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PARTII

ANSWERSTOEND-OF-CHAPTERQUESTIONS

CHAPTER5:THESUPPLYCHAINMANAGEMENTCONCEPT

sthedifferencesbetweenasupplychainandsupplychainmanagement.

Asupplychaincanbeviewedasacombinationofprocess,functions,activities,

relationships,andpathwaysalongwhichproducts,rvices,information,andfinancial

transactionsmoveinandbetweenenterprisfromoriginalproducertoultimateendur

chainsarenotanewconceptinthenthatthroughtheyears

organizationshavebeendependentonsuppliersandorganizationshavervedcustomers.

Althoughanyorganizationcanbepartofasupplychain,supplychainmanagement

requiresovertmanagementeffortswithinthoorganizationsinthesupplychain.

Moreover,supplychainmanagementcannotbesuccessfulunlesstheparticipating

companiesadoptanenterpri-to-enterpriperspectiveandapplythesystemsapproach

acrossallorganizationsinthesupplychain.

stheSCORandGSCFmodelsofsupplychainmanagement.

TheSCORmodelidentifiessixkeyprocess—plan,source,make,deliver,return,and

enable—thesixprocessindicates

SCFmodel,thereare

eightrelevantprocess—customerrelationshipmanagement,customerrvice

management,demandmanagement,orderfulfillment,manufacturingflowmanagement,

supplierrelationshipmanagement,productdevelopmentmanagement,andreturns

icsalsoplaysanimportantroleinthesupplychainprocessinthe

GSCFmodel.

showthelogisticsfunctioncontributestothesupplychainmanagement

processtablishedintheSCORandGSCFmodels.

WithrespecttotheSCORmodel,itcanbearguedthatlogisticshassomeinvolvementin

icscanalsobeinvolvedindeliveringandreturning;the

definitionofthedeliverprocessspecificallymentionsthelogisticscomponentsoforder

management,transportationmanagement,heGSCF

model,logisticsconsiderationssuchason-timepickupanddeliverycouldariwithinthe

isticsfunctioncancontributetocustomerrelationship

managementandsupplierrelationshipmanagementprocessintermsofoutboundor

inboundmaterialbeingpartofaproductandrviceagreementwithakeycustomeror

supplier.

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efourkeyenablersofsupplychainmanagementimplementation?

Thetextdiscusdtheimplicationsofincreadcustomerpower,establishingappropriate

relationshipstructures,leveragingtechnologyforenhancedvisibilityandcommunication,

andtheuofsupplychainfacilitators.

thedifferencebetweenaleanandanagilesupplychain?Underwhat

circumstancesiachanappropriatesupplychainapproachtopursue?

Anagilesupplychainfocusonanorganization’scapabilitytorespondtochangesin

pplychainsfocusoneliminatingall

waste,includingtime,esupplychainmaybemost

appropriateincontextsinwhichcustomerdemandisvolatileandcustomerrequirements

swherecustomerdemandisrelativelystableandvarietyis

low,establishingaleansupplychainmaybeamoreappropriategoal.

ssomeofthewaysthatinventorycanbereducedinthesupplychain.

Waystoreduceinventoryinthesupplychaininclude,butarenotlimitedto,smaller,

morefrequentorders;theuofpremiumtransportation;demand–pull,asoppodto

supply–push,replenishment;andtheeliminationorconsolidationofslower-moving

r,prominentsupplychaindisruptionsintheearlypartofthetwenty-

firstcentury,suchasterroristattacksandnaturaldisasters,havecaudsomesupply

chainstoreassstheiremphasisoninventoryreduction.

thedifferencebetweenrelationalandtransactionalexchanges?Whichis

morerelevantforsupplychainmanagement?Why?

Relationalexchangestendtoemphasizealong-termorientationwhereastransactional

transactionalexchanges,relational

exchangesarecharacterizedbyattributessuchastrust,commitment,anddependence.

Supplychainmanagementsuggeststhatsupplychainxisttoimprovethelong-term

onal

ult,relationalexchangesaremore

relevantthantransactionalexchangestosupplychainmanagement.

greeordisagreethatsupplychaincollaborationcanbeclassifiedas

transactional,tacticalinformationsharing,orstrategicinnature?Why?

Studentscouldarguethatsupplychaincollaborationisnottransactional,tactical

informationsharingorstrategicinnature,butthetextarguesforthisclassification

scheme.

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aptersuggeststhattechnologyhasbeenatthecenterofchangestakingplace

greeordisagree?Why?

Althoughstudentscansupporteithersideoftheargument,thetextdoesarguethat

technolog

particular,increasincomputingpowerandtheInternethavebeenbehindmuchofthis

change.

stheimpactoftheInternetonsupplychainmanagement.

TheInternetcanfacilitatesupplychaineffectivenessandefficiencybyproviding

opportuniti

Internetallowsonesupplychainpartytohavevirtuallyinstantaneousvisibilitytothe

sibilitycanultimately

resultinlowerinventoriesandimprovedprofitabilitythroughoutthesupplychain.

htregulatoryandpoliticalconditionsactasbarrierstosupplychain

management?

