Chapter 5a: Supply Chain Network Design Flashcards
a complex structure, where organizations are cross linked and there’s two way exchange of both materials and information between them.
Supply Chain Network
A supply chain network is comprised of _______ and ________.
nodes; links
a fixed point in the supply chain where goods are processed, mixed, held, or sold. (the facilities in the supply chain)
nodes
the transportation method used to connect the nodes in a supply chain
links (like trucks, trains, airplanes, ships, pipelines, or intermodal transporation)
T or F: The internet can be a link in the supply chain network today.
True (especially when talking about electronic goods, like music, movies, and e-books)
Nodes and Links should add ______ to the ______ in the supply chain. If a node isn’t adding this, then there’s no point of having it.
value; goods
What are the 2 important considerations when designing a supply chain network?
- Geographic scope
- Number of nodes
At extremes, you have _________ networks that have a national focus, or ___________ network that has a local or regional focus.
centralized; decentralized
What are the 4 decision factors when choosing the type of Supply Chain Network a company should use?
- Product Value (can drive whether we need one or multiple facilities)
- Weight and Dimension of our product
- Demand for product
- Shelf life
What type of supply chain network focuses on all the activities that take place at a single node; the network is designed around that one location.
Centralized Supply Chain
A smaller company with a single facility/single operation is highly (centralized/decentralized).
centralized
T or F: there are larger companies that operate from a single facility (centralized supply chain)
True
For larger companies operating from a single facility (centralization), this gives them ________ _______ over decision making and what’s happening across their supply chain.
centralized control
What are the 6 benefits of centralized networks?
- Lower inventory/safety stock levels
- Better visibility
- Lower overhead stock
- Less labor
- Smaller management team
- Economies of scale
What are the 4 challenges of centralized networks?
- Longer lead time
- Higher delivery costs
- Potential inefficiencies as single facility grows
- Potential issues with regional customers
What type of supply chain network does this describe?
- has similar activities taking place at multiple regional nodes that make up the overall network (multiple factories, distribution centers, and a large number of stores) (ex: Kroger)
- controls their customer interactions and flow of goods. They also have some decision making authority at local facilities (local decision making authority)
decentralized supply chain
Beverage companies tend to run highly (centralized/decentralized) networks.
decentralized
What are the 4 benefits of decentralized networks? Which of these is the primary benefit?
- Customer proximity – primary benefit
- Shorter lead times
- Lower delivery costs
- Responsive to demand
What are the 4 challenges of decentralized networks?
- More safety stock in system (bc of extra inventory at every location)
- Higher overhead costs
- More managers
- No economies of scale
The risk of decentralized networks is lack of _______ and ________.
control; coordination
For each of the 4 key trade-offs between Centralized and Decentralized Networks, describe each for both types of networks:
1. Inventory Costs (higher/lower)
2. Facility Costs (higher/lower)
3. Transportation (cheaper inbound/cheaper outbound)
4. Service Level (harder to provide great customer service/ proximity equals better opportunity for great service)
- Inventory Costs:
- Centralized: lower
- Decentralized: higher - Facility Costs:
- Centralized: lower
- Decentralized: higher - Transportation:
- Centralized: cheaper inbound
- Decentralized: cheaper
outbound - Service Level:
- Centralized: harder to provide
great customer service
- Decentralized: proximity equals
better opportunity for great
service
Ultimately, your network decision (between centralized vs. decentralized) has to balance ______ and ______ ________.
cost; customer service
The goal of your network decision is to have the lowest _______. For this, you have to consider what 4 things?
- cost
1. Transportation
2. Warehousing
3. Inventory Costs
4. Cost of Lost Sales
You have to find a balance between ________ and _________ when choosing network design.
efficiency; effectiveness
After deciding between centralized or decentralized, companies must choose how products will flow through the nodes for the marketplace. What are the 3 main Network Fulfillment Options?
- Direct delivery
- Cross-docking
- Distribution center
Which network fulfillment option does this describe?
products move straight from our facility to the customer location by truck or train without any stopping along the way; point-to-point service
Direct delivery
T or F: Direct delivery reduces delivery delays, eliminates need for intermediate facilities, and cuts product loss.
True
T or F: Cross-docking has less handling, so there is lower impact (less opportunity for damage, theft, etc.)
False; this is Direct Delivery
_______ supply chains that move products from suppliers to the store shelves typically use direct shipping.
Retail
What 3 types of goods typically use direct shipping (since they need to get to the store quickly)?
- High-volume goods (snack foods, soft drinks)
- Time Sensitive (newspapers)
- Perishable Products (dairy, bread, fresh produce)
Which network fulfillment option does this describe?
product flows from our facility to an interim facility, where goods are sorted and mixed before being moved immediately to the customer; product mixing service
Cross-Docking
T or F: Cross-docking holds some inventory.
