Multiple Regression Models Case Study: Web Video on Demand

Web Video on Demand (WVOD) is an Internet video-on-demand streaming service. The company offers a subscription service for $5.99/month, which includes access to all programming and 30-second commercial intervals.

In the last year, the company has recently begun producing its own programming, including 30-, 60-, and 120-minute television shows, specials, and films. Programming has been developed for teen audiences as well as adults.

The following data represent the amount of money brought in through advertising sales, the average number of viewers, length of the program, and the average viewer age per program.

Advertising Sales($)Average # of Viewers(Millions)Length of Program (Minutes)Average Viewer Age(Years)
28,00010.13030
25,50011.43025
31,00019.96030
29,00013.66038
20,50012.56020
14,5003.53015
27,00015.16024
23,5003.73017
19,5004.33019
23,00012.212045
18,0005.112019
29,50015.96028
30,00016.812031
25,0008.512058
22,5009.13043

The WVOD executives are in the process of evaluating a partnership with several independent filmmakers to fund and distribute socially conscious and diverse programming. The executives have asked for regression models to be developed based on specific needs. The three regression model requests and programming details are included below.

The WVOD executives would like to see a regression model that predicts the amount of advertising sales based on the number of viewers and the length of the program. Develop this regression model (“Regression Model A”). Web Video on Demand would like to acquire a 60-minute documentary special about social media and bullying. The special is aimed at teen viewers and is estimated to bring in 3.2 million viewers. Based on the regression model, predict the advertising sales that could be generated by the special.

The WVOD executives would also like to see a regression model that predicts the amount of advertising sales based on the number of viewers, the length of the program, and the average viewer age. Develop this regression model (“Regression Model B”). Web Video on Demand may acquire a 2-hour film that was a hit with critics and audiences at several international film festivals. Initial customer surveys indicate that the film could bring in 14.1 viewers and the average viewer age would be 32. Use this information to predict the advertising sales.

© 2016. Grand Canyon University. All Rights Reserved.

MGT 322: Logistics Management

SECOND SEMESTER 2018-19

ASSIGNMENT 3

Course:MGT322Student name:
Academic Year1439-1440 HStudents number:
Semester:2ndstudent grade:
Section:CRN:Level of the Mark:

Instructions for Assignment

Assignment Regulations:

· This assignment is an individual assignment.

· All students are encouraged to use their own word.

· Student must apply Harvard Referencing Style within their reports.

· A mark of zero will be given for any submission that includes copying from other resource without referencing it

· A mark of zero will be given for any assignment that has over 30% plagiarism

· PDF is not accepted Only WORD DOCUMENT

Logistics Management

ASSIGNMENT -3

Submission Date by students: 04/01/2019Place of Submission: Students Grade CentreWeight: 05 MarksLearning Outcome:1. Analyze and identify challenges and issues pertaining to logistical processes.2. Apply essential elements of core logistic and supply chain management principles.3. The capacity to write coherent project about actual logistic case studies.Assignment Workload:This assignment is an individual assignment.Critical ThinkingThe purpose of this assignment is to identify and apply Logistics and Supply Chain Management concepts/tools to suggest logistics performance priorities. To this purpose, you should review about these companies through secondary available information. Think about how you can apply the concepts/tools that you learned in this course.Just in time (JIT) is an inventory management method whereby materials, goods, and labor are scheduled to arrive or be replenished exactly when needed in the production process? Using this concept of JIT and Lean Thinking you should answer the following questions by taking any Saudi Manufacturing company.Question:1. Why Companies adopted JIT model?2. Assess the reasons for using lean thinking. What are the benefits from Suppliers to end users? Using examples and Reasons why Company more focus on lean thinking and make their production Optimal?The Answer should be 3- 4 pages in length including the cover and appendices, with 1″ margins on all sides, double-spacing, and 12 point font. The cover of the answer should include title, course code and name, your full name, and your University id number.The Answer must follow the outline points below:· JIT and Lean Thinking· Their Main functions· Any local example· Reasons with suitable Examples· Reference

Week 4.a: Social Media then and now

http://www.ragan.com/Main/Articles/48761.aspx

Week 4.b: Delivering Bad News

https://www. forbes .com/sites/erikaandersen/2013/03/06/how-great-leaders-deliver-bad-news/#7ee7004c3dc6

(Please copy/paste this link into your browser search area in order to open it)

When you have read the above articles, you must do two things:

1. Write a summary of what you have learned from the articles, what you agreed (or disagreed with) and so on.  

Discuss (talk about) the reading material with your fellow students.  You can talk about what you learned from the articles; what you liked; what you did not like; what the authors missed in their article; how the articles relate to your experience and so on. When I read your discussions I want to see evidence that you have actually read the material and that you truly understand what you read and how it applied to the real world business environment.