Withrespecttoregulatoryconditions,anumberoftoday’ssupplychainarrangements

imum,companiesshouldbeawareof

calconditions

suchaswarandgovernmentalstabilitycanalsoactasbarrierstosupplychain

icaluncertaintysuchaswarmightcausomeorganizationstoshy

awayfromjoiningordevelopingsupplychainsthatrelyoncompanieslocatedinwarring

mentalpoliciesthateitherdiscourageinterorganizationalcoordination

ordiscouragedoingbusinesswithcertaincountrieswouldobviouslyhaveanegative

ampleofgovernmentpolicy,the2016

decisionbytheUnitedKingdomtoexittheEuropeanUnionislikelytohavesignificant

effectsonEuropeansupplychains.

opmanagementcommitmentnecessaryforsuccessfulsupplychain

management?

Topmanagementhastheabilitytoallocatethenecessaryresourcesforsupplychain

endeavorsandthepowertostructure,orrestructure,corporateincentivepoliciestofocus

onachievingorganizationalorinterorganizational(asoppodtofunctional)objectives.

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mpaniesarehesitanttoufrequentshoppercardsbecauthedata

providedcouldviolatethecustomer’greeordisagree?Why?

Althougheitheranswerisacceptable,thequestionofdatausageversuscustomerprivacy

nehand,thefrequent

shoppercardscanprovideaplethoraofdataabouttheshoppinghabitsofparticular

consumers,potentiallyallowingstorestoachievecustomizedmarketingforindividual

ametime,frequentshoppercardscouldviolatecustomerprivacyby

revealingwhatwaspurchad,whenitwaspurchad,whereitwaspurchad,andhow

itwaspurchad.

sthebest-of-breedandsingleintegratorapproaches.

Inasingleintegratorapproach,asinglevendorprovidesallrelevantsoftware

applications(e.g.,inventorymanagement,transportationmanagement,warehou

management,etc.).Oneadvantageofthisapproachisthatthereshouldbecoordination

atively,abestofbreedapproachchoosthebest

proachoftenrequiresadditionalsoftware

packagestocoordinatethedifferentapplications—andtheintegrationsdon’talwaysgo

smoothly.

hinkcorporateculturesarerelevantforsupplychainmanagement?Whyor

whynot?

r,thetextindicatesthatincompatiblecorporate

culturescouldprentpotentialobstaclestoeffectiveandefficientsupplychain

mple,anorganizationwithaparticipativemanagementstylemight

notm

addition,manifestationsofcorporatecultures,suchascompanyritualsandcompany

brochures,canprovideimportantcluesaboutthecapabilityofpotentialsupplychain

partiestoworktogether.

upplychainintegrationsodifficultinglobalsupplychains?

Integrationchallengesinglobalsupplychainsincludecultural,economic,technological,

political,spatial,supplychainstranslateintoboth

longerandmoreunpredictableleadtimesforshipments,whichincreathechancesthat

customerdemandmightnotbefulfilledduetoapotentialout-of-stocksituation.

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sthestrategicandtacticalconsiderationsthatcandriveacompanytouthe

rvicesofa3PL.

Thedecisiontou3PLrvicescanbedrivenbystrategicconsiderationsinthen

thatanorganizationbelievesthatoneormoreaspectsofitssupplychain(s)needstobe

atively,thedecisiontou3PLrvicescouldbemoretacticalin

nizationmighthaveaninefficientdistributionnetwork,aninabilityto

controlinternalcosts,acostlyorinflexibleworkforce,outdatedwarehousingfacilities,or

outdatedinformationsystems.

esomereasonsthatthird-partylogisticsarrangementsaren’talways

successful?

Onecommoncauof3PLfailureisunreasonableandunrealisticexpectations,generally

fromtheur’

example,hasthearrangementbeenstructuredsothatunexpectedoccurrencescanbe

dealtwithinatimelyandsatisfactorymanner?

thedifferencebetweena3PLanda4PL/LLP?

Third-partylogisticsreferstoasituationinwhichonecompany(say,amanufacturer)

allowsaspecialistcompanytoprovideitwithoneormorelogisticsfunctions(e.g.,

warehousingoroutboundtransportation).A4PL/LLPisacompanywhoprimary

purpoistoensurethatvarious3PLsareworkingtowardtherelevantsupplychaingoals

andobjectives.

sthethreeprimarymethodsthatorganizationscanutointegratetheir

supplychains.

Onemethodisverticalintegration,inwhichoneorganizationownsmultipleparticipants

dmethodinvolvesformalcontractsamongvarious

participants,rdmethodfocusoninformal

agre

optionprovidesagreatdealofflexibility,whichcanhavebothpositiveandnegative

aspects.

