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Chap0010 - Chapter 10 Supply Chain Strategy CHAPTER 10...

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Chapter 10 - Supply Chain Strategy CHAPTER 10 SUPPLY CHAIN STRATEGY Review and Discussion Questions 1. What recent changes have caused supply chain management to gain importance? Changes include: a. Competitive pressures from foreign firms. b. Elevation of product quality to a very high level of importance. c. International marketing and international purchasing. d. Trends towards choosing sole-source suppliers and long term relationships. e. Product varieties and ranges are rapidly changing, and speed of delivery to market is essential. f. Product life cycles have shortened necessitating knowledge and control of inventories in the various pipelines. g. Adoption of JIT production has changed supplier relationships and has also increased the focus on reducing inventories. h. Trends in the legal system hold manufacturers liable for product failures, even though causes of failure may lie outside of the production system itself. i. Use of EDI in purchasing. j. The growth of supplier development. 2. With so much productive capacity and room for expansion in the United States, why would a company based in the United States choose to purchase items from foreign firm? Discuss the pros and cons. The use of foreign firms can provide a U.S. firm more alternatives in selecting a supplier. The pros are more choices, potentially reduced costs in the areas of materials, transportation, production, and distribution, and potentially moving closer to a foreign market. The cons are the distance is generally increased, communications problems are increased due to distance, culture, and technology. There may be problems with customs, government regulations, political stability, etc. 155
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Chapter 10 - Supply Chain Strategy 3. Describe the differences between functional and innovative products. Functional products are staples that people buy in a wide range of retail outlets. Typically, they do not change much over time, have low profit margins, stable predictable demand and long life cycles. Innovative products, on the other hand, give customers additional reasons to buy. Fashionable clothes and personal computers are examples of innovative products.
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