Summary of Chapter 11 Supply Chain Management
The goal of Supply Chain Management is to match supply to demand in the most efficient manner. Companies devote large amounts of resources to effectively manage a supply chain. The resources are as follows:
1: Product and service flow
2: Information flow
3: Financial flow

Financial flow refers to terms, payments, credits, ownership rights between suppliers, manufacturers, retailers, and customers.

Summary of Management Responsibilities & Procurement (pg. 516-521)
Management responsibilities have legal, economic, and ethical aspects. Procurement involves the purchasing of materials, parts, and supplies in order to produce products or provide services. Purchasing departments function through interfaces that connect them to the company's other departments and its suppliers. Purchasing can be handled by one special department (centralized), individual departments, or separate locations that do their own purchasing (decentralized). An important fact to keep in mind is that global supply chains are increasing. With this factor, additional complexities have arisen as to the communication and cultural differences to name a couple however, information technology has advanced from this very change. As to purchasing with the increasing globalization web-based auctions and managed inventory relationship will grow.

Strategic Responsibilities
The strategies include the following: supply chain strategy alignment, network configuration, information technology, product and services, capacity planning, strategic partnerships, distribution strategy, and uncertainty and risk reduction. Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a "SWOT analysis" to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of the entity in question.

Ethics in Purchasing (pg. 521)
Ethical behavior is important in all aspects of business. Businesses have more power than consumers when there is less competition, which can cause them to abuse the market for their sole gain. A set of guidelines for ethical behavior has been established by The National Association of Purchasing Management. Some examples of these guidelines include confidential and proprietary information, following applicable laws and trade agreements, professional competence, and responsibilities to your employer.

Summary of Supplier Management (pg. 525-527)

Supply management deals with the important aspect of operations management that relates to the reliability and effectiveness of a supply chain. An organization must make vital decisions in regards to choosing suppliers, auditing, certification, and continuing relationships/partnerships.

Inventory Management (pg. 529-530)
Inventory is the key component of supply chains. The elements of inventory management relate to the location of the supply chain, the speed at which inventory moves through the supply chain, and the effects of demand variability . Inventory velocity is defined as the rate at which goods move through a supply chain. The greater the velocity, the lower the holding costs. Without careful management, demand variations can cause inventory fluctuations. This leads to the concept called the bullwhip effect which is another part of inventory management that has to be paid great attention to. It means that when a customer initially has increased demand than as that demand is related up the supply chain, it turns into more and more demand, which in turn causes higher inventories that aren't really needed. The last important component is Vendor-managed inventory (VMI), which is when the actual supplier keeps control of the inventories for businesses and does the replenishing for them.

Summary: Creating an Effective Supply Chain (512-539)
An important part of supply chain is logistics which handles the maneuvering of the flow of goods, services, cash, and information. The vital components of having a successful supply chain are trust among partners, effective communication, supply chain visibility, performance metrics and the effective and efficient matching of supply to demand . To obtain effective communication and supply chain viability, supply chain managers are investing in Radio Frequency Identification (RFID) and Collaborative Planning Forecasting and Replenishment (CPFR). RFID uses radio wave technology to gather and share information. RFID is a tag-like device attached to material in the supply chain; it allows the tracking, identifying, monitoring or locating of the material through the chain. CPFR is an agreement among partners in the supply chain to develop a market plan. RFID's main goal is to share information among supply chain partners in planning, forecasting, and inventory replenishment. When supply chain managers develop a supply chain, they must make sure that they incorporate quality, cost, flexibility, velocity, and customer service. The use of RFID tags ( Radio Frequency identification) is becoming an essential part of Supply Chains.

Supply Chain Management (pg. 512)
Supply chains are often called value chains. Supply chain management is the strategic coordination of the supply chain for the purpose of integrating supply and demand management. Those trends are re-evaluation of sourcing, risk management, inventory management, lean supply chain and sustainability. To reduce those impacts, the organization needs to reconfigure their supply chain.

Management Responsibilities have legal, economic, and ethical aspects. These aspects relate to the organization's strategy, tactics, and operations. Procurement is related to the purchasing of materials, services etc. to produce goods or provide services. The costs, quality and delivery time are very important in purchasing of goods or services. Purchasing department functions through interfaces that connect them with other departments in the company and its suppliers. Purchasing cycle starts with request to purchase and ends with receiving that purchase. Purchasing can be handled by one department (centralized) or individual departments that do their own purchasing (decentralized).

