Omar Tahio

 

Chapter 6

6.1. What is procurement? What is its relevance to logistics? Procurement refers to the raw materials, component parts, and supplies bought from outside organizations to support a company’s operations, is an important activity and closely related to logistics because acquired goods and services must be entered into the supply chain in the exact quantities and at the precise time they are needed. Procurement is important because its cost often range between 60 to 80 percent of an organization’s revenues.

6.3. Discuss the benefits and potential challenges of using electronic procurement cards. Procurement card can benefit organizations in several ways, one which is a reduction in the number of invoices, unlike personal credit cards, p-cards an organization will take individual  payments for each p-card holder. P-cards allow suppliers to be paid in a timelier fashion. Issues associated with an expansion of p-cards overseas include currency differences, availability of technology, difference in card acceptance a cceptance and cultural issues with the program.

6.4. Discuss three potential procurement objectives. The three potential procurement objectives are support organizational goals and objectives, managing the purchase process effectively and efficiently, and managing the supply base.

6.6. Distinguish between a single sourcing approach and a multiple sourcing approach. Multiple sourcing proponents argue that by having hav ing more than one supplier increased amounts of competition, greater risk mitigation and improved market intelligence can c an arise. Single sourcing, on the other hand, hand , consolidates purchase volume with a single supplier with the hopes of enjoying lower costs per unit and increased cooperation and communication in the supply relationship.

6.8. Discuss the factors that make supplier selection and evaluation difficult. Sometimes it may be difficult for a supplier to achieve both competitive pricing and high quality supply. However, some vendor selection criteria may be contradictory, it is important to understand potential trade-offs between them. However, it could be difficult sometimes.

 

6.13. What are some of the challenges of implementing a global sourcing strategy? Challenges in establishing a successful global sourcing strategy include understanding und erstanding hidden costs as supply bases are expanded. Examples of hidden costs: Increased costs of dealing with suppliers outside the domestic market Duty and tariff changes that occur over supply agreement life Increased inventory-related costs associated with global supply chains Rising levels of logistics cost volatility (e.g. ocean freight rates)

6.17. Name, and give an example of, the five dimensions of socially responsible purchasing.

The five dimensions are: 1-Diversity is concerned with procurement activities associated with minority or women-owned organizations. 2- The environment e nvironment includes considerations such as waste reduction and the design of products for reuse or recycling. 3- Human rights issues include child labor laws as well as sweatshop labor. 44 - Philanthropy focuses on employee volunteer efforts and philanthropic contributions. 5- Safety is concerned with the safe transportation of purchased products, as well as the safe operation of relevant facilities.

6.20. How can supply chain finance help procurement drive value for its firm?

Procurement should be responsible for investment recovery because becau se without procurement in the first place, there probably would be b e no scrap, surplus, obsolete, or waste material to manage. Alternatively, one could argue that since investment recovery focuses on revenues and costs, the finance department should have responsibility.

 

Chapter 7

7.1 What is the relationship between demand management, order management, and customer service? A: Firms take a step ahead when orders are placed. Forecasts are composed of sales of the stocked inventories so that the firm can fill orders accordingly. Order management and customer service go hand in hand. Through the four stages of the order cycle, organizations are able to analyze customer service standards. 7.4 Define and describe the order cycle. Why is it considered an important factor of customer service? A: The order cycle is the elapsed time from when a customer places an order until the customer receives the order. It is an important aspect of customer service in part because the order cycle is frequently used to determine the parameters of customer service goals and objectives. The order cycle is also being used by some firms as a competitive weapon. 7.5 What are some causes of order cycle variability? What are the consequences of order cycle variability? A: Order cycle variability variability can occur in each stage of th thee order cycle. For example, order transmittal  by mail sometimes results results in the mailed item never reaching reaching its intended destination; destination; variability, variability, in the form of unreliable transit times, can occur during order delivery. One consequence of order cycle variability might be an increase in inventory levels levels to guard against stockouts. If inventory levels are not increased, then stockouts could occur because of order cycle variability, or a company might be forced to use expedited transportation to make sure orders arrive on time. 7.8 Define order triage and explain how it can affect order processing. A: Order triage refers to classifying orders according to pre-established guidelines guidelines so that a company can prioritize how orders should be filled. Companies that choose to do order triage must decide the attribute(s) used to prioritize (e.g., first in, first served; customer customer longevity). Although there is no one right attribute to use for order prioritization, the chosen attributes are likely to delight one set of customers and disappoint other customers. 7.12 How can customer service act as a competitive weapon? A: Customer service is more difficult for competitors to imitate than other marketing mix variables such as price and promotion. The text cites an example of Nordstrom’s, a high-end retailer that has a long-standing reputation reputation for excellent customer service. Their devotion to excellent excellent customer service leads Nordstrom’s to do things that competitors cannot or will not match.

