Consumer/Citizen Flashcards
What is Supply Chain?
it is a network of facilities that procure raw materials transform them into intermediate goods and then final products and deliver products through a distribution system. Spans procurement –> internal transformation, and distribution.
Vertical Integration (make or buy)
vertical integration refers to the proportion of the supply chain that the company owns
Reasons to outsource
financially driven reasons
- improve assets
- generate cash
-reduce cost
Improvement driven reasons
- improve quality and productivity
- shortens cycle time
- improve risk management
-improve credibility and image
organizationally driven reasons
- improve effectiveness
-increase flexibility
-increase product and service value by improving response time
Procurement
procurement involves buying services or materials we elect to not develop internally
- as a % of sales purchasing costs are substantial
Activities in procurement
supplier identification and selection
buying
negotiation
contracting
supply market research
supplier measurement and improvement
purchasing systems development
5 rights of purchasing
right quality
right time
right quantity
right price
right source
Selection of Vendor
Criteria weightings are incorporated to showcase the importance
Criteria
- company
- service
- products
- sustainability
Development process
improving supplier relations, operations and efficiency will improve performance
Options: free consulting to their vendors to help accomplish cost reductions, improve quality, fast and consistent delivery
Centralized purchasing
positive –> purchasing power
negative –> reduced flexibility/ speed
Stockless purchasing
the supplier delivers material directly to the production area rather than the stockroom
Blanket Purchase Orders (POs)
long term purchase commitment to a supplier for items that are delivered upon receipt of a shipping requisition
Pro for retailer: unit cost savings, lower holding cost, lower order cost less supply uncertainty
Pros for manufacturer: known demand (efficient production planning)
Vendor Managed Inventory (VMI)
Vendors manage the customer’s inventory of the products they supply (Ordering, stocking shelves, etc.)
- relatively common in a retail company
- can be employed for supplies
Customer benefit VMI and implementation challenges
Benefit
Less admin for customer (order cost)
less chance of stock out
Implementation
trusting vendor. staff layoffs
Vendor benefits and implementation challenges
Benefit
- knowledge of end customer demand patterns
- potentially more sales (less stockouts)
Challenges
- staffing, vehicles, remote technology
Time Utility (when)
provides goods to customers when wanted not when produced (storage, warehousing)
Place utility (where)
provide goods where they are needed not where they are produced (transportation)
Form utility (what(
physical/chemical change in goods and or packaging. e.g., assembly, manufacturing
Logistics Costs
Transportation cost
inventory cost
packaging
damages
Cross-docking
remove the intermediate step of storage by distributing them immediately after they are received
reduces: product handling, inventory, facility costs
requires: tight scheduling, extensive information technology
Drop Shipping
retailer does not have item you want in stock, and then must order it from their supplier for you
Retailer can tell supplier to dropship directly to you
Postponement
Intentionally delay supply chain activities to improve flexibility and reduce inventory costs. Can reduce 30% to 40% of the cost
Postponement to place utility
avoid committing (e.g., positioning inventory down the supply chain) for as long as possible
Form Utility
Manufacturing Plan –> Distribution centre –> Serviced out depending on demand
Labeling Postponment
products are completed with the exception of labelling
Packaging postponement
products are completed but stored in bulk without packaging
- reduces space in the warehouse
-provides flexibility for demand fluctuations of different packages sizes (battery, toilet paper)
Third Party Logistics (3PL)
Outsourcing allows each partner to concentrate on what they do best and assign who has expertise in that aspect of the business
- transportation, warehousing, distribution, order fulfilment
1PL
Conducting all logistics internally
2PL
Using a carrier to transport freight
3PL
Outsourcing some logistical activities (transportation + freight services). A 3PL provider usually owns physical logistics assets such as trucks or warehouses
4PL
Completely outsourcing a supply chain (design, build, and operation). A 4PL provider usually does not own physical logistics assets (Deloitte, Accenture)
Functional Demand
usually less than 2 year life cycle, 5-20% contribution margin, low product variety, and 1-2% stockout
The primary purpose is to supply predictable demand efficiently at the lowest cost and focus on low cost and quality
Innovative Unpredictable Demand
the primary purpose of the life cycle is 3-12 months and the contribution margin is 20-30% and with a high product variety and 10-40% average stockout rate
The primary purpose is to respond quickly to unpredictable demand, minimize stockouts, and markdowns and focus on speed, flexibility and quality
Humanitarian Supply Chains
process and system involved in mobilizing people, resources skills, and knowledge to help vulnerable people affected by disaster
- distribution is the hardest part
- pre-positioning resources (Red Cross)
Differences between Humanitarian Supply Chain and Commercial Supply Chain
- cost not as critical as speed
- high inventory levels
- perishable items expire - replaced
- many stakeholders to coordinate with
- high visibility of performance
- job satisfaction
Reverse Supply Chain
refers to the series of activities required to retrieve a product from a customer and either dispose or reuse it
- used products (recycling) goods
- new products (returns)
XEROX (only 2% goes to landfill)
Design for Manufacturing
-use standard materials and parts of known quality
-design to the process capability and set tolerances and specifications that won’t strain the current system
- minimize the number of distinct components
Handling
during production/assembly
openings for lifting
Shipping
maximizing areas so more can fit like ikea cups and milk jugs
Eco-design
low impact materials -0> material use –> production techniques –> distribution system –> impact during use –> inital lifetime –> end of life system
Modular Design Flexibility
the creation of products (goods and services) from some combination of basic, pre-existing subsystems
Benefit: design, inventory, and production efficiencies
Benefit: customization at a reasonable price
Old economics design to target cost
cost + desired margin = selling price
new economics designed to target cost
selling price - desired margin = target cost
Concurrent engineering
the team approach to design, rather than a sequential, functional approach
Radio Frequency Identification (RFID)
an inexpensive chip tag attached to items that stores information
RFID impacts on supply chain management
- improved inventory visibility and accuracy (customer service)
- ability to stock a wider variety of products ( low admin per item)
3D Printing
additive manufacturing to build 3d products layer after layer
- children’s prosthetics and NASA printing tools
- economic influence by 2025 could be $230-550 billion
reduces lead time
reduces transportation cost carbon footprint
Blockchain
not owned by any single company or government
provides all partners in a transaction with a secure, distributed, ledger that allows them to see the same information at the same time e
can significantly increase transparency from product origin, through the shipping process and customer delivery
potential supply chain benefits
- proof of sustainability
- lower administrative costs
- food safety recalls
