Exam 1 Flashcards
Globalization
Increasing global presence by establishing business entities in other parts of the world. Complexities: language, culture, time, mode barriers; coordination, regulation, exchange rates, bribery. Interconnectedness between businesses and governments- communication, culture, and time as barriers.
Processes Definition
The means of making something that is of value to a customer. A series of actions or steps taken to achieve an end.
Process 4 types
When focusing on processes, you must focus on design, management, control, and improvement.
Process Design
- configuring inputs and resources in a way that provides value, enhances quality, and is productive.
Process Management -
the act of executing and controlling the productive functions of a firm
Process Control
act of monitoring a process for efficacy. Dimensions include cost, timeliness, or quality.
Process Improvement -
a proactive effort to enhance process performance.
Sustainability –
Proactively managing to save resources and to “green” production. The ability to operate today in a way that does not threaten the future.
Sustainability Management:
Improvement-based environmental management systems. Total cost of ownership.
Sustainability Equation (societal)
People + Planet + Profits
Supply Chain (SC) Management –.
Firms cooperating to create value for customers
Value Chain –
Inbound logistics, transformation processes, and outbound logistics: the core of what a firm does.
Supply Chain Flows – Involves 3 primary flows
1) product flows,
2) monetary flows
3) information flows.
Product flows:
move from upstream to downstream and are generally unidirectional.
Reverse Logistics: occurs when products move up the supply chain (in special cases such as product returns)
Lean: refers to management of processes in a way that minimizes waste.
Monetary flows:
unidirectional but move from downstream to upstream. (a) Support processes: such as legal departments, are activities that support value-added activities.
Information flows:
Data that moves throughout the supply chain. Bidirectional flows move both upstream and downstream in the normal conduct of supply chain commerce.
Supply Chain Strategy –
The supply chain portion of the strategic plan
Includes developing the ability of the firm to leverage internal relationships, supplier alliances, and customer relationships to create sustained competitive advantage.
Postponement –
Mass production of only the base product - don’t add value until you acquire a customer order (Harley-Davidson)
Order Winner/ Order Qualifier - 4 DETERMINANTS
- Quality,
- Dependability
- Flexibility
- Speed/Cost
Order winner:
The attributes that differentiate a company’s products.
Order qualifier:
Necessary attributes that allow a firm to enter into and compete in a market; a firm’s strategy must account for these necessities.
Transactional -
arm’s length transactions with supply chain partners that is managed by scripted interactions.
Complementary -
companies understand their core competency and understand they need the competency of another firm to maintain world class service.
Synergistic -
two companies are committed to work together and are better together than they would be alone.
Aligning Strategic Levels -
The long-term strategy that defines how the company will win customers, create game-winning capabilities, fit into the competitive environment, and develop relationships.
Functional Tactics
- Short-term steps used to implement strategy and achieve strategic goals.
Operations -
The daily activities that a firm must perform to achieve success.
STRATEGY EXECUTION (3 PROCESSES)
ALIGNING STRATEGIC LEVELS
FUNCTIONAL TACTICS
OPERATIONS
Supply Chain Operational Reference (SCOR) Model -
- Plan (supply and demand)
- Source (procuring goods and services)
- Make (transforming products into finished state)
- Deliver (finished goods to meet demand, order-transportation-distribution)
- Return (returning products for any reason)
ZARA - ACTIVITY
Zara is excellent at understanding its target market; can produce clothing much faster than typical clothing retailers and have it on the shelves before others to stay current with the trends; can produce batches in only 5 weeks (other companies take up to 6 months to produce the current trend)
Lego Activity (key learning)
There is a lot more to Supply Chain Management than reaches the eye. Now it’s more supply chain against supply chain. If you have all of the cogs and wheels that go into it running smoothly then you have an effective supply chain. If one part is off then can mess up the supply chain.
Product Design - 2 types
A process of applying imagination to invent new products / services.
- Continuous - Enhancing existing products / services.
- Discontinuous - Creating new products / services.
Process Design -
The selection and implementation of methods for producing products / services.
Process Layout -
A physical arrangement of equipment and workstations used in producing a product or service; functions are gathered together into work centers.
Product Layout
Usually either linear or U-shaped and are laid out according to the requirements of a product. Engineers figure out the best production order for a completed product.
