9.2 Supply chain management Flashcards
1
Q
A supply chain consists of a
A
- network of org.
- together they work together to provide and process the necessary raw materials into work in progress and then into finished goods for distribution and sale to end customer
- Eg: raw materials supplier - manufacturer - wholesaler/retailer - customer
2
Q
The transformation of the product along the supply chain includes activities such as:
A
- Production planning
- Purchasing
- Materials management
- Distribution
- Customer service
- Forecasting
3
Q
Supply chain management (SCM) involves
A
- the coordination of activities from the suppliers of raw materials on one end of the SC to the customer at the other end
- this should be done in a way to save costs and add value
- the objective should be to achieve synergies that benefit every player along the chain
- technology can play a key part in SCM
4
Q
The strategic supply wheel - Cousins (pg 242):
A
- this model emphasises the importance of viewing supply as central to the org and it’s effectiveness
- the notion is that the supply strategy should involve a number of key areas (spokes) for attention and action
- the wheel depicts the corp supply strategy as hub and an integrated approach is needed to balance all fives spokes
- there is an interface between spokes and the FF, particularly in areas of cost/benefit and performance measures
5
Q
Cousins model - spokes of wheel:
A
- Organisation structure - whether centralised / decentralised impacts control and interaction and should enhance rather than hinder supply strategy
- Relationships with suppliers - can be competitive (contractual) or collaborative (relational)
- Cost / benefit - supply decisions should be based on benefits and costs and cost/benefit should be done when making strategic decisions
- Competences - do the skills exist to achieve the strategy
- Performance measures - necessary to monitor and control the chosen strategy
6
Q
Relationship with suppliers (Cousin) - Competitive (contractual):
A
- purchasing function looked for lowest price suppliers, often through process of tendering, use of power and constantly switching supply sources to prevent getting too close
- supplier contracts had heavy penalty clauses and were drawn up in a spirit of general mistrust
- the knowledge and skills of supplier could not be exploited as info was deliberately withheld in case supplier used it to gain power during price negotiations
7
Q
Relationship with suppliers (Cousin) - Collaborative (relational):
A
- Org look to enter into partnerships with key customers and suppliers so they can better understand how to provide value and customer service
- product design processes include discussions involving both customers and suppliers, resulting in a synergy that can lead to generating new ideas, solutions and innovative products
- to enhance collaboration the org may reward supplier with long term sole sourcing agreements in return for greater levels of support and commitment to ongoing improvement
- the nature of the collaboration needs to shift to reflect the constant change in environment
8
Q
Material requirement planning (MRP):
A
- is a computerised system for planning the requirements for raw materials, work in progress and finished products
- It is designed to answer three questions:
- What is needed?
- How much is needed?
- When is it needed?
9
Q
Functions of MRP include:
A
- Identifying firm orders and forecasting future orders with confidence
- Using orders to determine quantity of materials required
- Determining the timing of material requirement
- Calculating purchase orders based on stock levels
- Automatically placing purchase orders
- Scheduling materials for future production
10
Q
The following technology has been developed from MRP:
A
- Manufacturing resource planning (MRPII) - goes beyond MRP to include:
- production planning
- machine capacity scheduling
- demand forecasting and analysis
- quality tracking tools
- employee attendance
- productivity tracking
- Enterprise resource planning (ERP) - integrates info from many aspects of operations and support functions into one single system
11
Q
Quality is one of the key ways in which a bus can
A
- differentiate it’s g/s, improve performance and gain a competitive advantage
- it can be defined in a number of ways:
- it means the g/s are free from errors and adheres to design specifications
- the g/s are fit for use
- the g/s meets the customers needs
12
Q
Why quality is important to a bus:
A
Higher quality can help increase revenue and reduce costs:
- higher quality improves the perceived image of product which can lead to more customers wanting to buy it and willing to pay more
- a higher volume of sales may result in lower unit costs due to economies of scale
- higher quality in manufacturing should lower waste and defective rates which will reduce production costs