 

7.14 List and discuss the three elements of the dependability dimension of customer service. A: The three elements are consistent order cycles, safe delivery, and complete delivery. delivery. As pointed out earlier, inconsistent order cycles necessitate necessitate higher inventory requi requirements. rements. Safe delivery brings loss and damage considerations into play; lost or damaged product can cause a variety of negative ramifications for a customer, customer, such as an out-of-stock situation. situation. One way of measuring the completeness of delivery involves the order fill rate or the percentage of orders that can be completely and immediately filled from existing stock; incomplete deliveries generally translate into unhappy customers.

 

Case 7.1 answers

1. Does S Super uper Auto Auto have have a cu custome stomerr service service problem? problem? Why Why or why why not? As Peng Zhang surveyed only 0.01% of customers, we cannot say that there is a customer service  problem but at the same the company company cannot afford to ignore ignore the feedback received fro from m these customers 2. Based on th thee reports of some vehicle vehicle owners, owners, it is apparent that that some dealers dealers have an integrity issue. Why has Super Auto not been aware of the issue? dealers of Super Auto ordered spare parts directly from Super Auto, which dispatched available spare  parts from its national warehouse warehouse in Shanghai the the next day using a cou courier rier service. The courier has a delivery lead time of one day to major cities and two days to the rest of China. Super Auto has over 100 authorized dealers across the country. It was a huge administrative burden for Super Auto to manage the small quantity of spare parts orders, which were highly unpredictable. 3. Does the sp spare are parts outsour outsourcing cing arrangem arrangement ent have any negativ negativee implicatio implications ns for the qual quality ity of spare  parts services offered to vehicle vehicle owners? If yes, why? Dealers complained that the courier service sometimes cost more than the spare parts shipped. In the outsourcing arrangement, Daily Freight orders spare parts in bulk from Super Auto and owns spare  parts at its seven regional regional warehouses at strategic strategic locations in Chin Chinaa 4. Assu Assuming ming Daily Daily Freight’s Freight’s claim claim on meeting SLAs SLAs is true, what what possible possible revision revisionss should be made made to the outsourcing SLAs? Why? . In the service level agreements (SLAs), Daily Freight needs to meet an availability rate of 95% of spare parts orders. Daily Freight marks up 10% on Super Auto’s sales prices to cover the inventory financing, transportation, transportation, and administrative costs. The demand for spare parts is sporadic and urgent. Before the outsourcing, all the authorized 3S (sales, services, and spare parts) dealers of Super Auto ordered spare parts directly from Super Auto, which dispatched available spare parts from its national warehouse 5. What revision revisionss may be made to the the old spare spare parts services services feedback form to help help Super A Auto uto collect customer information for continuously monitoring monitoring and managing the performance of dealers in the future? Why? You also need to come up with an effective procedure to continuously monitor and manage other dealers to ensure that they act with integrity in serving vehicle owners. Furthermore, please review the SLAs with Daily Freight to see if any revisions are necessary.” After Li left the meeting room, Wang, Zhang, and Chen discussed how to conduct a large-scale survey of vehicle owners to identify  possible dishonest dishonest dealers. Chen showed the the others an old spare parts parts services survey 6. Is it too la late te for Super Super Auto to attempt attempt servic servicee recovery recovery with vehicle vehicle owners owners who who were cheated cheated by dishonest dealers? Why or why not? By conduct a large-scale survey of vehicle owners to identify possible dishonest dealers. Chen showed the others an old spare parts services survey 7. What le lessons ssons can can we learn learn from the Super Super Auto case case for managing managing cu custome stomerr service service quality quality in outsourcing? 8.

How to distribute by the right way and how to work with other dealers