CPIM Flashcards
Supply Chain
Network of suppliers that deliver products from raw materials to end customers through an engineer or transactional flow of information, goods, and money
Supply Chain Management
Design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally
Upstream
toward raw material end of chain
Downstream
toward final customer
Reverse Logistics
supply chain for returns
External Influences on Supply Chains
- Customer expectations
- Government regulations
- Economic conditions
- Political/social environment
- Competitors (global & domestic)
MPC
Manufacturing, Planning, & Control
Closed loop information system that includes the planning function of production planning (S&OP), master production scheduling, materials requirements planning (MRP), and capacity requirements planning.
Strategic & Business Planning
long range (2-3 years), includes mission/vision/values, these are the two major activities of strategy formation
S&OP
medium range (<2 years), highest level of priority planning, proceeds from strategic planning but is tactical, product family aggregate demand is a key input, capacity checks involve resource planning, output is a production plan
Material Requirements Planning (MRP)
short range (days, weeks, months), operational, involves demand calculation in the master production schedule, uses quantities in BOMS to calculate raw materials/components/timelines to purchase or release
Priority Planning
starts with S&OP, then master scheduling, then MRP
Resource Planning
Supply side activity, start of capacity planning, can be done at strategic level for long range decisions (capex), at business plan level, and S&OP level as a capacity check for time horizon of the production plan.
RCCP
Rough Cut Capacity Planning
second level of capacity planning done at the master scheduling level. Checks equipment/space/staffing/raw materials and results in a master production schedule for each product with due dates and quantities.
PAC
Purchasing & Production Activity Control
where planning ends because the MRP results in purchasing raw materials. In-house produced materials and inputs to PAC which regulates flow of work through production processes.
4 Major sections of SCOR
Supply Chain Operations Reference model of never ending infinity loop of supply processes
Performance
Processes
Practices
People
note: SCOR does not address sales/marketing
3 Characteristics of Well-Crafted Business Strategy
- They fit their environments and can identify and respond quickly/well to changes
- They create sustainable competitive advantage, not easily imitated by rivals
- They result in measurable improvements
Key Success Factors
Product attributes, organizational strengths, and accomplishments with the greatest impact on future success.
Strategy
Identifies how a company will function in its environment. It specifies how to satisfy customers, grow the business, compete, manage the organization and develop capabilities, and achieve financial objectives.
2 Major Activities of Strategy Formation
- Strategic Planning
- Business Planning
Strategic Plan
how to marshal and determine actions to support the mission, goals, and objectives of an organization. Time frame is > 1year.
Business Plan
a statement of long-range strategy and revenue, cost, and profit objectives accompanied by budgets, a projected balance sheet, and a cash flow statement. The business plan is translated into functional plans through the production planning (or S&OP) process.
Corporate Strategy
Plan to improve competitiveness of organization as a whole
Business Strategies
Plan to improve competitiveness of individual lines of business
Functional Area Strategies
Plan to implement and support corporate strategy at a functional level
Operations Strategies
Plan how the function will perform its work in a manner consistent with the direction and priorities of other strategy levels. Must address decisions about capacity, supply network, process technology, organizational improvement
Mission
The overall goal(s) for an organization set within the parameters of the business scope
Vision
The shared perception of an organization’s future - what it will achieve, and a supporting philosophy. Must be supported by strategic objectives strategies, and action plans.
Environmental Scanning
A process used to analyze an organization’s potential strengths, weaknesses, opportunities, and threats. Emphasizes opportunities and threats because the tool is external.
Benchmarking
A tool used to learn lessons from other companies (successes to emulate, failures to avoid) and benchmark organizations who won awards (seek out their processes). Can be expensive/time consuming and should be part of a larger plan.
Competitive Analysis
Analysis of a competitor including its strategies, capabilities, prices, and costs.
PESTEL Analysis
Political factors
Economic conditions
Sociocultural forces
Technological factors
Environmental forces
Legal/regulatory factors
5 Forces Framework
methodology for analyzing competitive pressures in the market and assessing importance of each pressure ex: suppliers, substitutes, buyers, new entrants
Industry attractiveness is highest when:
- seller rivalry is weak to moderate
- barriers to new entrants are high
- competition from substitutes is low
-supplier and buyer leverage are weak
Resource
Anything that adds value to a good or service in it’s creation, production, or delivery. This includes tangible and intangible assets. Capabilities use resources to create value.
VRIN Test
Valuable: relevant to strategy, creates competitive advantage
Rare: organization possesses but competitors lack
Inimitable: difficult to copy
Non-substitutable: cannot be countered by entirely different type of resources
This tests for sustainable competitive advantage.
SWOT Analysis
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)
This tests for an organization’s ability to implement a strategy and defend itself against competition.
Core Process
Unique capability that is central to a company’s competitive strategy
Core Competency
Skills/knowledge that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and provides for future growth.
Value Chain
Functions within a company that add value to the goods or services that the organization sells to customers for payment
Primary Activities
These create value:
- Purchasing
- Operations
- Logistics
- Sales/marketing
Secondary Activities
These make the primary activities possible:
- IT
-HR
- Accounting
Product Life Cycle
1) the stages a new product goes through from beginning to end (introduction, growth, maturity, decline)
2) the time from initial R&D to time when sales and support are withdrawn
3) the period of time when a product can be products & marketed profitably
Functional Product
mature products with a low profit margin and predictable demand
Solo Product Roll (Rollover) vs. Dual Product Roll
solo: inventories of existing product are completely used up before new product introduction
dual: plans for both old and new product version to be available for a period of time
ETO is best for what phase(s) of product life cycle?
Introduction
MTO is best for what phase(s) of product life cycle?
Introduction, Growth, Maturity, Decline
ATO is best for what phase(s) of product life cycle?
Growth, Maturity, Decline
MTS is best for what phase(s) of product life cycle?
Introduction, Growth, Maturity
Strategic Scope
the range of activities performed internally, the breadth of its product and service offerings, the extent of its geographic market presence, and its mix of businesses
Market Penetration
pursuing larger market share in the existing market with the same product
Product Development
growing within an existing market by introducing new products
Market Development
selling existing products in a new market
Diversification Strategy
expanding the scope of a product line to exploit new markets and spread risk over several product lines, often pursued when original markets are saturated or declining
Related vs. Unrelated Diversification
Related: focuses on industries with similar value-chain activities aka “strategic fit” enabling economies of scale
Unrelated: corporate investment in organizations with different value chain activities/resources
3 Tests of Potential Diversification
1) Industry attractiveness
2) Cost of entry (will profit outweigh investment - barriers are often high in attractive industries)
3) Better-off test (are returns greater together than two companies apart)
Profit Sanctuary
expansion into a foreign market with a strong protected position that supports competitive activities in the organization’s other markets
Multinational Strategy
designed to out-compete rivals that focus on cross-business and cross-country coordination, enabling economies of scale and improved position by reducing costs, cross country-subsidization, etc.
Transnational Strategy
aims to achieve both standardization and local responsiveness
Multi-domestic Strategy
each country market is self contained, customers have unique product expectations that are addressed by local production capabilities
Horizontal Integration
a firm that produces or sells similar products in various geographical locations
Vertical Integration
functions that were previously performed by suppliers are done internally
Merger vs. Acquisition
In a merger a new entity is formed, in an acquisition one entity absorbs another
Backward Integration
focuses on activities closer to the origin of the value chain (raw material suppliers)
Forward Integration
focuses on activities closer to the end customer