I hope my instructions are clear — if they are not it is your responsibility to tell me what parts you don’t understand and ask for clarification (communications takes at last two people).

Human Resource Management, 5th Ed. Pearson Education, New York.

Chapter 11 and 13

8- Substantive post- 75-100 words each

Discussion 1

1. Predict what type of candidate might be most attracted to an organization offering high salary and cash incentives, but expensive benefits. What are the pros and cons of this type of candidate?

2. According to Compensation & Benefits Review (2012), the effect of compensation on employee performance, satisfaction and organizational commitment is hard to overstate. Having an effective compensation structure may be tough for some HR units, as finding a balance a balance between direct and indirect compensation is the tipping point many times, as it is not always the money for employees. Employees want to establish themselves with a company or organization for the most part, as long-term employment and benefits helps them to feel that compensation for both themselves and their families eliminates them from looking elsewhere.

I’m thinking the kind of candidate who wants the package mentioned in the questions is pretty much most professionals.

For me, I have valued compensation packages that offer 401(k), more leave days, remote working opportunities and I have love it. What are your thoughts as it relates to other benefits and not so much financially-based?

Compensation & Benefits Review Vol 44, Issue 1, pp. 24 – 28 First published date: April-23-2012 10.1177/0886368712445666Respond?

3. Most well educated and professionals that are looking for high paying jobs and are not worried about any benefits will more then likely be younger and hungry for promotions. They will thrive on the ability to progress and just look at making more money. Most high paying jobs come with big titles but could give an individual a late start to their career because of extra schooling and or testing and certifications that are needed. They probably do not have large families and may even be single because they are not worried about the benefits. Professionals with families will more than likely want the stability and benefits rather then the high pay and incentives. High paying jobs usually come with extra hours as well which means less family time. One negative towards a candidate in search for this type of job is that they are always looking for a better option or advancement which could mean a different company if they have a better offer. On the other hand you will get a very driven employee

Small Business Law. (n.d.). Retrieved from https://smallbusiness.findlaw.com/

Discussion 2

1) Should compensation adjustments be based on market movement, meritorious performance, or a combination of both?

2) Compensation adjustments should be based on a combination of both market and meritorious performance. In my experience, wages have typically not been a primary reason employee’s take a position in the organization. However, if someone feels they are not being fairly compensated for their role it’s likely a reason employee’s will look elsewhere for work.

Organizations that have a good pulse on the market movement for their organization should utilize that insight to remain competitive. Early in my career I worked for a fortune 100 organization that as a rule kept employees around the mid-point of the market for their position. They often didn’t go beyond mid-point even with proven high performers. This stance often led to frustration and to high turnover within the organization.

There needs to be a balance between both market and performance compensation to keep talent in an organization. Compensation just based on performance my not align with the market demand for the position and put an organization at risk of losing great talent. A few months ago, I was able to recruit an extremely talented and high performing individual from an organization because they weren’t market competitive for the role. I was able to sell him on the mission, great opportunity to learn, and grow as well as offer a salary that I knew wouldn’t be matched by his current organization. Respond?

3)

Discussion 3

1) Provide citation and reference to the material(s) you discuss. Describe what you found interesting regarding this topic, and why.

Describe how you will apply that learning in your daily life, including your work life.

Describe what may be unclear to you, and what you would like to learn.

2)

Logistics Management

Chapter 11

Logistics Management

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Learning Objectives

11–2

LO11-1 Explain logistics and the major decisions made by logistics managers.

LO11-2 Estimate cost savings from consolidation.

LO11-3 Choose efficient transportation modes and carriers.

LO11-4 Make decisions regarding warehouses, distribution centers, and facility networks.

