Ch 7. Strategic Lead Time Management

Question 1

What does it mean when consumers are “time-sensitive”?

Answer 1

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.

Question 2

What’s the major determinant in the choice of supplier or brand?

Answer 2

The cost of time.

Question 3

Top 3 pressures leading to the growth of time-sensitive markets

Answer 3

1. shortening product life cycles
2. customers’ drive for reduced inventory
3. volatile markets (reliance on forecast is dangerous)

Question 4

What is the effect of reduced inventories for upstream suppliers?

Answer 4

• JIT delivery service is now increasingly important

- Suppliers need to substitute responsiveness for inventory (agile supply chain)

Question 5

Why does demand volatility increase? 3 reasons

Answer 5

1. competitive activity
2. unexpected response to promotions/price changes
3. intermediary reordering policies

Question 6

What are the 2 views on lead-time?

Answer 6

1. Customer viewpoint = elapsed time from order to delivery (order-to-delivery cycle)
2. Supplier viewpoint = time it takes to convert an order into cash (cash-to-cash cycle)

Question 7

Which 2 elements are important to the order cycle time?

Answer 7

1. Short lead times

2. Reliability and consistency of delivery

Question 8

What is the cash-to-cash cycle?

Answer 8

It’s how long it takes to source materials until the delivery of the final product.

Question 9

What is a major drawback of having long pipelines?

Answer 9

Responsiveness to changes in demand will be reduced.

Question 10

Define pipeline management

Answer 10

A process whereby manufacturing and procurement are linked to the needs of the marketplace.

Question 11

What are the 4 goals of pipeline management and how are they achieved?

Answer 11

1. lower cost
2. higher quality
3. more flexibility
4. faster response times

They are achieved by reducing the pipeline length and/or speeding up the flow through that pipeline.

Question 12

What is value-adding time?

Answer 12

Time spent on activities that creates a benefit a customer is willing to pay for.

Question 13

What is the first step to understanding how logistic processes can be improved?

Answer 13

Flowcharting so the difference between value-adding time and non value-adding time can become apparent.

Question 14

How is the efficiency of a supply chain measured?

Answer 14

You can calculate this by its throughput efficiency.

value-added time ÷ end-to-end pipeline x 100

Question 15

What is the challenge to pipeline management?

Answer 15

Finding ways to improve the ratio of value-added to cost-added time.

Question 16

What are the sources of blockages and fractures that occur in the pipeline?

Answer 16

1. extended set-up / change-over times
2. bottlenecks
3. excessive inventory
4. sequential order processing
5. inadequate pipeline visibility

Question 17

How do you identify opportunities to reduce end-to-end pipeline time?

Answer 17

by creating a supply chain map

Question 18

What is a supply chain map? Explain the difference between horizontal and vertical time.

Answer 18

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

Question 19

What does horizontal time on a supply chain map determine?

Answer 19

Horizontal: the time it takes to respond to an increase in demand

Question 20

What is pipeline volume and what does it determine?

Answer 20

The sum of horizontal and vertical time. It determines the time it takes to drain the system of inventory.

Question 21

What reasons are there for non-value-adding time in the supply chain?

Answer 21

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