Creating an Effective Supply Chain (p. 539~540)

SUMMARY: To achieve an effective supply chain, we must accomplish the following:
1. Trust – Trust, confidence, and similar goals need to be established between the trading partners.
2. Information velocity (the speed at which information is communicated in a supply chain) – the faster, the better.
3. Effective Communication - using standardized forms of communication between partners
4. Supply chain visibility (a major trading partner can connect to its supply chain to access data in real time) – data sharing.
5. Event management (the ability to detect and respond to unplanned events) capability – monitoring, notifying, simulating, measuring.
6. Performance metrics – to confirm that the supply chain is functioning as expected and the problems are being addressed. Fill rate (the percentage of demand filled from stock on hand) is also very important. Refer Table 11.7 for the key performance measures.
Strategic sourcing – analyzing the procurement process to lower costs by reducing waste and non-value-added activities, increase profits, reduce risks, and improve supplier performance.

Two key factors that are required by suppliers are timely deliveries and high quality products. An organization relies on the supplier's operations meeting business needs, and most importantly, consumer needs. Each organization must examine the reputation, past experience, price, and quality before choosing and purchasing from a supplier. When chosen, periodic audits must be made to analyze performance and production capabilities. A certified supplier has met or exceeded the demands of a buyer, which can be critical in establishing long-term relationships. Maintaining good relationships with suppliers is increasingly recognized as an important factor in maintaining a competitive edge.

1. Which of the following is not a capability of event management?
a. monitoring
b. fill rate
c. notifying
d. simulation
e. measuring
Answer: B pg. 517

2. Which of the following options is considered a tactical responsibility?
a) Collaborating
b) Scheduling
c) Order Fulfilling
d) Controlling
e) Information Sharing
Answer: A pg.518

3. RFID can aid a business in which of the following?
a. increase supply chain visibility
b. improve inventory management
c. improve quality control
d. enhance relationship with suppliers or customers
e. all of the above
Answer: E pg. 518

4. Which one of these is not one of the Management Strategic Responsibilities?
a) Capacity Planning
b) Information Technology
c) Uncertainty and Risk reduction
d) Shipping
e) Distribution strategy
Answer: d) Shipping is a tactical responsibility pg.518-519

5. What is the proper order of the Purchasing cycle?
a) Purchasing receives the requisition, purchasing places the order with a vendor, receiving orders
b) Receiving orders,purchasing receives the requisition, purchasing places the order with a vendor
c) Purchasing receives the requisition, purchasing selects a supplier, purchasing places the order with a vendor, monitoring orders, receiving orders
d) Purchasing receives the requisition, purchasing selects a supplier, purchasing places the order with a vendor, receiving orders
e) Purchasing selects a supplier, purchasing places the order with a vendor, monitoring orders, receiving orders
Answer: C pg. 520

6. Which of the following is (are) standard(s) for ethical behavior in purchasing?
A) Promote positive supplier and customer relationships
B) Avoid improper reciprocal agreements
C) Protect confidential and proprietary information
D) Champion social responsibility and sustainability practices
E) All of the above
Answer: E pg.521

7. Which ethical standard avoids improper reciprocal agreements?
A) Perceived Impropriety
B) Issues of Influence
C) Responsibilities to your employer
D) Reciprocity
E) None of the above
Answer: D pg.521

8. Which of the following is NOT a Principle of ethics in business?
A) Integrity in Your Decisions
B) Integrity in Your Actions
C) Value for Your Employer
D) Value for Your Time
E) Loyalty to Your Profession
Answer: D pg.521

9. A supplier agrees to hold inventory for a customer in exchange for the customer agreeing to long-term commitment.
This is an example of.
a. strategic partnering
b. customer aid development (CAD)
c. strategic planning
d. partner relationship modeling
e. none of the above
Answer: A pg.529

10. Cross-docking is best used to
a.increase time between quality inseparable to get best results
b. decrease the amount of ships at a loading dock during delivery
c. change transportation methods during delivery
d. avoid storage at a warehouse
e. none of the above
Answer: D pg.525

11. Which of the following is NOT taken into account when choosing a supplier?
a.) Supplier's Past experience
b.) Supplier's Reputation
c.) Supplier's Accounting Method
d.) Supplier's Price
e.) Supplier's Service
Answer: C pg.525

12. Which of the following is used in evaluating the sources of supply in terms of price, quality, reputation, and service?
a.) Management Selection
b.) Vendor Analysis
c.) Supplier Auditing
d.) Selection Analysis
e.) Supplier Marketing Analysis
Answer: B pg. 526

13. Certified suppliers are sometimes referred to as
a.) World-class suppliers
b.) Superior-class suppliers
c.) High-class suppliers
d.) High-rated performers
e.) Standard-class suppliers
Answer: A pg. 532

