Supply Chain Strategy and Logistics

98 flashcards by MentisLibrary

The commercial side of supply chain: category sourcing and total cost of ownership, Incoterms 2020, freight modes and customs, network and warehouse design, newsvendor and multi-echelon inventory models, S&OP and forecasting, and supplier risk.

What are the four quadrants of the Kraljic matrix?
Items are plotted on profit impact against supply risk: non-critical or routine (low, low), leverage (high impact, low risk), bottleneck (low impact, high risk) and strategic (high, high). Each quadrant gets a different buying strategy.
What is total cost of ownership in sourcing?
The full lifetime cost of a purchase: unit price plus freight, duty, inventory carrying, quality failures, tooling, changeover, integration, support and disposal. It is the correct basis for comparing bids.
Distinguish an RFI, an RFQ and an RFP.
A request for information gathers capability and market data with no commitment. A request for quotation asks for pricing on a fully defined specification. A request for proposal invites suppliers to propose a solution as well as a price, and is scored on multiple criteria.
What is spend analysis, and what is a spend cube?
Spend analysis classifies historical purchasing data to find opportunity. The spend cube views the same spend along three dimensions at once: by category, by supplier and by business unit or site.
What is tail spend, and why is it hard to control?
The long tail of low-value transactions with many suppliers that together make up a small share of value but a large share of purchase orders and supplier records. It resists category management because no single item justifies the effort.
Single source, sole source and dual source
Single sourcing is a deliberate choice to buy from one of several capable suppliers. Sole sourcing means only one supplier exists or is qualified. Dual sourcing splits volume across two suppliers to keep both live.
What is should-cost or clean-sheet analysis?
Building an independent estimate of what a part ought to cost from material weight and grade, cycle time, machine rate, labour, scrap, overhead and a reasonable margin, then negotiating against that model rather than against last year's price.
What does a supplier scorecard usually measure?
Quality (defect rate, corrective action closure), delivery (on-time in-full, lead time adherence), cost (price change, savings delivered), service and responsiveness, and increasingly compliance and sustainability. Weightings are agreed in advance and reviewed on a fixed cycle.
Compare fixed price, cost plus and index-linked contracts.
Fixed price puts cost risk on the supplier and suits a well-defined scope. Cost plus reimburses cost with an agreed fee and suits genuine uncertainty. Index-linked pricing ties the material element to a published index so neither party gambles on commodity moves.
What is a reverse auction, and when is it inappropriate?
An event where pre-qualified suppliers bid the price down in real time against each other. It works for commoditised, fully specified, high-value categories with several willing suppliers, and is wrong for bottleneck items, relational categories and anything where quality varies with the supplier.
What is maverick or off-contract spend?
Purchasing made outside the negotiated agreements and approved channels, so the organisation pays list price, loses volume leverage and buys from unvetted suppliers.
What is the three-way match in purchase-to-pay?
Before payment, the system matches the purchase order, the goods receipt and the supplier invoice on quantity and price. A mismatch beyond tolerance blocks the payment for investigation.
What is supplier development?
Investing the buyer's own engineering, quality or planning resource in a supplier to raise its capability, typically where switching is impractical and the gap is fixable.
What is supply chain finance, or reverse factoring?
An arrangement in which a bank pays the supplier early at a discount based on the BUYER's credit rating, while the buyer pays the bank on the original, often extended, due date.
What do Incoterms actually govern, and what do they not?
They allocate, between seller and buyer, the tasks, costs and risk of delivery: who arranges carriage and insurance, where risk passes, and who clears export and import. They do not transfer title, set payment terms, fix the governing law, or apply to services.
Which Incoterms 2020 rules apply to any mode of transport?
EXW, FCA, CPT, CIP, DAP, DPU and DDP. These seven work for road, rail, air, sea and multimodal shipments.
Which four Incoterms 2020 rules are restricted to sea and inland waterway transport?
FAS, FOB, CFR and CIF. All four assume the goods are handed over alongside or on board a vessel, which only fits bulk and breakbulk cargo.
What does EXW require of the seller and the buyer?
EXW, Ex Works, is the minimum seller obligation: the seller makes the goods available at its own premises, not cleared for export and not loaded. The buyer bears loading, export clearance, all transport, all risk and import clearance.
What does FCA cover, and what did Incoterms 2020 add to it?
Free Carrier: the seller clears for export and delivers to the carrier named by the buyer at the agreed place. If that place is the seller's premises, delivery happens when the goods are loaded onto the buyer's vehicle; elsewhere, when they arrive ready for unloading. Incoterms 2020 added an option for the parties to agree that the buyer instructs the carrier to issue an on-board bill of lading to the seller.
How do CPT and CIP differ?
Under both, the seller contracts and pays carriage to the named destination while risk passes much earlier, at handover to the first carrier. CIP adds an obligation on the seller to buy cargo insurance for the buyer's benefit.
What insurance level does Incoterms 2020 require under CIP and under CIF?
CIP requires cover at Institute Cargo Clauses (A) level, an all-risks standard. CIF requires only the minimum Institute Cargo Clauses (C). The two rules were deliberately separated in the 2020 revision.
How do DAP, DPU and DDP differ?
Under DAP the seller delivers ready for unloading at the named place, with the buyer handling import clearance. DPU is identical except the seller must also unload. DDP goes furthest: the seller also clears for import and pays duties and import taxes.
What replaced DAT in Incoterms 2020, and why?
DAT, Delivered at Terminal, became DPU, Delivered at Place Unloaded. The change removed the implication that delivery had to be at a terminal, since unloading can happen at any agreed place.
Why should FOB not be used for containerised shipments?
Under FOB risk passes when the goods are on board the vessel, but a container is handed to the carrier at an inland depot or terminal days or weeks earlier. Between handover and loading the seller keeps the risk while having no control or access.
Rank the main freight modes on speed, cost and typical use.
Air is fastest and most expensive per unit weight, suiting high-value, urgent or perishable goods. Road is flexible and door to door over shorter distances. Rail and intermodal are cheaper over long land distances with less flexibility. Ocean is cheapest per unit and slowest, suiting bulk and non-urgent volume.
When does less-than-truckload beat full truckload?
When the shipment is too small to fill a trailer economically, roughly a handful of pallets, and the delivery can tolerate the terminal handling and longer transit of a hub-and-spoke network. Above about half a trailer, full truckload usually wins on cost and damage risk.
What is intermodal transport, and what is drayage?
Intermodal moves the same loading unit, usually a container or trailer, by more than one mode without handling the goods themselves. Drayage is the short truck move between a port or rail ramp and a nearby shipper, consignee or depot.
What is freight consolidation, and what is a milk run?
Consolidation combines several small shipments into one larger move to obtain a better rate. A milk run is a single vehicle collecting from or delivering to several stops on a fixed route and schedule.
What is the difference between a 3PL and a 4PL?
A third-party logistics provider executes logistics activities such as warehousing, transport and customs on the client's behalf. A fourth-party provider orchestrates and manages the whole network, including other providers, and usually owns no assets itself.
What does a freight forwarder do that a customs broker does not?
A forwarder arranges the movement: booking carriage, consolidating cargo, issuing transport documents and coordinating each leg. A customs broker is licensed to file entries and clear goods with the customs authority. Many firms do both, but they are distinct legal roles.