BADM 7120: Ch. 16 Supply Chain Management
Supply Chain - ANS-set of entities and relationships that cumulatively defines materials and
information flows both downstream towards the customer and upstream towards the first
supplier
what flows downstream? - ANS-materials and requisite information (usage instructions,
inventory levels, invoices)
what flows upstream? - ANS-return materials and monetary flow
physical supply - ANS-flow of materials from upstream nodes/facilities into the focal entity
physical distribution - ANS-flow of materials from downstream nodes/facilities towards the end
customer
supply chain management - ANS-the design and management of seamless, value-adding
processes across organizational boundaries to meet the real needs of the end customer
SCOR model: what is it/acronym - ANS-model that represents the integration of sourcing,
operations, and logistics
SCOR = Supply Chain Operations Reference Model
5 SCOR Functions - ANS-1. Plan: coordinating the other functions
2. Source: bringing inputs into the transformation process from other organizations
3. Make: (operations function) making product/service
4. Deliver: (logistics function) responsible for movement and storage of goods/across
organizations in the supply chain
5. Return: return & recycle inputs or products in the supply chain
5 Measures of Supply Chain Performance - ANS-1. Delivery
2. Quality
3. Flexibility
4. Time
5. Cost
Supply chain performance: delivery - how is delivery defined, what measures are used per
definition? - ANS-depends on if product is MTO or MTS
MTO: on-time delivery - % orders delivered complete and on date requested by customer
, MTS: fill rate - % orders filled completely from inventory w/o stockouts
Supply chain performance: Quality (3 ways to measure) - ANS-1. performance of
product/service
2. conformance to specifications
3. customer satisfaction
Supply chain performance: Flexibility (2 common measures) - ANS-1. Volume Flexibility: time to
change volume of output by a fixed amount
2. Mix flexibility: time to change the mix of products/services
Supply Chain performance: Time (2 measures) - ANS-1. Total supply chain throughput time:
sum of the throughput times of each of the entities or entire supply chain
2. Cash to Cash cycle time: how quickly a firm is paid by its customers relative to how quickly it
has to pay its suppliers
Cash to Cash cycle time formula - ANS-Cash to cash cycle time = days in inventory + days in
accts receivable - days in accts payable
unit cost formula - ANS-unit cost = [materials + labor + overhead] / # units produced
Total supply chain cost formula - ANS-total supply chain cost = suppliers (materials &
components + producer (fabrication and assembly) + logistics (shipping and WIP b/w firms)
bullwhip effect - ANS-increased variability in orders that are received by entities upstream in the
chain, which in turn affects the amount of inventory those entities hold
4 key points of supply chain dynamics - ANS-1. supply chain = highly interactive
2. bullwhip effect is often observed in supply chain
3. even with perfect information, replenishment lead times and potentially long lag in information
sharing can lead to bullwhip effect
4. improve supply chain by reducing total replenishment lead time and sharing real demand info
with all levels of the chain
2 human strategies that amplify supply chain dynamics - ANS-1. safe harbor: increased orders
and inventory magnification upstream due to increase orders from downstream (upstream
suppliers' fear. of stockouts)
2. inventory panic: upstream tier stockouts and inability to fill orders due to reduction of safety
stock after a long period of decreased demand (this occurs when there is a lull in sales, the
suppliers adjust, and demand picks back up)
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