships; sourcing, purchasing, procuring
Total cost of ownership Before: finding, assessing, selecting supplier During: buying, receiving items After: storing & owning items incl. after sale (warranty, defect, replacement, repairs)
The importance of supply management
Ensures timely availability of resources
Assess supply risk—unplanned event that will negatively affect firm’s ability to serve customers; ex. disruption to production, earnings, time to market, etc.
Reduces total cost (not just purchase price)
Enhances quality
Supplier quality has direct affect on product quality—meet specific level of quality
Enables access to technology and innovations
Ex. Innovative perfume bottle enhances brand image—developed by suppliers
Fosters social responsibility
Suppliers must meet environmental and social responsibility goals
Social Responsibility: measurable corporate policies/behaviors designed to benefit related communities
Value to community, social diversity, environmental responsibility, ethical behavior, financial responsibility (reporting), human rights (child labor), safety standard
Supply Management strategy
Insourcing (within the firm) OR outsourcing (from suppliers)
Make or Buy Decision: decide between insource & outsource
Sourcing strategy (Kraljic) framework
Strategic (high-high): build partnerships
Bottleneck (high risk, low value): use multiple sources
Leverage (low risk, high value): many suppliers, consolidate purchases (discount)
Noncritical (low, low): not important, lower transaction costs of purchasing
Supplier relationship
TRANSACTIONAL: adversarial, arms-length, acceptance mutual goals, full partnership: COLLABORATIVE
Choose supplier
Competitive bidding: price most important, several qualified sources--transactional
Online reverse auction: competitive bidding, supplier can submit multiple bids
Negotiation: planning, reviewing, analyzing, compromising—seek mutual agreement
Weighted point model: performance by importance; Weight x Rating = Score
Tools
Supplier scorecard: track/report supplier performance in key areas
Certification: assessment of suppliers ability to meet buyer’s needs
SRM (supplier relationship mgmt.): technology enabled data to manage firm’s interactions w/ supplers (manage relationships)

6. Logistic Management- Transportation
Concepts
Logistic Mgmt: planning, implementing, controlling flow of goods from point of origin to meet customer requirements (lowest cost)
Inbound (suppliers), outbound (distributors), internal (firm) logistics
Transportation
Issue/trends in transportation:
Fuel prices: variability, increased fuel surcharges, etc.
Intermodal transportation: combines 2+ transportation modes to take advantage of economies of scale
Technology: more efficient equipment, larger capacity, etc.
IT: better coordination, visibility, routing operations, etc.
3PL: increased outsourcing of transportation services
Infrastructure condition: ex. bridge collapsed
Environmental issues: emission & carbon footprint
Increased security requirements: increased processing time, stringent regulations, delays, increased cost, etc.
Cost to service tradeoff: as service levels increase, costs increase (larger inv = high carrying cost)
Cost to cost tradeoff: increasing cost of one logistics activity reduces that of another (ex. More warehouses = higher costs = lower transportations costs)
Total landed cost: sum of all products and logistics related costs
Regulations
Economic: transportation equally accessible (entry regulation, rates, services)
Social: protect public safety & environment (labor, hazardous materials, etc)
Transportation economics
Economy of scale: cost per unit weight DECREASES as size INCREASES
Economy of distance: cost per unit distance DECREASES as distance INCREASES
Pooled