LO11-5 Explain the importance of packaging and materials handling.

LO11-6 Locate facilities using the center-of-gravity model.

LO11-7 Describe the benefits of integrated service providers.

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

2

Starbucks Global Logistics: From the World to your Cup

LO11-1

11–3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Harvest/Ocean Transport

Surface Shipping/Storage

Roasting/Packaging

Distribution/Sale

Logistics Management

Logistics Management: movement and storage of materials to meet customer needs and organizational objectives

Includes forward and reverse flow

Includes flow of materials and information

Load, offload, move, sort and select material

11–4

LO11-1

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

4

Activities of Integrated Logistics Management

11–5

LO11-1

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

5

Logistics Cost Minimization & Trade-offs

Cost-to-Service: service levels = costs

Cost-to-Cost: cost of one activity, of another

Total Landed Cost: sum of all product and logistics related costs

Country costs of manufacturing

Cost in transit to country of sale

Cost within country of sale

11–6

LO11-1

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

6

Transportation Management

Government’s Role:

Economic Regulation: entry of new carriers, rates, and services provided

Safety Regulation: safe for carriers and public, including increased emphasis on security from terrorist activity

11–7

LO11-1

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

7

Transportation Management

Transportation Economics:

Economy of Scale: cost per unit of weight decreases as shipment size increases

Economy of Distance: cost per unit traveled decreases as distance moved increases

11–8

LO11-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

8

Consolidation

Consolidation: one large shipment made of many smaller shipments

By Market Area: combine small shipments from one shipper going to the same area

Pooled Delivery: combine small shipments from different shippers going to the same area

Scheduled Delivery: delivery at specific times

11–9

LO11-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

9

Consolidation or Not – Example

Example 11-1

A firm has orders of 12,000 lbs each of goods for three customers. It is $15.75 per hundredweight (cwt) to ship direct, or $10.50 cwt for shipments of greater than 30,000 lbs with a $300 fee for each stop.

Should the firm consolidate the orders into one shipment?

11–10

LO11-2

Cost of individual shipments:

$15.75 x (12,000/100) = $15.75 x 120cwt = $1,890

total for all three shipments = 3 x $1,890 = $5,670

Consolidated shipments:

$10.50 x (36000/100) = $10.50 x 360cwt = $3,780

including stop charge = 3 x $300 + $3780 = $4,680

Saving with consolidation = $5,670 – $4,680 = $990

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

10

Transportation Mode Selection

In order to decide which mode of transportation to use to ship an order, consider:

LO11-3

11–11

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Speed

the elapsed time required to move from the point of origin to destination.

Availability

the ability to service any possible location.

Dependability

the variance in the expected delivery times.

Capability

Frequency

the ability to handle any type of product and/or size of load.

the number of scheduled movements that can be arranged by a shipper.

Transportation Mode Selection: Characteristics

LO11-3

11–12

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Trucking Industry: 3 Segments

LO11-3

11–13

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Truckload (TL)

carriers generally carry only full trailers of freight.

trucks can be routed directly from the shipper to the consignee.

Less-than-truckload (LTL)

carriers usually move loads of less than 15,000 pounds.

carriers experience relatively higher fixed costs because of the need to stop at a terminal for load consolidation.

Specialty Carriers

include package haulers such as FedEx and United Parcel Service (UPS).

typically pay higher marketing costs because they want to generate full loads.

dominated by a few large carriers.

Carrier Types

Value Density: ratio of value to weight, often determines the type of carrier used

Common: provide service to the public with published rates

Contract: provide service only to select, contracted customers

Private: firm owns its own equipment

11–14

LO11-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

14

Transportation Service Selection

Total cost = In-transit holding cost + Freight cost

Example 11-2

11–15

LO11-3

A firm must ship a 10 lb parcel of 30 items valued at $500 each a distance of 1,000 miles.

Transportation options are 8-day ground for $50 or 2-day air for $90.

Holding cost is 20% of product value.

How should the firm ship their product?

In-transit holding = days in transit/365 x value x holding cost

Ground:

= [(8days/365) x $15,000 x 20%] + $50 = $115.75

Air:

= [(2days/365) x $15,000 x 20%] + $90 = $106.44

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

15

Student Activity

11–16

LO11-3

Rework the transportation cost analysis in Example 11-2 given all the same parameters, except that the 30 items are now valued at only $50 each.

