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vertically integrated firm
a firm whose business boundaries include one-time suppliers and/or customers
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collaborative approach to making and distributing products and services to customers
strategic partnerships
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generic supply chain flow
- 1. firms extracting raw materials from the ground (iron ore, wood, oil)
- 2. selling these to suppliers (lumber companies, raw food distributors)
- 3. turn raw materials into materials useable by manufacturers (sheet steel, aluminum, lumber)
- 4. component manufacturers make and sell intermediate components (electrical wire, fabrics)
- 5. final-products manufacturers (coca-cola, boeing) assemble finished goods and sell to wholesalers
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reverse logistics activites
returned product, warranty repairs, recycled product.
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focal firm
end-product manufacturer (boeing, general motors, coca-cola)
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key to developing effective supply chain management
keeping the customer in mind
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supply chain management
idea of coordinating or integrating a number of product-related activities among supply chain participants to improve operating efficiencies, quality, and customer service in order to gain a sustainable competitive advantage for all of the collaborating organizations.
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who has the most to gain from supply chains?
firms with large system inventories, many suppliers, complex product assemblies, and large purchasing budgets.
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bullwhip effect
supply chain safety stock, forecasting, and production problems. Caused by forecasts not being met.
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business process reengineering (BPR)
radical rethinking and redesigning of business processes to reduce waste and increase performance.
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third-party logistics providers (3PLs)
used to ensure a continuous, uninterrupted supply of goods.
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supply chain management in wholesaling and retailing industries is referred to as:
quick response (QR) service response logistics, or integrated logistics
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supplier management
encouraging or helping the firm's suppliers to perform.
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supplier evaluation
determining the current capabilities of suppliers.
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effective supplier management allows:
firms to selectively screen out poor-performing suppliers and build successful, trusting relationships with the remaining top-performing suppliers.
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advantages of operating on a global scale
larger market for products, lower labor costs
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risks of operating on a global scale
fluctuating exchange rates, tariffs, taxes
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How can firms avoid problems with global operation
use a number of suppliers, manufacturing, and storage facilities in various foreign locations
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successful supply chain integration occurs when:
participants realize that supply chain management must become part of the firms' strategic planning processes, where objectives are based on the end-customers' needs.
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supply chain expansion is occurring on two fronts:
increasing the breadth of the supply chain to include foreign manufacturing, and increasing the depth of the supply chain to include second- and third-tier suppliers and customers.
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second-tier suppliers and customers are:
suppliers' suppliers and the customers' customers
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three corporate goals are:
value, productivity, growth
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Procurement
process of obtaining services, supplies, and equipment in conformance with corporate regulations
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operations
design, operation, and improvement of production systems that efficiently transform inputs into finished good and services, while maximizing productivity.
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logistics
coordinated planning and execution of product distribution, transport, warehousing
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steps in corporate strategy and management
- 1. research and planning
- 2. design
- 3. business models
- 4. managing the supply chain
- 5. selling the product
- 6. service, support, repairs, maintenance, returns
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independent demand item
items for which demand is influenced by market conditions. Demand is not related to demand for other items in stock or produced.
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dependent demand item
items that are required as components or inputs to other products or services.
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lead time
time elapsed between customer placing order and order being received by customer
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lot size
typically refers to the order size
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SKU
stock keeping unit. Unique identifying number used to track each unique product customers can purchase.
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market inventory
readily available on the shelf
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safety stock
protects against uncertainty: it is not intended to be used.
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anticipation inventory
used to absorb uneven rates of demand or supply
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pipeline inventory
inventory "on its way" to the customer
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backward integration
taking over the role of your supplier
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forward integration
taking over the role of companies closer to the customer
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bulk cargo
free flowing, stored loose (coal, grain, rice, oil)
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breakbulk cargo
general or packaged cargo, typically containerized.
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neo-bulk cargo
characteristics of both bulk and breakbulk cargo (cars, logs, steel)
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mulitmodal
use of more than one mode of transport during a single shipment
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intermodal
seamless multimodal shipment - no need to unload container or repackage products
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dunnage
used to fill empty space inside boxes, tubes, etc (packing peanuts, styrofoam)
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primary packaging
in contact with the end item (plastic bag, can, bottle, shrink wrap)
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secondary packaging
contains end item and primary packaging (box, case, drum)
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tertiary packaging
contains several items which are in secondary packaging (crate, pallet, metal straps)
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3PLs
third party logistics company
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freight forwarders
travel agents for exports
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customs house brokers
help items clear foreign customs
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