Process Continuum (5 types)
- Project: One time creation of new product
Example: Yangtze River Dam Construction - Job Shop: Low volume batch processing of similar products
Example: Copy center, special orders but somewhat standardized - Batch: Set up production line, produce quantity required, reconfigure production line
Example: Appliance manufacturer - Assembly Line: High volume, high standardization
Example: Automobile assembly factory - Continuous: Process flows from one place to another with little human interaction.
Example: Flour mill
Break-Even Analysis -
the process of considering fixed costs, variable costs, and expected revenues to determine the viability of an investment in process technologies.
Process Mapping -
Schematic picture of a process using symbols - Arcs between symbols represent progression from one step to the next
Process Mapping - 3 steps
- Develop general process map
- Interview those who perform each step of the work
- Determine which steps add value. Eliminate those that do not.
Line Balancing Analysis -
- Determine precedence relationships (Which task must come before other tasks)
- Calculate required cycle time
- Determine theoretical minimum number of workstations.
- Select primary rule and secondary rule (Primary assigns tasks to stations, Secondary rule breaks ties)
- Assign tasks to workstations
- Determine your process efficiency
Designing for Reliability
2s Dimension of Reliability:
- Failure Rate
- Time
Reliability Dimensions apply to:
- Component reliability (likelihood of a certain part not failing)
- System reliability (likelihood a system of components not failing)
Measuring Reliability -
Failure Rate & Time (Compared against competition or historically)
Service Operations -
Production processes wherein each customer is a supplier of process inputs (accounting: financial records (inputs) financial statements (outputs)), co-production
Services -
The result of services operations
Key Elements of Service Design (2)
Simultaneity
Time Perishable Capacity:
Simultaneity:
Happens when the production of services occurs at roughly the same time as customer demand.
Time Perishable Capacity:
Unused capacity (at times of low demand) is lost forever and cannot be used to meet later demand.
Offerings and Experience
Waiting in line (theme park)
Entertain customers, keep them occupied
Let waiting customers be productive
Enforce not cutting or budging
Like to see line is moving, see people being waited on
Tell customers how long the wait will be
Problems with Predicting Service Capacity
Service demand is variable and uncertain
Customer do not arrive at a uniform rate
Customers may not come at all
How much work are customers willing to do themselves?
Self-service cash registers
How long will customers wait for their service?
PCN – Dr. Sampson’s Presentation
Categorizes flowchart steps according to whether or not they involve interaction between entities such as providers and customers. (see page 108)
Involve - Direct Interaction, surrogate interaction, and independent processing
Direct Interaction
Direct Interaction (e.g. with suppliers) Negotiating supply contract, receiving supplies. (taking orders from cusomers, serving pizza, etc.)
Surrogate Interaction
Acting on Supplier resources (Ordering supplier resources). (acting on customer resources)
Independent Processing
Entity acting on entity’s owned/controlled resources. Basically everything that runs inside of a company.
Newsvendor Analysis
Critical Fractile - A method for making capacity decisions in services. Measures tradeoffs cost of under stocking vs. cost of overstocking. CF - The optimal capacity level in the Newsvendor Analysis.
Queuing Theory -
Used to determine customer system performance and wait times. Shows relationship between capacity levels and expected wait costs
Quality Function Deployment – House of Quality -
Method for translating customer requirements into functional design. House used to implement customer requirements into a design. Left side: Customer Requirements. Roof: Technical Requirements. (BE ABLE To DRAW IT)
Customer Relationship Management Systems -(3 types)
Acquisition
Enhancement
Retention
Acquisition
- Gathering data that can be used to target customers and identify those who might be likely purchasers of products or services.
Ex: Google tracking data about searches, email messages, and calendar events to provide relevant advertising.
Enhancement-
Improving the experience of current customers.
Ex: Hotels keeping track of customer preferences through frequent-guest programs.
Retention-
Promoting ongoing and increased business with current customers. Loyal customers are more profitable than new or casual customers. Track customer use and trigger actions to increase use.
Ex: Provide packages or specials to keep customers coming back.
Improving Customer Service - (6 steps!)
- Understand and meet customer expectations.
a. Each customer may provide his or her own specifications.
b. Customers are often the quality inspectors.
c. Customers are often the cause of service failures - Provide fail-safe service (poka yokes).