Why is ground service now the best choice?

Ground:

= [(8days/365) x $1,500 x 20%] + $50 = $56.58

Air:

= [(2days/365) x $1,500 x 20%] + $90 = $91.64

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

16

Freight Transportation Mode Greenhouse Emissions

11–17

LO11-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

17

Warehouse Management – Primary Functions of Warehousing

11–18

LO11-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

18

Stockpiling

the storage of inventory in warehouses to protect against seasonality either in supply or demand.

Production Support

dedicated to storing parts and components needed to support a plant’s operations.

Break-Bulk, Warehouse Consolidation, and Cross-Docking

splitting the shipment into individual orders and arranging for local delivery to customers.

Warehouse Management – Break-Bulk, Warehouse Consolidation, and Cross-DockingI

Break-Bulk

Consolidation

Cross-Docking

11–19

LO11-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

19

Warehouse Management – Part II

Reverse Logistics:

Material moves upstream in the supply chain

Especially important in online retail

Value Added Services: providing additional value to the customer, such as postponement

(www.zappos.com)

11–20

LO11-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

20

Student Activity

Contact a company that has a warehouse operation nearby (it may be that your college or university has a warehouse facility). Arrange for a tour of the warehouse. Ask the warehouse manager about the different functions the facility performs (consolidation, break-bulk, etc.) for the organization.

11–21

LO11-5

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

21

Warehouse Management – Primary Process Activities

Warehouses must perform a variety of operations on a daily basis:

Receiving and unloading

In-storage handling

Storage

Order picking

Staging

Shipping

11–22

LO11-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

22

Materials Handling and Packaging

Handling material increases costs and risk of damage

Packaging can decrease handling costs and risk of damage

Containerization or Unitization: filling or creating a larger container from smaller ones

Automated Storage and Retrieval Systems: robots that get, move and put-away material

RIFD: electronic tracking of material

11–23

LO11-5

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

23

Network Design – Part I

Most impact on supply chain operations

Multiple factors to consider

Labor (availability and cost)

Proximity to suppliers and customers

Cost of land and construction

Taxes, incentives, and regulations

Transportation Infrastructure

Quality of life for employees

Supply chain risk

11–24

LO11-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

24

Network Design – Facility Location

Center of Gravity Method: finds the lowest cost based on demand and distance, using X,Y coordinates to define a geographic position

Di = Demand at location i

Xi = X coordinate at location i

Yi = Y coordinate at location i

11–25

LO11-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

25

Network Design – Facility Location: Steps Using the Center-of-Gravity Method

Example 11-3

11–26

LO11-6

1. Position the demand locations on a map with X and Y coordinates.

2. Determine the amount of demand at each location.

Di = Demand at location i

Xi = X coordinate at location i

Yi = Y coordinate at location i

3. Compute the weighted averages for X and Y coordinates using the formula below:

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

26

Network Design – Facility Location: Steps Using the Center-of-Gravity Method – Example

Example 11-3

11–27

LO11-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

27

Network Design – Facility Location: Steps Using the Center-of-Gravity Method

Example 11-3

11–28

LO11-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

28

Network Design – Transportation Cost

Number of locations is determined by balancing inbound and outbound transportation costs

Figure 11-5

11–29

LO11-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

29

Network Design – Total Network Cost

11–30

LO11-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

30

Integrated Service Providers

11–31

Integrated service providers (ISPs): Companies that provide a range of logistics services.

Third-party logistics service providers (3PLs): A common term used in the industry to describe ISPs.

LO11-7

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Logistics Management Summary

Flow of material and information between suppliers, producers and customers

Meet customer needs at lowest landed cost

Includes multiple decision areas

Economies of scale and distance impact costs

Multiple warehouse type to facilitate material storage and flow

Network design and facility location impact costs and customer service

11–32

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

32

‡”

‡”

i

i

i

i

D

i

X

D

X

=

‡”

‡”

i

i

i

i

D

i

Y

D

Y

=

Customer Service Management

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Learning Objectives

LO9-1 Describe how operations management helps establish and fulfill different levels of organizational commitment to customers.

LO9-2 Define the elements of basic service and explain how they are measured.

