Chapter 5-6

IDCS: eBusiness (Part Time)

WEDNESDAY, MAY 23, 2012 

Q1: Define "direct materials" and "indirect materials". List reasons for a large company having two separate departments to manage the purchasing of each.

Direct materials are those materials that become part of the finished product in a manufacturing process. Steel manufacturers, for example, consider the iron that brought to be direct materials. The process for direct materials is an important part of any manufacturing business because the cost of direct materials is usually cost very expensive then indirect materials.

Indirect materials are all other materials that the company purchases, including factory supplies such as sand paper, hand tools and replacement parts of manufacturing machinery. Indirect materials items are often called maintenance, repair and operating supplies.

Large companies usually purchasing direct and indirect materials to separate departments. This is primarily because the procurement process differs significantly.

- Most companies include the purchase of non manufacturing goods and services, such as office supplies, computer hardware and software and travel expenses.

- Many vendors that manufacture general industrial merchandise and standard machine tools for a variety of industries have created Web sites through which their customers can purchase materials.  

 

Q2: In about 200 words, describe the reasons a buyer might have for wanting to participate in an industry consortium marketplace instead of setting up its own private company marketplace.

An industry consortium can also be known as a partnership. A partnership is commonly formed where two or more people wish to come to together to form a business. Perhaps they have a common business idea that they wish to put to the test or have realized that their skills and talents compliment each others in such a way that they might make a good business team. Forming a partnership seems like the most logical option and, in some cases, it is. Running a small business with a reasonably low turnover, a partnership is quite often a good choice of legal structure for a new business. Being a partnership, the business owners necessarily share the profits, the liabilities and the decision making.

Advantages

-The more money they can put into the business, which will allow better flexibility and more potential for growth. It also means more potential profit, which will be equally shared between the partners.

-They are less strictly regulated than companies, in terms of the laws governing the formation and because the partners have the only say in the way the business is run (without interference by shareholders) they are far more flexible in terms of management, as long as all the partners can agree.

-Partners share the decision making and can help each other out when they need to. More partners mean more brains that can be picked for business ideas and for the solving of problems that the business encounters.

Disadvantages

-One of the most obvious disadvantages of partnership is the danger of disagreements between the partners. Obviously people are likely to have different ideas on how the business should be run, who should be doing what and what the best interests of the business are.

-Because the partnership is jointly run, it is necessary that all the partners agree with things that are being done. This means that in some circumstances there are less freedoms with regards to the management of the business.

-Ordinary Partnerships are subject to unlimited liability, which means that each of the partners shares the liability and financial risks of the business.

-Partners share the profits equally. This can lead to inconsistency where one or more partners aren’t putting a fair share of effort into the running or management of the business, but still reaping the rewards.

As a conclusion, there are several advantages and disadvantages of partnership in terms of a business undertaking. Every team must have a good working knowledge of the law and the current advantages of partnership over the other legal forms of business in order to run a success business.



Q3: Which industries were the first to establish standard RFID technology? In about 100 words, state why, in your opinion, these industries were more interested in RFID tag technology than other industries.

RFID is the reading of physical tags on single products, cases, pallets, or re-usable containers that emit radio signals to be picked up by reader devices. These devices and software must be supported by a sophisticated software architecture that enables the collection and distribution of location-based information in near real time. The complete RFID picture combines the technology of the tags and readers with access to global standardized databases, ensuring real time access to up-to-date information about relevant products at any point in the supply chain.

Tags contain a unique identification number called an Electronic Product Code (EPC), and potentially additional information of interest to manufacturers, healthcare organizations, military organizations, logistics providers, and retailers, or others that need to track the physical location of goods or equipment. All information stored on RFID tags accompanies items as they travel through a supply chain or other business process. All information on RFID tags, such as product attributes, physical dimensions, prices, or laundering requirements, can be scanned wirelessly by a reader at high speed and from a distance of several meters.

The first industry to establish RFID was used over sixty years ago by Britain to identify aircraft in World War II and was part of the refinement of radar. It was during the 1960s that RFID was first considered as a solution for the commercial world. The first commercial applications involving RFID followed during the 70s and 80s. These commercial applications were concerned with identifying some asset inside a single location. They were based on proprietary infrastructures.

These industries use it for security use, tracking, detecting distant objects and determining their position, track weather formations, wind speed etc.

Conclusion

RFID offers new levels of visibility for companies that want to track physical items between locations. In the retail supply chain, goods tagged at the point of manufacture can now be traced from the factory to the shop floor, providing a real time view of inventory for all supply chain partners.

Awareness of RFID technology and the benefits it delivers is increasing across the industry. By playing a key role in developing the infrastructure required for RFID, Microsoft is contributing to the momentum of mass deployment.