- Provide service guarantees.
a. Unconditional, without exceptions.
b. Easy to understand and communicate.
c. Meaningful (Valued by the customer).
d. Easy and painless to invoke.
e. Easy to collect. - Measure your performance relative to customer expectations.
a. Satisfaction- Are customer needs met.
b. Loyalty- A customer’s feeling of affiliation with company.
c. Net Promoter Score(NPS)- Willingness to recommend to friends (0-10) .Detractor (0-6), Neutral (7-8), Promoters (9-10), NPS = # of Promoters - # of Detractors - Manage customer complaints.
a. Regulatory complaints from Gov’t
b. Employee Complaints
c. Customer Complaints - Recover from service failures.
a. Service Recovery & Service Failures (reference definitions below)
Identify where service failures are likely to occur.
Identify how failures are detected and reported.
Determine how they should be managed.
Service Recovery -
A process for responding to service failures.
Service Failure -
Systematic occurrences that result in dissatisfied customers.
Servitization -
The process of integrating service offering with manufactured goods.
Ex: A car dealership offers free oil changes and car maintenance with purchase of car.
Ex: IBM sells computer hardware and software. In addition, have consulting service to help customers or businesses know how to best use products.
Strategic Sourcing -
The process of planning, evaluating, implementing, and controlling both highly important and routine sourcing decisions.
Illicit – The Dark Trade -
When you buy an illicit product you are only touching the tip of an iceberg. There are a lot of steps that go into illicit products. Since the advent of technology (like computers) it can be very difficult to try to stop them since worldwide network. Some of these products are life threatening- fake medications that can kill people because not made of safe materials.
Buyer – Supplier Relationships
- Organization within the firm that is responsible for acquiring goods and services from suppliers has been known by many names, including procurement, purchasing, materials, sourcing, and supply management. People in these organizations have likewise been given various titles, including:
- Purchasing Agent
- Purchasing Manager
- Purchasing Buyer
- Supply Manager
Effect of Strategic Sourcing on the Firm -
- Reducing the cost of purchased products and services
a. A small change in the cost of purchased products and services can have more significant effect on profits than a large change in sales - The quality of purchased goods and services
a. Experienced purchasing managers understand that overall product quality is no better than the weakest supplier.
Cost of development and design
Approximately 85% of an item or service’s cost is determined in the design stage
Supply managers can also facilitate early supplier involvement in the design process
Supplier integration points (6)
- Idea generation
- Business/Technical Assessment
- Product/process/service CONCEPT DVLP.
- Product/process/service ENGINEERING DVLP.
- Prototype Build, Test, and Pilot/Ramp-up for Operations.
- Full-Scale Production/Operations.
Category Segmentation (4)
- Leveraging Item
- Critical Item
- Routine Item
- Bottleneck Item
Leverage Item -
High profit Low Risk
has the potential to affect profit, typically because it is associated with a high level of expenditures while also having many qualified sources of supply (buying tomatoes for Heinz ketchup, reverse auction)
Critical Item -
High Profit, High Supply Risk
can have a big effect on profitability but only has a few qualified suppliers (form alliances through trust-based relationships)
Routine Item -
Low Profit, Low Risk
is typically something of low value, purchased in small volumes, though individual transactions (lots of substitutions and requires little purchasing expertise
Bottleneck Item -
High Supply Risk, Low Profit.
there are few alternate sources of supply, typically due to complex specifications requiring complex manufacturing or service processes, new technologies, or untested processes
Total Cost of Ownership
- the sum of acquisition, ownership, and post-ownership
Acquisition:
includes all purchasing costs related to identifying, selecting, ordering, receiving, and paying for a purchased item.
Ownership:
costs associated after acquisition, including costs related to the quality and maintenance of the purchased item, inventory, warehousing, etc.
Post-ownership:
all costs related to the customer’s use and disposition of the purchased item, including environmental costs, warranty costs, product liability, and customer dissatisfaction costs.
Supplier Management -
the processes of forging strong links by identifying what is needed by the firm and then selecting, developing, and actively managing the supply base.