LO9-3 Describe a model of customer satisfaction.

LO9-4 Explain how a commitment to customer success is the highest level of customer management.

LO9-5 Describe the technological and relational aspects of customer relationship management.

LO9-6 Describe a strategy for segmenting customers and for developing tailored relationships with them.

9–2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

2

Winning the Customer’s Heart: Strategic Alignment at Unilever

Supply Chain Strategy

Business Strategy

LO9-1

9–3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

3

Customer Management

9–4

Intense focus on understanding and providing customers with products/service they desire

LO9-1

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

4

Six Basic “Rights” to Customers

LO9-1

9–5

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Basic Customer Service

Right amount

Right place

Right time

Right product

Right condition

Right information

Customer Service – Product Availability

9–6

Product Availability: inventory available when and where desired by customer

Units Lines Orders

Orders Units Lines Delivered Delivered Delivered

1,000 20,000 5,000 19,500 4,800 910

Example 9-1

LO9-2

Unit Fill Rate: Total units delivered / Total units ordered

= 19,500/20,000 = 97.5%

Line Fill Rate: Number of order lines delivered complete / Total order lines

= 4,800/5,000 = 96%

Order Fill Rate: Total complete orders delivered / Total orders

= 910/1000 = 91%

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

6

Lead Time Performance

9–7

Lead Time: time between start and end of an activity

Product design: conceptualize, design & test

Order: place and schedule for production

Procurement: source and arrive

Production: start to end of production

Delivery: warehousing & transportation to customer

LO9-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

7

Lead Time Performance – Part II

9–8

Differing market orientations have different elements of Order-to-Delivery (OTD) lead time

Engineer to Order (ETO): design and make to customer specifications

Make to Order (MTO): make to customer demand from raw materials and components

Assemble to Order (ATO): assemble to customer demand from generic subassemblies

Make to Stock (MTS): build and stock in anticipation of customer demand

LO9-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

8

Lead Time Performance- Part III

9–9

LO9-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

9

Service Reliability: The Perfect Order

9–10

Service Reliability: performance of all order related activities error-free

If a firm has 97% reliability on four attributes, the probability of a perfect order is .97x.97x.97x.97 = 0.885, or 88.5%

The Perfect Order: delivered without failure in any order attribute

Complete

On time

Damage free

Documentation correct

Example 9-2

LO9-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

10

Limitations of Customer Service

9–11

Customer service involves specifying the firm’s commitment to availability, operational performance, and reliability

Order winners, qualifiers, and losers

Meeting or beating competitor levels

Link to competitive strategy

Link performance to customer satisfaction

LO9-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

11

Customer Satisfaction: Core Expectations

LO9-3

9–12

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

12

Reliability

Security

Courtesy

Customer Satisfaction

Responsiveness

Access

Communication

Credibility

Competence

Tangibles

Knowing the customer

Customer Satisfaction – Part I

9–13

Customer Satisfaction: meeting or exceeding customer expectations, including:

Reliability: performance as promised

Responsiveness: prompt reply and resolution

Access: easy to use communication channels

Communication: proactive order notifications

Credibility: believable and honest

LO9-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

13

Customer Satisfaction – Part II

9–14

LO9-3

Customer Satisfaction: meeting or exceeding customer expectations, including:

Security: low risk and confidential

Courtesy: polite, friendly and respectful

Competence: able to perform

Tangibles: physical appearance

Knowing the customer: responsive to unique customer needs

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

14

Customer Satisfaction Model Gaps

Gaps occur at differences between:

Knowledge: understanding of customer needs

Standards: internal performance and customer expectations

Performance: standard and actual performance

Communication: actual performance and communications about performance

Perception: customer’s view of performance and actual performance

Satisfaction: customer’s perceptions and expectations of performance

9–15

LO9-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

15

Customer Satisfaction Model Gaps

9–16

LO9-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

16

Limitations of Customer Satisfaction

9–17

LO9-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

17

Happy Customer

Satisfied/Loyal Customer

Activity

Think of a time you were dissatisfied with a supplier’s performance

Which of your expectations were not met?

How did you form these expectations?

Which ‘gap’ resulted in your dissatisfaction?

