CHAPTER 2 – UNDERSTANDING SUPPLY CHAINS FROM DIFFERENT PERSPECTIVES Flashcards
UNDERSTANDING SUPPLY CHAINS FROM DIFFERENT PERSPECTIVES (5)
MSCDM
– Managing Supply Chain Flows
– Synchronizing Supply Chain Functions
– Connecting Supply Chain Communities
– Designing Supply Chain Systems
– Measuring Supply Chain Processes
think of it as three rivers that flow from a customer all the way back to the source of raw materials.
Managing Supply Chain Flows
Three Rivers/Flows:
MATERIALS
MONEY
INFORMATION
Flow downstream, start with the raw materials, flowing through value-added steps until a product finally ends up in the hands of customers.
Materials
flows upstream from the customer through all the supply chain partners
Money
flows both upstream and downstream as customers place orders and suppliers provide information about the products and when they will be delivered
Information
Supply chain management can also be described as integrating three of the functions inside an organization
Synchronizing Supply Chain Functions
three of the functions inside an organization:
Purchasing
Logistics
Operations
– the function that buys the materials and services that a company uses to produce its own products and services.
Purchasing (or procurement)
always looking for ways to get a better deal from suppliers.
purchasing department
The basic goal of the__ is to get the stuff that the company needs at the lowest cost possible
purchasing function
Cost reduction strategies for purchasing managers:
-Negotiating with suppliers to reduce the supplier’s profit margin
-Buying in large quantities to get volume discount
-Switching to a supplier that charges less for the same product
-Switching to a lower quality product that’s less expensive
? covers everything related to moving and storing products.
– different names: (4)
Logistics
- physical distribution, warehousing, transportation or traffic
– refers to the products and services that are being shipped to the company by the suppliers
Inbound logistics
products that you ship to your customers.
Outbound logistics
– The goals of the logistics function are to move things faster, reduce transportation costs, and decrease inventory.
– Following are some ways that a logistics department might try to achieve these goals:
-Consolidating many small shipments into one large shipment to lower shipping costs
-Breaking large shipments into smaller ones to increase velocity
-Switching from one mode of transportation to another, either to lower costs or increase velocity
-Increasing or decreasing the number of distribution centers to increase velocity or lower costs
-Outsourcing logistics services to a third-party logistics (3PL) company
– in charge of the process that your company focuses on to create value
Operations
Operations managers usually focus on __, which means asking “How much can we do with the resources we have?”
capacity utilization
Types of resources:
Resources can be human resources (people) or land and equipment (capital)
Some common goals for operations teams include:
-Reducing the amount of capacity wasted due to changeovers and maintenance
-Reducing shutdowns for any reason, including those caused by running out of raw materials
-Aligning production schedules and orders for raw materials with forecasts received from customers
The impact of culture can also apply to the functions within your
organization. Different departments — such as purchasing, logistics, and
operations — often develop cultures of their own.
Connecting Supply Chain Communities
related to the style of a group’s leader and the norms for a particular industry
Four major Behavioral forces that Influence Culture
Developed the Four major Behavioral forces that Influence Culture
Dr. John Gattorna
Four major Behavioral forces that Influence Culture
integrator, developer, administrator, producer
force of cohesion, cooperation and relationships.
Integrator
Teams that are driven by the Integrator force tend to have a__culture, where everyone on the team is encouraged to develop personal relationships and informal communications (part of a family/exclusive)
“group”
Force of creativity, change and flexibility
Developer
Teams that are driven by the Developer force form an __ culture, where everyone is focused on achieving a common vision.
“entrepreneurial”
force of analysis, systems and control
Administrator
Teams that are driven by the Administrator force create a __ culture, where communication is formal and shared through official channels
“hierarchical”
force of energy, action and results
Producer
Teams that are driven by the Producer force develop a __culture, where communications are concise and fast.
“rational”
– The most complicated way to look at a supply chain is to look at it as a system
– supply chains are made up of many interconnected components that can behave in unpredictable ways.
– Managing your supply chain as a system may require a different approach to measuring success than what functional teams normally use.
Designing Supply Chain Systems
components that make up supply chains:
People
Processes
Technologies
it helps to build a model of your supply chain to show how the parts of the system interact. These models can show cause and effect relationships:
(3)
Reinforcing loops - series of events repeats over and over, getting stronger each time
Balancing loops - opposite effect in which series of events gets weaker
Causal loops - common tools for modeling the dynamics of a system
in order to manage a supply chain, you need to be able to measure what’s happening.
Measuring Supply Chain Processes
every process in a supply chain can be measured with:
Quantitative metrics
Qualitative metrics
objective, numerical indicators
Quantitative metrics
describe intangible characteristics
Qualitative metrics
metrics that will give u insights (identify the steps in each supply chain process that will be most useful in understanding how things are working and what decisions you need to)
Key Performance Indicators (KPI)
Comparing KPIs between facilities and between companies
Benchmarking
three ways that you can change the system that can reduce and even
eliminate the Bullwhip Effect
-make batches smaller
-improve forecasting
-improve communications
in which
inventory peaks and valleys are amplified as they move upstream from one
step to the next in a supply chain.
Bullwhip Effect
