SCMT 309 1st EditionExam # 1 Study Guide Lectures: 1 - 16Chapter 1: Supply Chain Management: An Overview- The forces of change require organizations to be much more nimble and responsive; that is, organizations need to be able to transform themselves quickly to survive in the intensely competitive, global environment- A key element in Wal-Mart’s ability to discount brand-name products was an understanding of the importance of efficiency in its logistics and supply chain system from purchasing, through delivery to its stores, to lowering cost of operations and maintaining a continual forces on improving its supply chain processes, Walmart continually makes adjustments to improve not only its store operations but also its logistics and supply chain operations.- One could argue that most retailers are essentially supply chain companies since they buy products produced by others and sell these same products to their customers. While other factors such as merchandising, pricing, store location, and layout are important, supply chain management and logistics are key ingredients for success in today’s highly competitive global environment.What Forces Are Driving the Rate of Change- Supply chain management (SCM)- the management of the flow of goods. It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.o Became part of the vocabularies of CEOs, CFOs, COOs and CIOs during the1990s. the dynamics of the global environment changed dramatically during that decade, and organizations had to adapt to these changes or perish. Unfortunately, there were a number of casualties like some of the retailers previously mentioned - Five major external forces appear to be driving the rate of change and shaping our economic and political landscape:o Globalization Arguably the most frequently cited change factor by business leaders, and it has replaced the post-World War II Cold War as the dominant driving forces in world economics The concept of the global marketplace or the global economy has taken on new meaning for all enterprises (profit and nonprofit; small, medium, and large; products or services) and for individual consumers during the last two decades Overall, globalization has led to a more competitively intense economic and geopolitical environment. This environmentmanifests itself in opportunities and threats both economic and political Some say there is no “geography: in the current global environment (figuratively speaking), or that time and distance have been compressed. So companies seeking to rationalize their global networks frequently ask questions such as:- Where in the world should we source our materials/services?- Where in the world should we manufacture or produce ourproducts/services?- Where in the world should we market and sell our products/services?- Where in the world should we warehouse and distribute our products?- What global transportation alternatives should we consider? Some important issues or challenges for supply chains in the global economy are- More economic and political risko Supply and demand have become more volatile for a number of reasons.o Acts of terrorism can have serious implications for the flow of commerce. Companies have put in place security measures to protect their global supply chains and are prepared to act quickly to offset challenges to the flow of materials through their supply chains, but the risk is ever present.o Natural catastrophes such as hurricanes, floods, and earthquakes have become more problematic because of the scope and extent of global trade; therefore, they pose a significant potential problemfor global supply chains.o Challenges to supply and demand can be worsenedin number and severity by the distances involved, which requires risk mitigation strategies- Shorter product life cycleso Shorter product life cycles are a manifestation of the ability of products and services to be duplicatedquicklyo Technology companies are particularly vulnerable to the threat of their new products being reengineered. However, almost all products in ourhighly competitive global environment are faced with this issueo Shorter product life cycles present a challenge for inventory managemento Products that are duplicated will most likely face a faster reduction in demand and new pricing policies, both of which present challenges to effective inventory management. o The risk of obsolesce in certain sectors of the economy as new products are developed is anotherchallenge for inventory management. It also meanscontinually developing new products or reconfiguring old products- The blurring or traditional organizational boundarieso A result of companies having to adjust or transformtheir business model or the way that they do business in a competitive global economyo Outsourcing: To maintain profitability (financial viability), companies may have to outsource some parts of their operation to another domestic or global company that can provide what they need more efficiently and, hopefully, maintain the same quality.  Outsourcing is not new. No organization is completely independent. The competitiveness of the global environment, however, has increased the scope of outsourcing both domestically and globally Many car and computer manufacturers outsource components or parts that they need for finished products From a supply chain and logistics perspective, the growth in outsourcing is noteworthy because it increases the importance of effective and efficient global chains because they become longer and more complex The BRIC factor- BRIC- Brazil, Russia, India, and China.- These four countries have a total population of well over 3.0 billion, with China accounting for about 1.3 billion of that total- These four countries, especially China and India, have beena leading force in the changing world marketplace in this era of globalizations- They produce products and services for export, and have also become major consumers of energy, basic materials, and finished products.- The supply chains of most, if not all, companies have been affected by the emergence of the BRIC countrieso Walmart- is by far the largest buyer of products produced in China, which is in sharp contrast to its 1970s slogan of “Made in America.” o It’s estimated that if Walmart were a country, it would be China’s 7th or 8th