Ch 7. Strategic Lead Time Management Flashcards
What does it mean when consumers are “time-sensitive”?
Consumers value their time and this is reflected in their purchasing behavior.
If a brand is out of stock, chances are high that they will see a substitute brand.
What’s the major determinant in the choice of supplier or brand?
The cost of time.
Top 3 pressures leading to the growth of time-sensitive markets
- shortening product life cycles
- customers’ drive for reduced inventory
- volatile markets (reliance on forecast is dangerous)
What is the effect of reduced inventories for upstream suppliers?
- JIT delivery service is now increasingly important
- Suppliers need to substitute responsiveness for inventory (agile supply chain)
Why does demand volatility increase? 3 reasons
- competitive activity
- unexpected response to promotions/price changes
- intermediary reordering policies
What are the 2 views on lead-time?
- Customer viewpoint = elapsed time from order to delivery (order-to-delivery cycle)
- Supplier viewpoint = time it takes to convert an order into cash (cash-to-cash cycle)
Which 2 elements are important to the order cycle time?
- Short lead times
2. Reliability and consistency of delivery
What is the cash-to-cash cycle?
It’s how long it takes to source materials until the delivery of the final product.
What is a major drawback of having long pipelines?
Responsiveness to changes in demand will be reduced.
Define pipeline management
A process whereby manufacturing and procurement are linked to the needs of the marketplace.
What are the 4 goals of pipeline management and how are they achieved?
- lower cost
- higher quality
- more flexibility
- faster response times
They are achieved by reducing the pipeline length and/or speeding up the flow through that pipeline.
What is value-adding time?
Time spent on activities that creates a benefit a customer is willing to pay for.
What is the first step to understanding how logistic processes can be improved?
Flowcharting so the difference between value-adding time and non value-adding time can become apparent.
How is the efficiency of a supply chain measured?
You can calculate this by its throughput efficiency.
value-added time ÷ end-to-end pipeline x 100
What is the challenge to pipeline management?
Finding ways to improve the ratio of value-added to cost-added time.
What are the sources of blockages and fractures that occur in the pipeline?
- extended set-up / change-over times
- bottlenecks
- excessive inventory
- sequential order processing
- inadequate pipeline visibility
How do you identify opportunities to reduce end-to-end pipeline time?
by creating a supply chain map
What is a supply chain map? Explain the difference between horizontal and vertical time.
It’s a time-based representation of the processes and activities involved as materials/products move through the chain.
Horizontal time = time spent in process
Vertical time = time where the material/product is standing still as inventory
What does horizontal time on a supply chain map determine?
Horizontal: the time it takes to respond to an increase in demand
What is pipeline volume and what does it determine?
The sum of horizontal and vertical time. It determines the time it takes to drain the system of inventory.
What reasons are there for non-value-adding time in the supply chain?
Self-imposed rules or inherited industry ‘rules’ such as
- economic batch quantities
- economic order quantities
- minimum order sizes
- fixed inventory review periods
- production planning cycles
- forecasting review periods