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PARTIII

CASESOLUTIONS

CASE5-1:JOHNSONTOYCOMPANY

Question1:Fromthestandpointofanindividualconcernedwithaccountingcontrols,

discussandevaluateJohnsonToyCompany’sprentpoliciesforhandlingreturned

items.

Thecontrolsarepoorfromthestandpointofaccuracyoffinancialrecordsbecauthey

providepoorinformationtomanagement.

Question2:AnswerQuestion1,butfromthestandpointofanindividualinterestedin

marketing.

Marketingpeopletendtofavorlessstringentcontrolsinthenthattheyprovidemore

flexibilitywhenbargainingwithretailers.

Question3:PropoapolicyforhandlingreturnsthatshouldbeadoptedbytheJohnson

aintolistcircumstancesunderwhichexceptionswouldbeallowed.

ShoulditapplytotheJungleJimdolls?

Onestudent’sanswerisreproducedhere.

-VOLUMECUSTOMERS(definedaspurchasing$75,000of

merchandifromJohnson’speryear)

onallydamagedgoodsmaybereturnedtoJohnson’splantat

Johnson’xpenwithafullrefund.

-volumecustomerswillreceiveastraight2%deductionoffthe

wholesalellingpricetocoverdefectives—whetherdefectivesare

classifiedascosmeticallydamagedorslow-movingitems,except

whenunabletollduetospecialcircumstances(eSectionIII).

-VOLUMECUSTOMERS

onallydamagedgoodsmaybereturnedtoJohnson’splantvia

Johnson’ssalespersonwithafullrefund.

-volumecustomerswillnotreceiveanautomaticdeductionfor

d,thedamageordefectmustbedefined:

icallydamagedgoods(classifiedasfunctionaland

salable):a25%discountgranteduponinspectionby

Johnson’ssalesperson.

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-movingitems:NORETURNS

-movingitems(forreasonsotherthanphysicaldamage):

eSectionIII(specialcircumstances).

LCIRCUMSTANCESWhenproductisnotresalableforreasons

otherthanbeingfunctionallydamagedorjustaslowmoverintheoff

ason,suchaswhentheproductreceivesbadpress(asinthecaof

JungleJimandJoggerDolls),Johnsonwillallowreturnofallsuchnon-

resalableitemsunderthefollowingconditions:

ermustpayforthereturnedmerchanditoreachJohnson’s

plant.

er’saccountwillbecreditedforthefullamountofsaidpurcha.

istobeudwithin30daysofreceiptofreturnedgoodsat

Johnson’splant;creditwillbevoidafter30days.

NomentionwasmadeastowhetherthereturnspolicyshouldapplytotheJungleJim

mmighttrytoenforceitbutcustomersmightcomplainthatitshouldnotbe

appliedretroactively.

Question4:Shouldthispolicy,ifadopted,beprintedanddistributedtoallofthe

retailerswhohandleJohnsonToyCompanyproducts?Whyorwhynot?Ifitshouldnot

bedistributedtothem,whoshouldreceivecopies?

Yes,mentofa

customerrvicepolicyistoletcustomersknowinadvancewhatthepolicyis.

Question5:Assumethatitisdecidedtoprepareastatementonreturnstobedistributed

esucha

statement.

TheanswerprovidedforQuestion3wouldsufficehereaswell.

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Question6:OnthebasisofthepolicyinyouranswertoQuestion3,developinstructions

fortheJohnsonToyCompanydistributionandaccountingdepartmentswithrespectto

theirrolesandproceduresinthehandlingofreturns.

Onecouldtaketheinformation(asdevelopedintheanswerstoQuestions3and5)and

draftamemotobenttoboththedistributionandaccountingdepartments,tellingthem

ounting

departmentshouldbetoldtodevelopadditionalproceduresthatwillprotectagainstfraud.

Inaddition,otherdepartmentsinthefirmshouldreceivesomeinformationconcerning

thereturnsbecautheymaycontaininformationthatshouldinterestmarketing,quality

control,andproductionscheduling.

Question7:AssumethatyouareCherylGuridi,thefirm’

thinkthatthereturnspolicyfavoredbythelogisticsmanagerwoulddifferfromwhat

wouldbebestforthefirm?Whyorwhynot?

Yes,thereturnspolicyfavoredbythelogisticsmanagerwillfavoratightreturnpolicyso

thatherdepartmentdoesnothavetoberesponsibleforkeepingtrackofreturned

mwouldprobablypreferaloor

returnpolicysothatitcouldbeudasabargainingtooltoincreasales.

Question8:UntilthepolicyyourecommendinyouranswertoQuestion3takeffect,

howwouldyouhandletheimmediateproblemofretailerswantingtoreturnunsold

JungleJimtheJoggerdolls?

udentshaveprovidedveryspecific

havesaidthatbecauthepolicywasnotineffectwhentheJungleJim

dollswentout,ttergroupfavoredapolicyof

“almostanything”gued—withsupportfromthe

camaterial—thattherewereanumberofvaluedlong-termrelationshipswithretailers

thatshouldnotbeharmed.