- need for inspection and testing should be reduced also reducing costs
- volume of customer complaints and warranty claims should be lower therefore reduced cost
- better quality in production should lead to shorter processing times and therefore reduce costs
13
Q
Methods of quality measurement:
A
- there are four main types of quality-related costs, the org needs to identify these
- monitoring the costs of quality is central to the operation of any quality improvement programme
- targets should be set for each quality-related cost
14
Q
Quality related costs:
A
- Costs of conformance
- Prevention costs - cost of implementing a quality improvement programme to prevent defects before they occur (routine repairs of machinery & staff training costs)
- Appraisal costs - cost of quality inspection and testing (inspection of raw materials)
- Costs of non-conformance:
- Internal failure costs - cost of failing to meet quality standards before g/s reaches customer (machine breakdown repairs)
- External failure costs - cost of failing to meet quality standards after g/s reaches customer (returns from customers)
15
Q
There are a number of techniques an org can use to improve the effectiveness of the supply chain and manage relationships withing:
A
- Statistical process control
- Total quality management (TQM)
- Kaizen
- Six sigma
- Lean thinking
- Just in time
- Reverse logistics
16
Q
Statistical process control (SPC)
A
- a method for measuring and controlling quality during a process
- quality data is obtained in real time and plotted on a graph with a pre determined target and control limits
- data that falls within control limits indicates that everything is operating as expected
- if data falls outside the control limits, the variation should be investigated and corrective action taken before a defect occurs
17
Q
Total quality management (Japan):
A
- TQM is the continuous improvement in quality, productivity and effectiveness by establishing management responsibility for processes and outputs
- every process has an identified owner and every person operates within a process and contributes to it’s improvement
- it is less of a single technique and more of a culturally shared understanding
18
Q
The fundamental features of TQM include:
A
- Prevention of errors before they occur (get things right first time) - shift from quality control to quality assurance (prevention costs)
- Continual improvement - continuous examination and improvement of processes
- Real participation by all - everyone in value chain is involved in process
- Collaboration internally and externally is vital
- Commitment of senior management - management must be fully committed and encourage everyone else to become quality concious
19
Q
TQM participation by all includes:
A
- Employees - are encouraged to seek out, identify and correct quality problems. Teamwork is vital. They should be able to decide how best to do their work and achieve targets.
- Suppliers - Quality and reliability is vital
- Customers - goal is to identify and meet needs of customers
20
Q
TQM participation by employees may include:
A
- quality circles which are small groups of workers of different levels to come to together to discuss and solve quality problems
21
Q
Common reasons for failure of TQM programmes:
A
- Tail off - after an initial burst of enthusiasm, top management fails to maintain interest and support
- Deflection - other initiatives or problems deflect attention from TQM
- Lack of buy-in - managers pay only lip service to principles of worker involvement and communication
- Rejection - TQM does not fit in with org culture and therefore rejected
22
Q
Kaizen is
A
- is a Japanese term for the philosophy of continuous improvement in performance by small, incremental steps
23
Q
Characteristics of Kaizen:
A
- involves setting standards and then continually improving these standards to achieve long term sustainable improvements
- the focus is on eliminating waste, improving processes and systems and improving productivity
- it involves all areas of the bus
- employees often work in teams and are empowered to make changes (source of ideas on how to reduce costs, requires change in culture)
- allows org to respond quickly to changes in the competitive environment
24
Q
Six sigma quality management programme (Motorola)
A
- aim is to achieve a reduction in number of faults that go beyond an accepted tolerance limit by using statistical techniques
- the sigma stands for standard deviation
- this is the tolerance level set
25
Q
Lean thinking:
A
- is a philosophy that aims to systematically eliminate waste by identifying and eliminating all non value adding activities
26
Q
Lean thinking wastes to be eliminated include:
A
- Inventory - holding / purchasing unnecessary raw materials, wip and finished goods
- Waiting - time delays / idle time when value is not added to product
