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20 Cards in this Set
- Front
- Back
Discuss how the following helps alleviate the Bullwhip effect E-commerce and the Internet |
- Allow suppliers to have access to more accurate demand information - It mitigates the Bullwhip Effect by preventing distortion and miscommunication of demand information and reducing the lead time in order processing. |
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Discuss how the following helps alleviate the Bullwhip effect
Express Delivery |
- Reduces lead times, and the associated demand variance. - note that the variability of demand is proportional to the lead times in the system |
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Discuss how the following helps alleviate the Bullwhip effect
Collaborative Forecasts |
- Help all stakeholders in the supply chain to n arrive at a common, agreed-upon forecast of end-customer demand and reduce the bullwhip effect. |
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Discuss how the following helps alleviate the Bullwhip effect
Everyday Low Pricing |
- Periodic promotions create artificial demand peaks and bottoms and increase the variance in customer demand which amplifies the bullwhip effect. - Thru Everyday Low Pricing, demand fluctuations can be prevented, alleviating the bullwhip effect. |
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Discuss how the following helps alleviate the Bullwhip effect
Vendor-Managed Inventory |
- Allows the supplier to monitor downstream demand and to make a well-informed decision about how much to keep on-hand and how much to ship to customers. - Thus, the supplier doesn't have to rely on order data to forecast demand --> reducing the Bullwhip Effect. |
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Pros of sharing information among different supply chain members |
- Higher level of cooperation - Decreases info distortion - Facilitates collaborative/more accurate forecasting - Decreases the effect of behavioral biases, such as overreaction to demand shifts or shortage gaming. - Decreases bullwhip effect |
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Cons of sharing information among different supply chain members
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- Risk of info leakage - parties may have less motivation to share info with others supply chains - Need for proper contracts to increase info sharing and collaboration motivation. |
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Discuss 5 Ways that lead times within a supply chain can be reduced 1.) EDI |
- Electronic Data Interchange reduces the information lead time in the order process |
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Discuss 5 Ways that lead times within a supply chain can be reduced
2.) Cross-Docking |
- Reduces/eliminates the time items spend in inventory |
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Discuss 5 Ways that lead times within a supply chain can be reduced
3.) Share Inventory |
- Sharing inventory with nearby retail stores reduces the lead time during stock-outs |
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Discuss 5 Ways that lead times within a supply chain can be reduced
4.) Share Demand Information |
- Sharing demand info throughout the supply chain allows companies to be able to respond to demand fluctuations quickly. |
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Discuss 5 Ways that lead times within a supply chain can be reduced
5.) Delayed Differentiation |
- Delayed Differentiation pushes generic products down the supply chain as much as possible, and allows the supply chain to more easily accomodate demand for a variety of related products. |
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Pros of Location Pooling |
- Decrease inventory costs including the decrease in the level of safety stock - Decrease inbound transportation due to aggregation - The ability to provide high service to customers at low cost. - Decrease in inventory holding costs |
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Cons of Location Pooling |
- Inconvenience for the retailers and sales people. - Low Customer Service - Customers unable to see the product before buying it - Being Far from the Customers |
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Pros of Product Pooling |
- Decrease Inventory costs - Decrease in demand variability - less expensive to produce/procure because each component is needed in a larger volume |
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Cons of Product Pooling |
- May not provide key functionality to consumers with special needs - May eliminate brand/price segmentation opportunities - no differentiation or variety |
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Pros of Delayed Differentiation |
- Allows for differentiation at low cost - low inventory cost - ability to adjust the product mix based on the demand patterns |
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Cons of Delayed Differentiation |
- More expensive to produce or manufacture - Need for high flexibility in the production system - Can become expensive due to the flexibility required |
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What 3 factors led Walmart to own its truck although many retailers outsource all their transportation? |
1.) Scale: Large scale it is unlikely that a 3rd party can achieve further scale economies and increase the surplus 2.) Uncertainty: If requirements are highly variable over time, 3rd party can increase the surplus thru aggregation 3.) Specificity of Assets: If assets are specific to a firm, a 3rd party is unlikely to increase the surplus. |
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How can a supplier with a lower price end up costing the buyer more than a supplier with a higher price? |
- Lower price can be achieved by sacrificing product quality/reliability and process control. (Ultimately will cost outsourcer more than the total variable cost saved) - The cost of coordination is often underestimated. ( The outsourcer offloads relatively low-skilled labor but increases the burden on the mid-upper management in controlling the production. - Firms may also lose customer/supplier contact that causes them to miss opportunities that may have been recognized with a more direct relationship |