Chapter 3 Flashcards
What is process-oriented manner?
the focus on steps, procedures or methods to achieve goals, rather than focusing on end result. It emphasizes the importance of how tasks are done, ensuring each step is followed and optimized for efficiency and effectiveness.
What are the goals of SCM?
CTFQ advantages:
Optimization of SCM can affect costs (material, process, storage), time (lead, delivery) , flexibility and quality (reliability). Costs ,time can be reduced & flexibility and quality can be improved if there are coordinated, cross-company value creation processes of material and information.
These factors are interdependent of each other and all consequences affect each other.
Cost minimization can lead to improvement of capacity utilization (transport) , transparency, prevent growth of inventory through bullwhip effect).
Time-to market (delivery time) is shortened (production development acceleration), shortened throughput times (lead), deadline adherence -> improved customer service (through flexibility, faster order processing)
Quality Improvement through minimization of error rates, increase in customer satisfaction, optimization of service level (sustainability, feedback)
Flexibility is improved through increased responsiveness to short term changes in consumer demand and higher planning accuracy
The company must evaluate which goals to prioritize.
What is the scope of SCM, according to Otto and Kotzab?
Otto and Kotzab’s 6 Perspectives - SOMLOS
O&K differentiate 6 perspectives as reference points of the SCM:
System dynamics, operations research, marketing, logistics, organization
and strategy.
System dynamics perspective:
Goal: coordinate customer demand & supply flows while considering customer service, inventor and costs.
Problem: fluctuation in quantity of orders (order bundling), missing information in chain, unsynchronized production processes that lead to bottle necks
Solution: Sales channel must be straightened and shortened, Integration of information throughout all levels, adjustment of production capacity at each stage.
Operations research perspective:
Freedom in SCM is limited, therefore must improve material flow location and flexibility in value-added network BOTH at a minimal cost.
Marketing perspective:
Focus in marketing is the optimization of procurement (upstream) and distribution (downstream) to guarantee customer satisfaction in the most cost effective way.
Logistics perspective:
Smooth transition between interfaces and efficient processes.
Organization perspective:
Goal: strengthen relationships to improve performance and obtain success while establishing control over partners to avoid opportunistic behavior.
Strategy perspective.
Focus: competencies and profits. Profits and competencies aren’t the same for every company: they change over time and depending on value chain position.
Tasks: establish the vertical range of manufacturing & position in supply chain and integration pf competencies to meet customer needs.
What are the problem areas of SCM?
FIPI
Functional sub-concepts, IT, Partnerships, Industry Sector
Functional sub-concepts:
There is a paradox between business management and logistics, due to the changes in definition and application of logistics and SCM.
Examples: Logistics, Logistics Management, Value Chain Management, SCM,
IT:
Integration of IT into SCM causes problems.
Reason: IT based SCM focuses on operational programs used by companies within the value-added network and they need to coordinate efficiently and effectively to function as a holistic cross-company system. But there are many factors to consider:
Conclusion: IT is essential for SCM, but performance & success depends on quality of data & proper implementation. Having IT doesn’t guarantee success.
IT paradox: IT doesn’t always lead to better company performance.
Partnerships:
Cooperation and trust are important factors for SCM, but can be paradoxical to success and stability, and there is no guarantee.
Industries:
Depth of value is not a critical success factor, and depends on the market.
What role does SCM play in Cooperation Management?
Cooperation plays a key role in SCM, but there are many problems in cooperation, e.g. unclear motives, coopetition, poor management, hyper focus on details and lack of trust
TRUST is a key element for successful cooperation.
Trust is defined as someone who takes a risk, believing they will do as expected.
Ripperger defines trust in two ways:
-act of trust: voluntarily entering a risky situations without formal protection
-expectation of trust: hoping partners will not behave in self-interest (exploit), despite
lack of protection.
Relationships without trust is only possible through strict contracts .
Trust is used to avoid complications, promote information exchange, compensate for lacking contracts, limit partners’ behavior , address conflicts, foster risk taking behavior.
Trust develops over time and depends on duration and experiences of cooperation. The life cycle model helps plan and adjust strategies and identify key success factors. The models are interdepend and require continuous feedback, with different models for different cooperation stages.
What are the 5 phases in the cooperation model?
- Initiation phase: analysis of initial situation (market ,resources) and goal setting
- Partner search & choice: identify potential partners. Trust expectations plays a key role.
- Foundation & conception: negotiation of contributions, including:
-goals
-resources & skills
-timeline & duration
-organization, information &
communication structures
-profit distribution
-property rights & exit clauses
-conflict management measures - Process networking: establish and network cooperation, greatest influence on trust development
- Control & maturation: evaluation of progress with two outcomes: continuation of partnership or termination of partnership
What is Value Chain Network? What is Value-Added Network?
Value Chain Network- the system of interconnected activities and relationships that add value to a product, from raw material production to end customer delivery.
Value Added Network- the service that provides the exchange of electronic data between different companies in the value chain
Describe the evolution of logistics
The concept of logistics has been evolving over time. Logistics is deeply rooted in the military system and focuses of planning, provision and deployment of resources.
Oscar Morgenstern established the theory of operational logistics. Why is his publication important? Due to the importance of supply function and specialization in market expansion.