14. Short-term contracts involve:
a.) market bidding
b.) first-class bidding
c.) high-end bidding
d.) specification-bidding
e.) Competitive bidding
Answer: E pg.527

15.Some business organizations use BLANK to educate possible suppliers about the organization's policies, requirements and to enhance opportunities for receiving contracts.
a.) Supplier forums
b.) Supplier marketing meetings
c.) Business forums
d.) Business Management forums
e.) Company-need forums
Answer: A pg.527

16. What does the acronym CPFR in the supply chain management stand for?
a) Cost Planning, Forecasting, and Requirement
b) Cost Planning, Forecasting, and Replenishment
c) Cost Planning, Forecasting, and Receiving
d) Collaborative Planning, Forecasting, and Requirement
e) Collaborative Planning, Forecasting, and Replenishment
Answer: E pg.528

17. Term used to describe products being assembled based on customer specifications?

a) Engineer-to-Order (ETO)
b) Make-to-Order (MTO)

c) Assemble-to-Order (ATO)
d) Make-to-Stock (MTS)
e) None of the Above

Answer: C pg. 531

18. When inventory oscillations become progressively larger looking back through the supply chain describes?
a) Bullwhip Effect
b) Inventory Velocity
c) Economic Order Quantity
d) Type 1 Error

e) None of the Above
Answer: A pg. 530

19) Logistics are referred to as the: (pg. 531)
a) movement of materials, services, cash and information in a supply chain
b) movement of materials, services, and information in a supply chain
c) movement of materials, services, cash and information between competitors
d) movement of materials, cash and information between the company and customers
e)movement of services, and information in a supply chain
Answer: A pg.531

20 _ is a technology that uses radio waves to identify objects, such as goods in supply chain.
d) VMI
e) None of the above
Answer: B pg.531

21. RFID technology can do all of the following except:
a) reduce theft of inventory
b) improve inventory management
c) eliminate the need for checkout personnel at registers
d) reduce manual errors
e) provides more information than a barcode
Answer: C pg.534

22. What term describes screening returned goods to prevent incorrect acceptance of goods?
a. Cross-checking
b. Gateseeking
c. Intermediation
d. Gatekeeping
e. Cross-docking
Answer: d pg.538

23. Two key elements of managing returns are:
A) gatekeeping and avoidance
B) gatekeeping and acceptance
C) Logistics and reverse logistics
D) Logistics and sourcing
E) None of the Above
Answer: A pg.538

24. Which of the following is not a managing return:
A) Defective products
B) Recalled products
C) Unsold products returned from retailers
D) Non-recycle items
E) Waste
Answer: D pg.539

26. Strategic sourcing analyzes the procurement process to:
a) Lower costs
b) Reduce value-added activities
c) Reduce waste
d) All of the above

e) A & C
Answer: E pg.539

27. Strategic sourcing differs from more traditional sourcing in that:
a) It emphasizes purchase price rather than total costs
b) It seeks to consolidate purchasing power to achieve lower prices
c) Relies on fewer suppliers and collaborative relationships
d) All of the above

e) B & C only
Answer: E pg.539

28. Which one of the following options is not necessary in creating an effective supply chain?
a) Trust
b) Effective Communication
c) Information velocity
d) None of the above
e) All of the above are necessary
Answer: E pg.539

29. Which of the followings is NOT one of the supply chain financial measurements?
a) Return on assets
b) Cost
c) Average Value
d) Cash flow
e) Profits
Answer: C pg.540

30. Which one below is not a performance measure?
a. Financial
b. Suppliers
c. Competitive
d. Customer
e. Inventory
Answer: C pg.540

31. Which of the followings is NOT one of the challenges of supply chain management?
a) Barriers to integration of separate organization
b) Getting CEOs, board of directors, managers, and employees on the same page
c) Dealing with trade-offs

d) Other competitors
e) Variability and uncertainty
Answer: E pg.540-541

32. Delayed differentiation is one of the methods in what trade-offs?
a) Lot size-inventory trade-off

b) Product variety-inventory trade-off
c) Lead time-transportation cost trade-off
d) Cost-customer service trade-off
e) Inventory-transportation cost trade-off

Answer: B pg.540-541

33. What Trade-offs must be taken into account in structuring a supply chain?
a. Cost-customer service trade-offs
b. Inventory transportation cost trade-offs
c. Lot size-inventory trade-offs
d. Lead time-transportation cost trade offs
e. All of the above
Answer: E pg.541

34. Which of the following can be used to eliminate long lead times in the supply chain?
a) Disintermediation
b) Outsource
c) Cross-docking
d) Modular Construction
e) Intermediation
Answer: A pg.542