Supplier Management Process
- Identifying the need in terms of material, service, and desired relationship
- Selecting the supplier, which involves searching, evaluating, and negotiating
- Developing the supplier, motivated by either the need to resolve and existing issue or the desire for continuous improvement
- Providing feedback to the supplier through goal setting, and utilizing report cards
Selection -
selecting the right supplier
- Transactional Relationships: buyer has many supplier choices, does not need to share internal company info during the exchange, is purchasing a routine item, does not require technology innovation from the supplier, and does not expect to experience shortages in supply
- Collaborative Relationship: a buyer/supplier marked by long-term cooperation. Implies working together and integrating processes between the buyer and supplier, which requires sharing info, knowledge, and expertise and making specific investments in the buyer-supplier relationship
Evaluation -
Often use preliminary evaluation to narrow list of potential suppliers before performing in-depth evaluation
Supplier Evaluation
Can ask supplier to conduct self evaluation
Survey administered to suppliers to determine fit with purchaser needs
Use WFA to evaluate and compare potential suppliers
Weighted Factor Analysis -
a multi-criteria decision making method using weights
- Identify the key selection factors
- Determine the relative importance or weight of each factor (should add up to 1)
- Evaluate each supplier on each of the key selection factors
Development -
the process of helping a supplier improve performance in areas such as cost, delivery, and quality (I just remember Ryan and Davis did such a good job at this!!!)
- Identify critical supplier for development
- Form cross-functional team
- Meet with supplier’s top management team
- Identify opportunities and probability for development
- Define key metrics and cost-sharing mechanisms
- Reach agreement on key projects and joint resource requirements
- Monitor status of projects and modify strategies as appropriate
Scorecards -
a communication device that serves two key roles for the supply manager
1. Identifies the supplier performance metrics that are most critical to the supply manager organization
2. enables the evaluation of suppliers against these key metrics.
For supplier perspective:
1. enables a link between the supplier’s own internal performance measures and the strategic objectives of the supply manager
2. Enables the supplier to identify opportunities for improvement
3. Documents the criteria used to define what levels of performance are considered unacceptable
Apple -
Key themes of audit Worker empowerment Protection of worker rights Worker health and safety Environmental impact Ethics Management System - self and supplier accountability
Why spend $$$ monitoring supplier?
Leverage
Stewards for change
Securing the future w/ suppliers
Ethics - Fraud triangle
Perceived opportunity
Perceived Pressure
Rationalization
Independent Demand -
The demand of this product does not depend on the demand of other products. Not as easy to forecast
Dependent Demand -
The demand of this product does depend on the demand of other products. For example if you are an autoshop and you are going to make 3 cars then you need 15 tires (4 tires +1 spare for each).
Demand Management -
a proactive balancing of scarce business resources with demand Demand Management Tools- Advertising and promotion Pricing (Disney) Designing counterseasonal products (Snowboards/skateboards) Channel Management Outsourcing Product Phasing Supply chain management
Components of Time Series -
- trend- regular pattern of behavior; average rate of change in a time series (Sugar)
- cyclical- long term repetitive pattern more than one year (4 years); (olympics, economic turns)
- seasonal- repetitive pattern during a fixed period of time (sunscreen)
- irregular- random variation in any time series (potassium iodide)
Forecasting Bullwhips -
increasing upstream supply chain variation resulting from forecasts in a supply chain or distribution channel
collaborative planning, forecasting, and replenishment (CPFR) can help us moderate the impact of the bullwhip effect
Naïve Forecasting Methods -
Simple moving average (SMA)- where prior demand is averaged
Failure Rate -
If you tested 100 units for 100 hours and 10 failed
Making SC&O decisions consistent with overall strategy is referred to as
Alignment
The relationship that occurs when companies understand that their core competencies require anotherfirm’s competencies to succeed is a
complementary relationship.
Systems thinking leads to all of the following responsibilities in a SC&O manager role,
communicating freely with customers about their expectations and their customer experience.
a process-oriented management approach.
focus on entire acquisition process to create strategic advantage
The changing strategic environment requires the SC&O manager to be knowledgeable in all of the following categories
sustainability
innovation
globalization
Order winners are most closely associated with
differentiation
The balance delay is
the proportion of time the resources in the process are not utilized
All of the following are suggested reasons for performing research and development (R&D)
increase market share
strengthen the bottom line
regulatory mandates
Which processes are very specialized facilities where products move from one place to another with very little human interaction?
continuous flow
The temporal aspect of a lecture best illustrates the concept of
simultaneity
A flowchart tool for improving a services supply chain is called a
PCN diagram
Which of the following most closely represents the relationship between services and tangibles?