- Defective units - production of a part that is scrapped or requires rework
- Effort or motion - actions of people/equipment that don’t add value
- Transportation - delays in transportation or unnecessary handling due to poor planning or factory layout
- Over processing - unnecessary steps that don’t add value
- Over production - producing more than customers ordered
27
Q
Lean synchronisation aims to
A
- meet demand instantly with perfect quality and no waste
- it overlaps to a large degree with lean and just in time
28
Q
Just-in-time (JIT)
A
- is a system where the objective is to produce or procure products as they are required by the customer for use, rather than for inventory
- inventory levels of raw materials, wip and finished goods are kept to a minimum
29
Q
Requirements for successful operation of JIT system:
A
- High quality and reliability - emphasis on getting work right first time through
- highly skilled and well trained staff
- fully maintained machinery
- long term links with suppliers to ensure reliable and high quality service
- Elimination of non-value adding activities - value is only being added while a product is being produced and not while it’s stored (therefore low inventory)
- Speed of throughput - speed of production should match the rate of demand of customers (shorter production runs with lower finished goods stocks)
- Flexibility - is needed to respond immediately to customer orders
- system should be able to switch from making one product to another
- workforce should be dedicate and have appropriate skills
- it is an org culture that must be adopted by everyone
- workers should be able to use their initiative and deal with problems as they occur
- Lower costs by
- raising quality and eliminating waste
- achieving faster throughput
- minimising inventory levels
30
Q
Advantages of JIT:
A
- lower stock holding costs
- less working capital tied up in stock
- less stock perishing, becoming obsolete or out of date
- avoids build up of unsold finished products
- less time spent on checking and re-working products
31
Q
Disadvantages of JIT:
A
- little room for mistakes
- production is very reliant on suppliers (can cause delays)
- no spare finished products for unexpected orders
- may be difficult to empower employees to embrace concept and culture
- won’t be suitable for all companies (supermarkets)
- can be difficult to apply to service industry
32
Q
Reverse logistics is the
A
- return of unwanted or surplus goods, materials or equipment back to the org for reuse, recycling or disposal
- internet selling and shorter product life cycles has led to org focusing on their reverse logistics capability
33
Q
The main reasons for returns are:
A
- The customer is not satisfied with the product
- Installation or usage problems - if installation or usage is complicated
- Warranty claims for defective products
- Return of unsold stock by retailers
- Manufacturer recall program due to faults
34
Q
Steps should be taken to deal with the returns challenge:
A
- Minimise returns - production of good quality products that meet customer requirements and have clear guidelines for installation and use
- Ensure the possible reuse or recycling of material
35
Q
Techniques to deal with the returns challenge - these should reduce costs, improve customer service and increase revenue
A
- Root cause analysis to understand the reasons for returns
- Creation of profit centres around the returns process to focus on maximising the price they will get for returns
- Separation of supply chain into forward and reverse logistics
- Centralising the returns centre to improve speed and efficiency of handling returns
- Outsourcing the returns process to a competent and dedicated provider
- the use of technology such as ERP which supports reverse logistics processes
36
Q
A collaborative relationship between CFO and leader of supply chain is advantageous for org growth and competitive advantage:
A
- the role of supply chain leader has become more prominent, with a shift to creating supply chain strategy that is aligned with overall corp goals and helps org respond to new opportunities
- the FF now collaborates more closely with other functions as a supporter and enabler of performance
- the result is that CFOs and supply chain leaders are working increasingly together to understand, analyse and address supply chain issues
37
Q
In the FF’s unique position with end to end view of org, there are a number of areas the CFO can enhance performance by bus partnering with the supply chain, including:
A
- Stronger alignment between the supply chain and broader strategy and consistency of strategy within the supply chain
- CFO’s help to set the right growth priorities and pace of growth
- Monitor and enhance performance by establishing KPIs aligned with broader org
- Managing risk and business continuity
