BUSI 740 - Supply Chain Management Flashcards
LO A
Supply Chain Development/Design
NETWORK PLANNING PROCESSES
- Network Design (locations, transportation/warehouse costs); data collection/aggregation
- Inventory Positioning - safety stock, RM/WIP/FG
- Resource Allocation - supply chain master plan
LO A
Supply Chain Development
STEP 1: NETWORK DESIGN
How many facilities? Type (factory or warehouse)?
Size of facilities?
Allocating space for each product in the facility
Which customers use which warehouse?
Data needed: customer locations & demand #s, transportation rates (air vs truck vs rail vs ship), holding costs, etc.
Also consider: future demand, infrastructure, labor availability, public interest, natural resources, flexibility (what if warehouse closed, redirect where?)
LO A
Supply Chain Development
STEP 2: INVENTORY POSITIONING & LOGISTICS
- Identify the push-pull boundary. Which facility should be “made to stock” and which should be “make to order?”
- Take advantage of Risk Pooling (changes in demand)
- Move from a sequential or local optimization to a globally optimized strategy where all steps are considered and cost minimized.
LO A
Supply Chain Development
STEP 3: RESOURCE ALLOCATION
Allocate production, transportation, & inventory resources
System-wide Cost Min if best during times of recession/oversupply. Profit Max is best during growth periods when demand>supply. Who should we serve?
Where should products be produced?
How much should be produced? Batch size?
Information Sharing Strategies
- Capacity Reservation Contracts - prices @ different quantities
- Advance Purchase Contracts - lower $ if purchased in advance; higher $ if purchased after a certain date
- Global Optimization - align all players’ goals to reduce overall cost in the entire supply chain
Demand…Retailer…Wholesaler…Supplier…Factory…Supplier…Wholesaler…Retailer…Customer
LO B
Lead-Time Reduction Strategies
- Push-Based (forecasts) used for items with long lead time
- Pull-Based (demand-based)
- Demand-Driven Strategies - forecasts and shaping (marketing related, ad campaign, etc.)
LO C
Legal & Political Implications that impact the design of an international supply chain
Trade Agreements
Tariffs & Import/Export Quotas
Political Unrest
- Key is to manage the risks and identify possible unknowns (weather. terrorists, etc.)
- Be adaptable, assess risk periodically, better info, back-up plans
LO D
Vendor-Managed Inventory System
In a VMI system, the supplier decides on the appropriate inventory levels based on POS info from the retailer.
Advanced Info Systems required - barcodes/scanners
Consignment relationships are common where retailer doesn’t own merchandise
Confidentiality, communication, & cooperation are all important
When the vendor is responsible for ordering, planned downtime can be accounted for
Suppliers must have sophisticated forecasting in order for the retailer to agree with VMI
LO D
RSP - Retailer/Supplier Partnership
VMI Implementation
1. Negotiate RSP Contract
Who owns merchandise
credit terms
who's responsible for orders and when
service/inventory level benchmarks
- Info systems must be integrated
Forecasting techniques developed
Coordination of inventory management & transportation policies developed
LO E
Bringing a New Supplier into the Product Development Process
SUPPLIER INTEGRATION
Benefits of including suppliers in design process:
- Decline in purchased materials cost
- Increase in material quality
- Decline in development time and cost
- Increased final product technology levels
Levels of Supplier Integration:
None…White Box…Grey Box…Black Box
White Box - Consultation with supplier
Grey Box - Collaborative teams of engineers from buyer and supplier develop product
Black Box - requirements are given to supplier to develop and design product
Keys to Successful SCM
- Master the DEVELOPMENT CHAIN (new product development and intro, existing product changes)
- GLOBAL OPTIMIZATION (consider the entire process & all partners)
- RISK MANAGEMENT (political uncertainty, weather, terrorists, etc.)
Key Issues in SCM
Strategic/LT Tactical/Qtrly/Yearly Operational/Day-to-Day
- Distribution
- Inventory Control
- Production Sourcing
- Supply Contracts
- Customer Value
- Strategic Partnering
- Outsourcing
- Product Design
- IT Design
- Smart Pricing (supply & demand)
Inventory Control Strategies
- Max-Min: If inventory reaches a “minimum” level (aka reorder point) then we order up to the max level
- Q,R Policy: When inventory falls to a reorder level “R”, we place an order for “Q” units.
**Marginal Profit per unit should be > than marginal cost to store (FC not considered).
**Periodic or continuous review of inventory levels needed depending on lead times.
Inventory Reduction Strategies
- Periodic Inventory Counts - identify slow movers
- Tight management of lead times & safety stock
- Reduce safety stock
- Cycle Inventory Counts (walmart) one department per month instead of all one-time per year.
- ABC Approach - count “A” products more b/c they turnover quickly
- Shift inventory to suppliers
- Quantitative approach - use stats to find right balance b/w inventory & holding costs
Demand Forecasting: JUDGEMENT METHODS
(Collection of Expert Opinions)
*Judgement methods are good to use during testing and intro phases.
- Sales Force
- Panel of Experts
- Delphi Method - surveys experts & then reach a consensus