services always involve tangibles and intangibles
Filling your own drinks at a Burger King is an example of
Coproduction
. Which of the following is an assumption in single-server queue theory
infinite calling population that may enter the queue
first-come, first-served
a single server
What is the role of enhancement in the context of customer relationship management systems (CRMS)?
improving the experiences of current customers
Which of the following is NOT one of the general categories of customer relationship management systems(CRMS)?
retention
acquisition
enhancement
A computer user that receives service from an IT department within a company is what type of customer?
internal customer
Which of the following is the organization within a firm that is responsible for acquiring goods and services from suppliers?
sourcing
supply management
procurement
purchasing
in the portfolio model, what items are characterized by low profit impact and low supply risk?
routine items
Approximately how much of an item or service’s cost is determined in the design stage?
85%
In the portfolio model, what items are characterized by low profit impact and high supply risk?
bottleneck items
A framework for making purchasing-related strategic decisions that considers supply risk and profit impact is called a
portfolio model
Tomatoes for Heinz ketchup are an example of
a leverage item
Purchased goods and services make up how much of a firm’s cost of goods sold?
more than 50%
Sourcing managers have the opportunity to impact bottom-line cost savings. These benefits accrue through all of the following
improved product and service quality
supplier involvement in product design
service design
What is the metric that measures how many times per year inventory is used and replaced?
inventory turnover
What specification details the exact quantities of each raw material and the precise manner in which the item should be made?
complex specification
Which of the following is a step in weighted factor analysis (WFA)?
- identify the key selection factors
- determine the relative importance or weight of each factor
- evaluate each supplier on each of the key selection factors
Which of the following is a step in supplier development?
define key metrics and cost-sharing mechanisms
form a cross functional team
meet with the supplier’s top management
Selection -
selecting the right supplier
- Transactional Relationships: buyer has many supplier choices, does not need to share internal company info during the exchange, is purchasing a routine item, does not require technology innovation from the supplier, and does not expect to experience shortages in supply
- Collaborative Relationship: a buyer/supplier marked by long-term cooperation. Implies working together and integrating processes between the buyer and supplier, which requires sharing info, knowledge, and expertise and making specific investments in the buyer-supplier relationship
Evaluation -
Often use preliminary evaluation to narrow list of potential suppliers before performing in-depth evaluation
Supplier Evaluation
Can ask supplier to conduct self evaluation
Survey administered to suppliers to determine fit with purchaser needs
Use WFA to evaluate and compare potential suppliers
Weighted Factor Analysis -
a multi-criteria decision making method using weights
- Identify the key selection factors
- Determine the relative importance or weight of each factor (should add up to 1)
- Evaluate each supplier on each of the key selection factors
Development -
the process of helping a supplier improve performance in areas such as cost, delivery, and quality (I just remember Ryan and Davis did such a good job at this!!!)
- Identify critical supplier for development
- Form cross-functional team
- Meet with supplier’s top management team
- Identify opportunities and probability for development
- Define key metrics and cost-sharing mechanisms
- Reach agreement on key projects and joint resource requirements
- Monitor status of projects and modify strategies as appropriate
Scorecards -
a communication device that serves two key roles for the supply manager
1. Identifies the supplier performance metrics that are most critical to the supply manager organization
2. enables the evaluation of suppliers against these key metrics.
For supplier perspective:
1. enables a link between the supplier’s own internal performance measures and the strategic objectives of the supply manager
2. Enables the supplier to identify opportunities for improvement
3. Documents the criteria used to define what levels of performance are considered unacceptable
Apple -
Key themes of audit Worker empowerment Protection of worker rights Worker health and safety Environmental impact Ethics Management System - self and supplier accountability
Why spend $$$ monitoring supplier?
Leverage
Stewards for change
Securing the future w/ suppliers
Ethics - Fraud triangle
Perceived opportunity
Perceived Pressure
Rationalization
Independent Demand -
The demand of this product does not depend on the demand of other products. Not as easy to forecast
Dependent Demand -
The demand of this product does depend on the demand of other products. For example if you are an autoshop and you are going to make 3 cars then you need 15 tires (4 tires +1 spare for each).