35: What is the goal of supply chain management?
A: To maximize profit
B: To minimize loss
C: To minimize fixed cost
D: To match supply to demand as effectively and efficiently as possible
E: To match demand to supply as effectively and efficiently as possible
Answer: D pg.513

36: What is the abbreviation of the tracking chips which allow products to be tracked in real time?
Answer: D pg. 531

37: What is the main function of traffic management? - One more choice needed.
A: To oversee the shipment of incoming and outgoing goods
B: To oversee the time it takes to deliver the good to the buyer
C: To determine the expected time and the amount of traffic on the given day
D: To determine the expected cost to make daily deliveries
Answer: A pg. 511

38: How can a manager best improve their supply chain?
A: Hire a consultant who specializes in this
B: Read a book about the subject
C: Read Chapter 11 of the textbook
D: A&B
E: All of the above
Answer: E pg.529

39: What is procurement?
A: Acquisition
B: Disposition
C: Exposition
D: Sales
E: Profits
Answer: A pg.523

40. Which of the following is NOT a tactical responsibility?
A.) Sourcing
B.) Forecasting
C.) Collaborating
D.) Shipping
E.) Operations Planning
ANSWER: D. Shipping (p.518)

41. Purchasing has interfaces with all of the functional areas except: (p.g. 519)
a. Accounting
b. Data processing
c. Design
d. Engineering
e. Statistics
Answer: E pg.519-520

42. If the incremental holding cost of an item is $2.50 for holding an item 2 extra days, what is the holding cost of the item per year?
a. $912.5
b. $750.25
c. $365
d. $456.25
e. $135.75
answer: D pg. 536-7

Question 1
1) Which one of the following is not one of the management strategic responsibilities?
a) Capacity planning
b) Information technology
c) Uncertainty and risk reduction
d) Shipping
e) Distribution strategy

Question 2
What is the normal purchasing cycle?
a) Purchasing receives the requisition, purchasing places the order with a vendor, receiving orders.
b) Receiving orders, purchasing receives the requisition, purchasing places the order with a vendor
c) Purchasing receives the requisition, purchasing selects a supply, purchasing places the order with a vendor, monitoring orders, receiving orders
d) Purchasing receives the requisition, purchasing selects a supplier, purchasing places the order with a vendor, receiving orders.
e) Purchasing selects a supplier, purchasing places the order with a vendor, monitoring orders, receiving orders.

Question 3
What does the acronym CPFR in the chain management stand for? (pg 538)
a) Cost panning, forecasting and requirement
b) Cost planning, forecasting and replenishment
c) Cost planning, forecasting and receiving
d) Collaborative planning, forecasting and requirement
e) Collaborative planning, forecasting and replenishment

Question 4
Which of the following is not part of order fulfillment(pg:530)
a) Build-to-order(BTO)
b) Make-to-stock(MTS)
c) Make-to-order(MTO)
d) Engineer-to-order(ETO)
e) Assemble-to-order(ATO)

Question 5
Which one of the following options is not necessary in creating an effective supply chain? (pg 539)
a) Trust
b) Effective communication
c) Information velocity
d) None of the above
e) All of the above are necessary

Question 6
Which one of the following duties is not associated with purchasing?
a) Identify sources of supply
b) Monitoring orders
c) Negotiate contracts
d) Managing inventories
e) All of the above are duties
(Page 520-521)

Supply chain management involves a strategic coordination of all business functions within an organization and throughout its supply chain. It involves vendor analysis, supplier audits, supplier certification, and supplier partnerships. Various organizations implement a supply chain when producing and delivering a product or services. Today, the internet boom has caused many companies to conducting business online, these companies are known as e-businesses. The biggest issue with companies is conducting in an ethical manner when purchasing from a supplier.
1. Many challenges with Internet selling are supply related (T/F)
Answer: True (pg. 522)

2. Which of these is true regarding CPFR?
a. Develop a joint market plan
b. Outlines the selling, promotion, and time frame of a product
c. Is a key input to forecasting
d. All of the above
Answer: d) All of the above (pg. 528)
3. Which is a key element of managing returns:
a. Avoidance
b. Event management
c. Gatekeeping
d. A & C
Answer: d) A&C (pg. 538)

4. In manufacturing, upwards of
_ percent of the costs of finished goods come from purchased parts and materials.
a. 60
b. 75
c. 55
d. 90
Answer: a. 60 (pg. 518)
5. Which of these is not true regarding centralized purchasing?
a. Can obtain lower prices due to quantity discounts
b. Is handled by many departments
c. Enables companies to assign certain categories of items
d. Are more efficient due to fewer items
Answer: b. (pg. 520)