11
C H A P T E R
Supply Chain Management
1. Supply chain management is the coordination of the activities
2. The objective of supply chain management is to structure the
supply chain to maximize the supply chain’s competitive
LO 11.5: Explain major issues in logistics management
4. Table 11.3 identifies types of supply chain risk:
◼ Economic/legal changes
5. Vertical integration implies that a manufacturer moves
backward into purchasing raw materials for components and
6. The three basic approaches to negotiation are:
◼ The cost-based model
to one of trust and the establishment of long-term relationships. To
implement long-term relationships, purchasers must move to com-
8. There are differences between postponement and channel
assembly. Postponement implies that the final product is not
LO 11.3: Explain issues and opportunities in the supply chain
10. Online auctions lower entry barriers for buyers and seller,
11. FedEx, UPS, and DHL use the Internet to track and
coordinate pickup and delivery. This can facilitate delivery of
12. Walmart often uses drop shipping to remove itself completely
from the distribution process so that orders from various stores are
13. Blanket orders are orders that cover an extended order period,
say a year, and against which releases are issued against that
172 CHAPTER 11 SUPPL Y CHA IN MA N A G E M E N T
LO 11.3: Explain issues and opportunities in the supply chain
AACSB: Reflective thinking
14. An organization moving to JIT deliveries must ensure that
the supplier is capable of delivering quality products on time,
15. E-procurement is electronic purchasing—i.e., the use of the
16. Darden finds competitive advantage in the supply chain
through a very proactive evaluation, development, and auditing of
suppliers. Darden has adequate volume to find and develop
developed four different supply chains: one for seafood; one for
dairy/produce/other refrigerated foods; one for other food items,
such as baked goods; and one for restaurant supplies.
LO 11.4: Describe the steps in supplier selection
AACSB: Reflective thinking
17. The Supply Chain Council had developed a model, the Supply
Ethical Dilemma
11.2 (continued)
Facing a similar situation in Bangladesh, Levi Strauss part–
nered with contractors to continue paying the kids but let them
attend school, with the promise of a job upon reaching age 14.
It’s likely that such tactics would be costly in the short run,
— Some cultures (many of the poor farmers of the world)
— Some cultures (such as Germany) think teenagers should
be in school or training and not in the regular workforce.
• This case brings up broader issues regarding any sort of
END–OF-CHAPTER PROBLEMS (PROBLEMS WITH # SYMBOLS
ARE NOT IN MYOMLAB)
11.1# This problem provides a good way to (1) get students
involved with the real world, (2) have them interact with members
of the existing workforce, and (3) get them to take a relatively
detailed look at supply chains and their relation to corporate
11.2
(a) If Sales, Other production cost, and Fixed cost all remain
constant, then Cost of material must decrease by $15,000 in
This percentage increase in sales = ($175,000 − $100,000) /
$100,000 = 75%.
Supply Chain
Percent Increase
or Decrease
Percent
Increase
in sales is necessary.
Supply–Chain
Percent Increase
or Decrease
Percent
Increase
CHAPTER 11 SUPP LY CHA I N MA N A G E M E N T 173
11.3
11.4# Students should identify a number of problems from
simple communication, through product valuation, to the selection
11.7 Organic Grocers, Inc.
Cost of sales $10,500,000
Supply Chain
Percent Increase
or Decrease
Percent
Increase
174 CHAPTER 11 SUPPL Y CHA IN MA N A G E M E N T
2
3
◼ The 11 distribution centers in North America are managed
by major professional U.S. food distributors, such as
MBM, Maines, and Sygma. Frozen, dry, and canned food
products are handled economically by these strategically
located professional distributors.
shrimp, tilapia, scallops, and other fresh fish. These suppliers
title changes at delivery to the restaurant.
◼ For fresh food, title typically changes at delivery to the
restaurant.
◼ In the fresh seafood food supply chain, title typically
changes at delivery at the U.S. dock.
LO 11.5: Explain major issues in logistics management
AACSB: Reflective thinking
4. There are lots of opportunities for discussion here. For
example, the automobile industry develops new and innovative
SUPPLY CHAIN MANAGEMENT
AT REGAL MARINE
The 7-minute video available from Pearson is designed to
supplement this case and was filmed specifically for this text.
partnering is to further the understanding of end users’ needs as
ARNOLD PALMER HOSPITAL’S
SUPPLY CHAIN
The 8-minute video available from Pearson is designed to
supplement this case and was filmed specifically for this text.
1. How does this supply chain differ from that in a manu-
facturing firm?
At APH, most of the purchases are for supplies (MRO items:
maintenance, repair, and operating supplies) rather than for items
economics alone at APH?
APH’s Medical Economic Outcome Committee consists of users
who evaluate purchase options. However, internal specifications
Copyright ©2017 Pearson Education, Inc.
3. What role do doctors and nurses play in supply chain
decisions in a hospital? How is this handled at APH?
LO 11.4: Describe the steps in supplier selection
AACSB: Reflective thinking
supply chain for future surgical use?
All such requests go through the Medical Economic Outcome