9–18

LO9-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

18

Customer Success

Customer success requires a supplier to:

Have a long-term relationship focus

Gain comprehensive knowledge of customer needs

Consider the customer’s customers

Adapt manufacturing and distribution

9–19

LO9-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

19

Customer Relationship Management

Customer Relationship Management (CRM): technology-enabled data gathering about customers to develop strategic relationships

9–20

LO9-5

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

20

Customer Management and Relationship Strategy

9–21

LO9-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

21

Customer Management Summary

9–22

Basic customer service includes availability, lead-time performance and service reliability

Order-to-Delivery lead time is important

Satisfaction is achieved by meeting or exceeding customer expectations

Customer success focuses on strategic objectives and individual customer requirements

CRM involved data gathering and responding to the needs of specific customers

Multiple types of relationships and levels of commitment

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Sourcing and Supply Management

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Learning Objectives

LO10-1 Define supply management and understand its impact on a firm’s performance.

LO10-2 Define and describe each of the six supply management goals.

LO10-3 Analyze costs and make insourcing/outsourcing decisions.

LO10-4 Explain the steps in a strategic sourcing process.

LO10-5 Describe the components in a sourcing strategy.

LO10-6 Assess and select suppliers. 

LO10-7 Understand ways to manage ongoing supplier relationships.

10–2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

2

Chipotle®: Sourcing and Supply Management

10–3

LO10-1

© Stephen Brashear/AP Images

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

3

Supply Management

Supply Management: identification, acquisition, positioning, and management of inputs and supplier relationships

Also called purchasing or procurement

10–4

LO10-1

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

4

Effective Supply Management

10–5

A firm’s strategic objectives are better met when effective supply management:

Ensures timely availability of resources

Identifies, assess, and mitigate supply chain risk

Reduces total cost (not just purchase price)

Enhances quality

Enables access to technology and innovations

Fosters social responsibility

LO10-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

5

Effective Supply Management

10–6

Supply Risk: probability of an unplanned event that negatively affects a firm

Delays and disruptions

Thefts of intellectual property

Price increases

Product safety problems

LO10-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

6

Total Cost of Ownership

10-7

LO10-2

When the Cost Occur

Type of Costs

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

7

Before the transaction

Time spent and costs of searching for, visiting, evaluating, and certifying suppliers.

Purchase price and costs of ordering, transporting, expediting, receiving, inspecting, and following up.

After the transaction

During the transaction

Costs of inventory, supply risk, production downtime, defects in finished goods, warranties, safety recalls, replacements, repairs, lost sales, liability, and damaged reputation.

Activity

Think of some of the total costs of ownership for the following items:

Car or bicycle

iPod or other music device

Textbook

10–8

LO10-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

8

Goals Addressed by Sustainability

LO10-2

10–9

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

9

Results from Sustainability

LO10-2

10–10

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

Effects of

Sustainability

Improves financial performance

Increases quality

Instills customer loyalty

Enhances a firm’s reputation

Lower total costs

Effective Supply Management

Quality: A product’s quality is tied to the quality of its inputs.

Technology and Innovation: Suppliers are potential sources of innovation and new technology.

10–11

LO10-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

11

Effective Supply Management

10–12

Social Responsibility: behaviors that benefit related communities

Add value to communities

Increase social diversity

Environmental responsibility

Ethical behavior

Financial responsibility

Respect human rights

Safe working environment

Others?

LO10-2

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

12

Insourcing/Outsourcing

10–13

Insourcing: inputs from within the firm

Outsourcing: inputs from outside the firm

Make or Buy Decision: choosing between insourcing or outsourcing

LO10-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

13

Outsourcing Advantages and Disadvantages

10–14

LO10-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

14

Insourcing/Outsourcing

10–15

LO10-3

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

15

Insource or Outsource? Steps 1-4 in Decision

10–16

LO10-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

16

1. Assess Fit with Firm’s Competencies

What is the product’s or process’s relationship to the firm’s current or future core competencies?

What are savings from outsourcing compared to losing core competencies or intellectual property?

2. Evaluate the Suitability for Outsourcing

Characteristics that favor outsourcing: (1) Mature products with standard processes, (2) known technology where many capable suppliers and intellectual property risk is low.

