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DB 320 exam 1
| Question | Answer |
|---|---|
| Activities involved in managing the movement of products along the supply chain is called | Logistics |
| Focal Firm: | • often selects the suppliers, the channel members, manufactures or builds the product, and interfaces with the final consumer |
| Intermediary: | • a business entity between a manufacturer and the consumer, another word for Distributor |
| Disintermediation: | • when the intermediary is eliminated and the manufacturer sells directly to the consumer |
| Original Equipment Manufacturers (OEMs): | • purchase industrial products to build into other products, such as an automobile manufacturer who buys steel, glass, tires, etc. from suppliers to build a car. • sell their newly created product(s) to other businesses or the consumer market |
| Tier 1 Suppliers: | • companies that are direct suppliers to OEMs, such as a tire manufacturer. |
| Tier Two Suppliers: | • companies that provide product to Tier One Suppliers, such as the company who produces the rubber for the tire. |
| • Tier Three Suppliers | provide product to Tier Two Suppliers |
| Bullwhip Effect: | • demand order variabilities are amplified as they move up the supply chain |
| Electronic Data Interchange (EDI) | is a method of exchanging data in real time |
| Distributors are critically important to the US economy and they create value in four basic ways: | 1) contributing to contactual efficiency 2) minimizing channel uncertainty 3) facilitating routinization 4) simplifying assortment: categorization and breaking bulk |
| of all bus. school graduates join firms that compete directly in the business market | 50% |
| is the largest customer category in the US | The government |
| The Value of a Distributor for Manufacturers | • hold Inventory • provide Market Coverage • gather Market Information • make Sales Contacts • Process Orders • provide Customer Support, ongoing Customer Service |
| The Value of a Distributor for the Customer | • Product Availability • Assortment Convenience • Breaking Bulk • Credit and Financial Assistance • Advice and Technical Support • Customer Service |
| Product Availability – | multiple and dense channels of distribution |
| • Assortment Convenience – | can buy multiple manufacturers’ products |
| • Breaking Bulk – | small quantities available, often still with high volume discounts |
| • Credit and Financial Assistance – | making buying easy |
| • Customer Service – | delivery, returns, repairs, warranty work |
| Alternatives to a Distributor | • The Manufacturer can manage the full process itself • Full Commission Manufacturers’ Representatives/Selling Agents • Broker |
| Manufacturer’s Goals in a Distribution Channel | • Expand market reach • Enhance brand value • Minimize costs to serve |
| Distributor’s Goals in a Distribution Channel | • Maximize inventory turnover • Maximize margins |
| why partnerships fail | slow payback results • poor communication • over-optimism • lack of shared benefits • lack of commitment to relationship • misunderstanding of operating principles • cultural mismatches • lack of effective relationship experience |
| partnership Failure rates are as high as | 60% |
| factors for Successful B2B Partnerships | • Trust • Personal Relationships • Shared Vision and Goals • Commitment • Information Sharing • Culture of Managing Change • Culture of Continuous Improvement • Talent-based and Technology-based Capabilities • Performance Metrics |
| Multi-Attribute Model | • evaluates and certifies suppliers • suppliers rated between 0 and 100, with 100 being a perfect score • attributes are assigned a weighting based on relevance • attributes must be agreed upon by both distributor & supplier in advance |
| Multi-Attribute Model Unacceptable (<50): | supplier needs immediate corrective action or may be dropped from the product line |
| • Multi-Attribute Model Conditional (50-70): | supplier needs add’l work in some areas; may be a candidate for replacement |
| • Multi-Attribute Model Certified (70-90): | supplier meets performance standards |
| • Multi-Attribute Model Preferred (90-100): | supplier exceeds performance standards |
| Models for Evaluating Suppliers | • External certifications – ex: ISO 9000 and ISO 14000 indicators of meeting high-quality standards • ISO: International Organization for Standardization • US Distributors expect prospective suppliers to have an ISO certification |
| ISO 9000 | • Customer Focus • Leadership • Involvement of People • Process Approach • Systems Approach to Management • Continual Improvement • Factual Approach to Decision-making • Mutually Beneficial Supplier Relationships |
| ISO 14000 | is a series of international standards for environmental management. |
| All Supplier Relationship Management programs share these 5 features: | • visibility (product flows, information) • automation (of transactions) • integration (multiple department view) • collaboration (real time updates to inventory & products in transit) • optimization (data can be accessed easily) |
| Market Potential | • estimate of maximum demand over time • based on total number of potential users and purchase price • US Census and US Census of Manufacturers are market sources |
| Sales Potential | • maximum portion of the total industry demand that a company can capture in a given time period • assumes optimal conditions • requires thorough customer knowledge |
| Quantitative Sales Forecasting | • uses objective data only • incorporates “time series techniques” to predict future sales trends |
| Qualitative Sales Forecasting | • subjective assessment • uses informed judgements • important when limited quantitative data is available |
| Types of Qualitative Sales Forecasting | Jury of Executive Opinion Delphi method Sales Force Composite Customer Survey |
| Types of Quantitative Sales Forecasting | Moving Average Weighted Moving Average Exponential Smoothing |
| Exponential Smoothing | • a fraction is applied to the most recent demand (a number between 0 and 1) • this fraction is called a “smoothing constant” or “alpha” |
| Moving Averages | • assumption that future sales will be an average of past sales • to smooth fluctuations, the number of periods averaged can be increased |
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