False; does not hold any inventory (flows straight through destination)
Cross-docking:
- Speeds product ______
- Boosts ________
- There is limited product _______
- Increased _______ _______ (no interim storage)
- flow
- productivity
- handling
- inventory turnover
What are the 3 instances where cross-docking is a great fulfillment option?
- Supplier to factory consolidation (ex: car assembly plant)
- Retailers with seasonal/promotional goods
- High volume, bulky products
Which network fulfillment option does this describe?
traditional operations; the products are brought in and stored until customers place their orders. We then pull the orders and deliver them to the customers.; hold product in anticipation of demand.
Distribution Centers
Distribution Center:
- improves inventory _________
- provides product _______ (hold and ship vast assortment)
- promoted efficient ______ (we can transport in container loads which reduces transportation cost)
- availability (safety stock on hand)
- variety
- sourcing
What two types of products would benefit from using a distribution center network fulfillment option?
- Stable demand products (ex: Poptarts, Campbell Soup)
- Seasonal goods inventory build-up (ex: barbecue grills for the summer season)
For each of the 5 issues, describe what they are like in the 3 network fulfillment options:
1. Transport Costs (higher, lower)
2. Inventory (highest, moderate, minimal)
3. Safety Stock (protected, no backup)
4. Handling Costs (low, very low, high)
5. Facility Investment (very high, none, low)
- Transport Costs:
- Direct Delivery: higher
- Cross-Docking: lower
- D.C.: lower (bc they move
product in bulk)
- Inventory:
- Direct Delivery: minimal
- Cross-Docking: moderate
- D.C.: highest
- Safety Stock:
- Direct Delivery: no backup
- Cross-Docking: no backup
- D.C.: protected
- Handling Costs:
- Direct Delivery: very low
- Cross-Docking: low
- D.C.: high
- Facility Investment:
- Direct Delivery: none
- Cross-Docking: low
- D.C.: very high
T or F: The network fulfillment options can be used simultaneously.
True (Walmart does this)
When choosing how you want to distribute product (the network fulfillment options), it should be based on what 3 things?
- Volume
- Product Type
- Customer Requirements
What is the key issue when creating/revising a supply chain network design?
Balance efficiency with customer service.
Network design decisions are _______, (cheap/expensive), and have a (short/long)-term impact.
strategic; expensive; long-term
Network design decisions are _______, difficult to make, time consuming, data intensive, and require expertise.
complex
Network design decisions are _________ → time, space, cost issues, and competing goals of participants.
multidimensional
What are the 5 steps of the Network Design Process?
- Step 1: Define Problem and Choose Model
- Step 2: Collect the Data (then validate it all)
- Step 3: Run Scenarios
- Step 4: Evaluate Results
- Step 5: Take Action (make a decision)
Which step of the network design process does this describe?
- Compare and contrast the various options according to their ability to meet customer service and financial goals.
Evaluate Results
In Step 1: Define Problem and Choose Model of the Network Design Process:
- You can begin this process with a supply chain ______ to identify what you’re currently doing, what you’re doing well, and what you’re doing poorly.
- Analyze your current network configuration to understand how the ______ _______ to your supply chain and how much it ______.
- Look at the performance of your current network in terms of how well you are meeting ________ ________.
- Then, you’ll want to complete a ______ _________ to understand what needs to be changed, how the network should be changed, and what tools you will need to make these changes.
- audit
- product flows; costs
- customer needs
- needs assessment
What is typically the most time-consuming step in the Network Design Process?
Collect the Data (then validate it all)
In Step 2: Collect the Data (then validate it all) of the Network Design Process, what are the 6 types of data you need to collect?
- Supplier (who they are, where they’re located, how they deliver product to you)
- Demand (who are your customers, where they’re located, how you deliver product out to them)
- Transportation (what mode and carriers are available to you, how much capacity do they have available)
- Facility (the size, what capacity does it have, what functions it can perform)
- Demand Forecasts (how much must flow through the system)
- General Information ( taxes, availability of infrastructure and labor costs)
Which step of the Network Design Process does this describe?
- Develop and run different scenarios with different facilities, location possibilities, etc. to help you understand which network design is best for you.
- Some issues you may be looking at are adding facilities, moving locations of current facilities, changing roles and capabilities of facilities, etc.
Run Scenarios
What is the goal of Step 3: Run Scenarios, in the Network Design Process?
identify network options that are consistent with your key objectives with both your internal and external supply chain stakeholders.
In Step 5: Take Action of the Network Design Process:
- Ideally, you will move forward with an initiative and develop _________ ______ that focus on specific sites and new opportunities for your organization.
- However, if you decide to hold off for now, you will need to revisit the issue at a _______ later time.
- implementation plans
- specified