3. Evaluate the Reasons for Outsourcing

When product or process seems appropriate for outsourcing, compare the benefits of outsourcing versus insourcing.

4. Assess All Relevant Quantitative Costs.

If previous steps indicate that outsourcing makes sense, compare the cost of making the product internally versus the cost of purchasing it.

Insource or Outsource? Steps 5-8 in Decision

10–17

LO10-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

17

5. Assess All Qualitative Factors

Important qualitative factors may include: loss of control; risk of dealing with a supplier; location, quality of supplier’s management team, compatibility of organizational cultures and values; supplier’s flexibility, labor-management climate, warranty and support systems; and proprietary information and degree of secrecy required.

6. Review the Capability of Suppliers

This includes a review of the technical, financial, manufacturing, and quality-related capabilities of suppliers.

7. Make and Implement a Decision

If you decide to outsource, select a supplier and document the anticipated benefits of outsourcing. If you decide to insource, document the reasons for this decision.

8. Monitor the Decision and Revise It as Necessary.

Compare the actual results of the decision against estimates and identify potential problems.

Student Activity

10–18

LO10-4

Many universities are outsoucing services that were traditionally insourced.  Make a list of the major services that your university offers.  Which are opportunities for outsourcing and which should be insourced? Why?

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

18

Strategic Sourcing Process

10–19

LO10-4

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

19

Sourcing Strategies

10–20

Leverage

Consolidate

purchases

Strategic

Build

Relationships

Bottleneck

Use

Multiple

sources

Noncritical

Increase

efficiencies

Low High

Level of Supply Risk

High

Value

of

Spend

to Firm

Low

LO10-5

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

20

Sourcing Strategies

10–21

Supply Base Optimization: number of suppliers to use

Too few increases shortage and price risks, innovation may be limited

Too many increases complexity and makes supply management difficult

LO10-5

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

21

Sourcing Strategies

10–22

Capabilities and location are important:

Proximity impacts ease of communication, transportation costs and community perceptions

Consideration of trade barriers and incentives

Global presence may impact access to markets

LO10-5

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

22

Supplier Relationships

10–23

LO10-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

23

Assess and Select Suppliers

10–24

Competitive bidding: price is most important factor, specifications are clear, high value, several equally qualified sources

Request for Proposal (RFP) or Quote (RFQ): describes what customer wants; supplier responds with cost and other data for consideration

LO10-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

24

Assess and Select Suppliers

10–25

Weighted Point Model: establishes performance categories that are weighted by importance

Table 10-2

LO10-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

25

Activity

Assume you need a new place to live or are considering several job offers. Use a weighted point model to assist in the decision making process.

What criteria are important to you?

How important is each criteria?

How will you break a tie score?

10–26

LO10-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

26

Assess and Select Suppliers

10–27

Online Reverse Auctions: suppliers bid in real time for buyer’s business

Supplier can make multiple bids

Usually price focused

Negotiation: bargaining process of planning, reviewing, analyzing, compromising to reach agreement

LO10-6

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

27

Managing Supplier Relationships

10–28

Information sharing: buyers and suppliers need to share timely data about demand, supply and delivery

Electronic Data Interchange (EDI): structured, secure mode of transmitting data

LO10-7

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

28

Managing Supplier Relationships

10–29

Supplier Scorecard: track and report supplier performance in key areas

Supplier Certification: assessment of supplier’s ability to meet buyer’s needs

Supplier Relationship Management (SRM): technology enabled data gathering about suppliers to manage strategic relationships

LO10-7

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

29

Supplier Management Summary

Effective supply management improves performance

In/Outsourcing requires both quantitative and qualitative analysis

Strategic sourcing finds and manages suppliers that meet the firm’s strategic objectives

Relationships with suppliers vary based on cost and risk

Suppliers are selected using online auctions, competitive bidding, or negotiation

Supplier relationship management involves communication and coordination

10–30

Copyright © 2017 McGraw-Hill Education. All Rights Reserved.