Oscar Morgenstern 4 stages in his model. MGS, C, CF, CC
Logistics as material & goods flow related to service function:
1970s services of flow of material and goods (transport, order, packing)
Integrated in the functional corporate structure = overlaps, inefficiency, information gaps, long processing times
Logistics as flow-related coordination function:
management in procurement, production and distribution is integrated, which were separate before. Focus: optimization and design
Change: Function-oriented to flow-oriented
Logistics as company’s flow orientation
Time is a critical factor, due to increasing demands on speed & flexibility
Focus: smooth info, reduce interface problems, develop new technologies
Change: Process oriented
Logistics as a cross company flow orientation
Rapid globalization= worldwide operation = increasing logistical challenges
Development of global strategies for procurement, production and distribution. Networks determine tasks in logistics.
Change: Network oriented
Logistics according to Baumgarten
1993-2002: Function integration of internal SC
Integration of functions in the internal SC
1996-2008: Information exchange
Exchange of info with value-added partners (customers, suppliers, service providers)
2000-2010 Collaborative management
Real time transmission of value-added info.
2004-2014 Synchronization of internal & external SC
Real-time communication through digitization
Differences between Morgenstern and Baumgarten’s evolution of logistics
Morgenstern: company-centric perspective
(internal processes + globalization)
Baumgarten: fully integrated, cross-company SCM
(Internal & external processes, evolution of real-time collaboration)
What are the 3 types of logistics?
Macro, Meta, Micro
Macro-focuses on large scale macro economic logistical issues e.g. infrastructure, & transport)
Meta- focuses on cooperation between companies to achieve goals
Micro- focuses on organizational units and subcategories of corporate logistics (industrial, trade, and service) THIS IS IMPORTANT
4 Logistical subsystems / functional areas in Corporate Logistics (found in micro logistics)
PPDD
Procurement-, Production-, Distribution-, Disposal- logistics
Procurement: material required for production (raw material, supplies) are collected from procurement markets- reflects cooperation relationship with service providers.
Production: plan, control and monitor production & secure flow of materials and info from assembly, storage to dispatch.
reflects activities to prepare and perform production
Distribution: coordination of transport and storage activities (handing over to consumers, transshipment) - reflects cooperation between sales and logistic service provider.
Disposal: recently added due to legal developments, to avoid waste and to recycle. Development of disposal system consistent with all processes- to collect residual materials in value chain for recycling or disposal.
Interface problems may arise in these areas-
SOLUTION: cross-divisional planning and control
What are systems in IT for Supply Chain?
EDI-electronica data interchange
1960s - MRP-material requirements planning
1970s - MRP 2- manufacturing resource planning
1970s - PPS- production planning and control
1990s - ERP (2)- entertainment resource planning
1990s - APS- advanced planning and scheduling
EDI- used to digitalize documents. standardized to reduce error, speed up transaction and is secured to protect from unauthorized users.
Example: invoices, purchase, shipping notices.
MRP- ensures right materials in right quantity for right time of production.
Downstream resource planning
MRP2 - expands scope of MRP and also plans labor (HR), equipment, and finance.
Upstream and downstream resource planning and managing + alignment w/ financial goals
Example: production plans, forecasts
PPS- enhances scheduling and operational efficiency in real-time
resource allocation + production planning & controlling
Upstream: requirements (quantities, dates, capacity)
downstream: capacity and time
ERP- helps integrate core processes into system and manage business efficiently. In r&d, f&a, controlling, s&m, and HR
CONS: step by step planning- without upstream feedback, time and capacity are not fully considered, lack of cross-company coordination.
ERP 2 - helps with external collaboration of stakeholders with the ERP system
APS- integrated quantity and cost view using algorithms . Planning to balance supply and demand- to plan the efficient use of machines, workers and materials, respond to quick changes in supply chain.
Real time optimizations and advanced in planning and scheduling
ERP and APS work together or APS replaces ERP
ARP to replace PPS
What are the 4 types of industries and 4 Supply chain Typologies according to Corsten and Gabriel??
Corsten and Gabriel identified 4 types of industries, based on characteristics and demand behavior: PCDS
Physical assembled product-challenge is coordination, due to less in-house production (e.g. automotive, electronic)
Chemically/ biologically manufactured product: challenge is distribution, since more control over production
Dynamic demand: challenge is fluctuating demand, focus on product availability and responsiveness on changes (e.g. electronic, goods)
Stable demand: challenge is managing complex production processes efficiently
4 supply chain typologies according to Corsten & Gabriel: FLAC
Fast supply chains: (dynamic demand & c/b product): fast & reactive, market is saturated, e.g. consumer goods
Focus: price and competition , no innovation and R&D- focus on complete customer solutions (instant meals)
Lean supply chains (stable demand & physical product): integral & efficient e.g. automotive
Focus: flexibility and connectedness in SCM, due to demand and product structure
Agile/Movable supply chains (dynamic demand, physical product) : modular& agile, market is uncertain, products have short innovations cycles, medium complexity, modular design, technological
e.g. computer & electronics,
Focus: availability, variation, services
Connected supply chains (stable demand/ c/b product): powerful, efficient & relevant, many regulations, high costs, complex customers, lengthy and continuous manufacturing,
e.g. chem. & pharma industries
Focus: lengthy and continuous manufacturing, competitors/imitators
What are the 4 types of industries??
Corsten and Gabriel identified 4 types of industries, based on characteristics and demand behavior: PCDS
Physical assembled product-challenge is coordination, due to less in-house production (e.g. automotive, electronic)
Chemically/ biologically manufactured product: challenge is distribution, since more control over production
Dynamic demand: challenge is fluctuating demand, focus on product availability and responsiveness on changes (e.g. electronic, goods)
Stable demand: challenge is managing complex production processes efficiently