Demand Management -
a proactive balancing of scarce business resources with demand Demand Management Tools- Advertising and promotion Pricing (Disney) Designing counterseasonal products (Snowboards/skateboards) Channel Management Outsourcing Product Phasing Supply chain management
Components of Time Series -
- trend- regular pattern of behavior; average rate of change in a time series (Sugar)
- cyclical- long term repetitive pattern more than one year (4 years); (olympics, economic turns)
- seasonal- repetitive pattern during a fixed period of time (sunscreen)
- irregular- random variation in any time series (potassium iodide)
Forecasting Bullwhips -
increasing upstream supply chain variation resulting from forecasts in a supply chain or distribution channel
collaborative planning, forecasting, and replenishment (CPFR) can help us moderate the impact of the bullwhip effect
Naïve Forecasting Methods -
Simple moving average (SMA)- where prior demand is averaged
Failure Rate -
If you tested 100 units for 100 hours and 10 failed
Making SC&O decisions consistent with overall strategy is referred to as
Alignment
The relationship that occurs when companies understand that their core competencies require anotherfirm’s competencies to succeed is a
complementary relationship.
Systems thinking leads to all of the following responsibilities in a SC&O manager role,
communicating freely with customers about their expectations and their customer experience.
a process-oriented management approach.
focus on entire acquisition process to create strategic advantage
The changing strategic environment requires the SC&O manager to be knowledgeable in all of the following categories
sustainability
innovation
globalization
Order winners are most closely associated with
differentiation
The balance delay is
the proportion of time the resources in the process are not utilized
All of the following are suggested reasons for performing research and development (R&D)
increase market share
strengthen the bottom line
regulatory mandates
Which processes are very specialized facilities where products move from one place to another with very little human interaction?
continuous flow
The temporal aspect of a lecture best illustrates the concept of
simultaneity
A flowchart tool for improving a services supply chain is called a
PCN diagram
Which of the following most closely represents the relationship between services and tangibles?
services always involve tangibles and intangibles
Filling your own drinks at a Burger King is an example of
Coproduction
. Which of the following is an assumption in single-server queue theory
infinite calling population that may enter the queue
first-come, first-served
a single server
What is the role of enhancement in the context of customer relationship management systems (CRMS)?
improving the experiences of current customers
Which of the following is NOT one of the general categories of customer relationship management systems(CRMS)?
retention
acquisition
enhancement
A computer user that receives service from an IT department within a company is what type of customer?
internal customer
Which of the following is the organization within a firm that is responsible for acquiring goods and services from suppliers?
sourcing
supply management
procurement
purchasing
in the portfolio model, what items are characterized by low profit impact and low supply risk?
routine items
Approximately how much of an item or service’s cost is determined in the design stage?
85%
In the portfolio model, what items are characterized by low profit impact and high supply risk?
bottleneck items
A framework for making purchasing-related strategic decisions that considers supply risk and profit impact is called a
portfolio model
Tomatoes for Heinz ketchup are an example of
a leverage item
Purchased goods and services make up how much of a firm’s cost of goods sold?
more than 50%
Sourcing managers have the opportunity to impact bottom-line cost savings. These benefits accrue through all of the following
improved product and service quality
supplier involvement in product design
service design
What is the metric that measures how many times per year inventory is used and replaced?
inventory turnover
What specification details the exact quantities of each raw material and the precise manner in which the item should be made?
complex specification
Which of the following is a step in weighted factor analysis (WFA)?
- identify the key selection factors
- determine the relative importance or weight of each factor
- evaluate each supplier on each of the key selection factors
Which of the following is a step in supplier development?
define key metrics and cost-sharing mechanisms
form a cross functional team
meet with the supplier’s top management
Random variation that occurs in any time series is called what?
irregular component
Which naive forecasting model averages prior demand with a prior forecast?
single exponential smoothing (SES)
The boom-bust cycle of the world economy is an example of what
component of a time series?
cyclical effects
As applied in demand planning, churn is
the loss and replacement of customers.
A company like Arctic Cat that produces snowmobiles during the summer and ATVs during the winter uses what demand management tool?
designing counterseasonal products
Which forecasting method involves experts gaining consensus through an iterative process?
Delphi method
Introducing new products in a sequence that allows for optimal use of capacity is what demand management tool?
product phasing
The bullwhip effect is manifested by _____________
variation in the supply chain.
increasing upstream