30

Category WeightRatingScoreRatingScoreRatingScore

Quality 40%31.252.031.2

Delivery 40%20.831.241.6

Price 20%51.030.620.4

Weighted Score 100% 3.0

3.8

3.2

Supplier A Supplier B Supplier C

Grading Rubric for Essay/Research Paper

Grading CriteriaPercentage
Deliverable requirements addressed; understanding of material and writer’s message and intent are clear. The students provided details that enabled the reader to comprehend the essence of the study.35%
Scholarly research which supports writer’s position properly acknowledged and cited direct quotations may not exceed 10% of the word count of the body of the assignment deliverable (excluded title page, abstract or table of contents if used, tables, exhibits, appendices, and reference page(s). Inclusion of plagiarized content will not be tolerated and may result in adverse academic consequences.20%
Critical thinking: position is well justified; logical flow; examples. The Student demonstrates critical thinking and provides evidence to support the analysis.20%
Structure: includes introduction and conclusion; proper paragraph format and reads as a polished, academic paper or professional presentation, as appropriate for the required assignment deliverable10%:
Mechanical – no spelling, grammatical or punctuation errors10%:
APA – deliverable is cited properly according to the APA Publication Manual (6th Ed.)5%

Essay (15 % of course grade)

Students should complete one of the essays described below. The essay is due in the individual’s  Assignments Folder  as indicated in the Course Guide/Schedule.

The essay should demonstrate a student’s ability to integrate and synthesize course concepts with selected readings to communicate his/her understanding of financial management concepts and their application in organizations.  The essay should also demonstrate a student’s ability to communicate as a manager. This includes proper writing style, organization, grammar, and spelling, as well as integration of course-related material. The writing style must follow the Publication Manual of the American Psychological Association , 6th edition. Citations for online sources should include the online address (URL) and access date as well as the citation for the specific reference. 

Research for the paper may be conducted online using the UMUC online library as the primary source. Do not use abstracts, use full-text articles. Publications that may be relevant for the topics listed below include: Strategic Finance, The Journal of Business Finance and Accounting, CFO Magazine, Nonprofit World, Harvard Business Review, or other accounting and financial journals.

The paper should: 

· Be based on your reading and research relevant to the topic.

· Be 5 to 6 double-spaced pages, not including the title page, executive summary, appendices, exhibits, and references.

· Include a one-page Executive Summary immediately following the title page that includes a statement of the major issue(s) and your conclusions and specific recommendations. The content of an Executive Summary is similar to an abstract. 

· Properly cite reference sources: these may include course material, information from magazines, journals, and online sources. All reference sources must have a publication date within the last fifteen years. Students who wish to use an older source publication should contact the instructor with the request and reason. 

Essay Topics/Individual Research Paper: Select one of the following topics

1. Ratio and Financial Statement Analysis – Your essay should critically analyze the benefits and limitations of ratio analysis, explaining what factors impact the meaningfulness of such measures and what new practices or theories may be emerging regarding the application of ratio and financial statement analysis.   Emphasize practical applications and real-world use of ratios synthesizing your readings in published research or survey articles.

2. Challenges faced by Financial Managers in a Changing Economic Environment

Your essay should critically asses the challenges faced by financial managers due to changes in the macroeconomic environment and how these impact businesses operations. Emphasize how there are consequences related to changes in strategies and priorities and in the way the departments adjust.

3.  Financial Management Practices and Their Impact on Organizational Performance: 

Your essay should critically asses the relationship between organizational performance and financial management practices. These include capital structure decision, investment appraisal techniques, dividend policy, working capital management and financial performance assessment.

Grading Rubric for Essay/Research Paper

Grading CriteriaPercentage
Deliverable requirements addressed; understanding of material and writer’s message and intent are clear. The students provided details that enabled the reader to comprehend the essence of the study.35%
Scholarly research which supports writer’s position properly acknowledged and cited direct quotations may not exceed 10% of the word count of the body of the assignment deliverable (excluded title page, abstract or table of contents if used, tables, exhibits, appendices, and reference page(s). Inclusion of plagiarized content will not be tolerated and may result in adverse academic consequences.20%
Critical thinking: position is well justified; logical flow; examples. The Student demonstrates critical thinking and provides evidence to support the analysis.20%
Structure: includes introduction and conclusion; proper paragraph format and reads as a polished, academic paper or professional presentation, as appropriate for the required assignment deliverable10%:
Mechanical – no spelling, grammatical or punctuation errors10%:
APA – deliverable is cited properly according to the APA Publication Manual (6th Ed.)5%