SCM 301 1st Edition Exam # 1 Study GuideI. Causes of the bullwhip effect:a. Price fluctuationsb. Periodic order policies at the wholesaler and manufacturer levelsc. Rationing/shortage gaming, trade deals offered by manufacturers to wholesalersd. Production schedules based on forecasts of wholesaler demand versus consumer demand II. Current trends in Supply Chain Managementa. Firms will increasingly need to be more flexible and responsive to customer needs b. Supply chains will need to benchmark industry performance and meet and improve on a continuous basisc. Responsiveness improvement will come from more effective and faster product & service delivery systemsd. Outsourcing of non-core activities to supplierse. Focusing of operationsf. A reduction in supply base as companies shift from multiple to single sourcingg. Long-term buyer supplier relationshipsh. Partnerships rather than adversarial tradingi. The outcome of these changes are that companies are establishing new relationships with their suppliers.III. Greening of supply chainsa. Producing, packaging, moving, storing, delivering and other supply chain activities can be harmful to the environmentb. Supply chains will work harder to reduce environmental degradationc. Large majority (75%) of U.S. consumers influenced by a firm’s environmental friendlinessreputationd. Recycling and conservation are a growing alternative in response to high cost of natural resourcesIV. Roles of Supply Basea. Supply Base: list of suppliers that a firm uses to acquire its materials, services, supplies, and equipment. Many firms are emphasizing long-term strategic supplier alliances consolidating volume into fewer suppliers, resulting in a smaller supply baseb. Preferred suppliers provide: i. Early supplier involvement: Information on the latest trends in materials, processes, or designsii. Information on the supply marketiii. Capacity for meeting unexpected demandiv. Cost efficiency due to economies of scaleV. Outsourcing: make-or-buya. Strategic decisionThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.b. Outsourcing - buying materials and components from suppliers instead of making them in-house. The trend has moved toward outsourcing. c. Backward vertical integration refers to acquiring sources of supply d. Forward vertical integration refers to acquiring customer’s operations.VI. Reasons for Buying or Outsourcinga. Cost advantage: Especially for components that are non-vital to the organization’s operations, suppliers may have economies of scale.b. Insufficient capacity: A firm may be at or near capacity and subcontracting from a supplier may make better sense.c. Lack of expertise: Firm may not have the necessary technology and expertise.d. Quality: Suppliers have better technology, process, skilled labor, and the advantage of economies of scale.VII. Reasons for Makinga. Protect proprietary technology b. No competent supplierc. Better quality controld. Use existing idle capacitye. Control of lead-time, transportation, and warehousing costf. Lower costVIII. Calculating Breakevena. Break even point q, is found by setting both options (cost to make and cost to buy) equalto each other. IX. Purchasing: Obtaining merchandise, capital equipment; raw materials, services, or maintenance, repair, and operating (MRO) supplies in exchange for money or its equivalent X. Merchant Buyers: Wholesalers and retailers who purchase for resaleXI. Industrial Buyers: Purchase raw materials for conversion, services, capital equipment, & MRO suppliesXII. Role of Purchasing an organizationa. Primary goals: Ensure uninterrupted flows of raw materials at the lowest total cost, i. Improve quality of the finished goods produced, and ii. Optimize customer satisfaction. b. Purchasing Contributes by:i. Actively seeking better materials and reliable suppliers, ii. Work closely with strategic suppliers to improve quality materials, and iii. Involving suppliers and purchasing personnel in new product design and development efforts.XIII. Purchasing Termsa. Material Requisition/Purchase Requisition - Stating product, quantity, and delivery date. May originate as a planned order release from the MRP system. Traveling requisition used for recurring orders.b. The Request for Quotation (RFQ) - Buyer identifies suppliers & issues a request for quotation (RFQ) for routine items or a Request for Proposal (RFP) for more demanding products. Supplier Development is used to develop supplier capabilities.c. The Purchase Order (PO) - Is the buyer’s offer & becomes a binding contract when accepted by supplier. When initiated by the supplier on their own terms, the documentis a sales order. The Uniform Commercial Code (UCC) governs transactions in the U.S., except Louisiana.d. Advantages of centralization:i. Concentrated volume ii. Leveraging purchase volumeiii. Avoid duplicationiv. Specializationv. Lower transportation costsvi. No competition within unitsvii. Common supply basee. Decentralization advantages:i. Closer knowledge of requirementsii. Local sourcingiii. Less bureaucracyf. How many suppliers to use?i. Single= risky.ii. Fewer: 1. To establish a good relationship2. Less quality variability3. Lower cost4. Transportation economies5. Proprietary product or process6. Volume too small to splitiii. Multiple:1. Need capacity2. Spread risk of supply interruption3. Create competition4. Informationg. Evaluating and selecting suppliers:i. Collaborative relationship, purchase cost less important with key suppliersii. Key suppliers selection: conducted by cross functional team selection approach using evaluation forms or scorecardsiii. Weighted Criteria evaluation system:1. Select the key dimensions of performance mutually acceptable to both customer & supplier.2. Monitor & collect performance data.3. Assign weights to each of the dimensions.4. Evaluate performance measures between 0 & 100.5. Multiply dimension rating by weight & sum of overall score.6. Classify vendors based on their overall score: Unacceptable, Conditional,Certified, & Preferred7. Audit & perform ongoing certification review. h. Delphi Method: i. . Choose the experts to participate. There should be a variety of knowledgeable people in different areas.ii. 2. Through a questionnaire (or E-mail), obtain forecasts (and any premises or qualifications for the forecasts) from all participants.iii. 3. Summarize