BUSI 2603U Lecture Notes - Lecture 9: Vertical Integration, Keiretsu, Outsourcing
15 Mar 2017
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Document Summary
Scm is the integration of the activities that procure materials and services, transform them into intermediate goods and final products, and deliver them through a distribution system: competition is no longer between companies; it is between supply chains. Supply chain risk: more reliance on supply chains means more risk, fewer suppliers increase dependence, compounded by globalization and logistical complexity, vendor reliability and quality risks, political and currency risks. Bullwhip effect: occurs when slight demand variability is magnified as information moves back upstream. Local optimization: focusing on local profit or cost minimization based on limited knowledge. Incentives: sales incentives, quantity discounts, quotas, and promotions, push merchandise prior to sale. Large lots: low unit costs but do not reflect sales, bullwhip effect. Stable demand becomes lumpy orders through the supply chain. Opportunities in an integrated supply chain: accurate pull data, vendor managed inventory (vmi)
