Exam 1 Flashcards
According to the eNotes, _______ decisions are made at the highest level of the organization and impact the direction of the organization in the long-term
.
strategic
According to the eNotes, what does OWMM stand for?
One Worker Multiple Machines
Some DCs get inbound inventory that is then redistributed for shipment to retail stores within 24 hours of the items arriving. According to the eNotes, this quick movement of inventory in and out of the DC would be an example of
cross docking
According to the eNotes, ______ is the amount of time that is not utilized at each workstation.
idle time
According to the eNotes, a(n) ______ is an illustration that shows the relationship between all the work elements in an assembly line process.
precedence diagram
According to the eNotes, which cargo classification would loose rice most likely fall under?
Bulk Cargo
What would be the required cycle time (in seconds) if you had 2 hours to make 160 units?
45 2 hours(3600) / 160
According to the eNotes, which manufacturing layout is best suited for items that would be make-to-stock, in cost competitive industries, and where life cycles would need to be long to recover high start-up costs?
line flow
According to lecture, a planogram would most likely be used in a(n):
Grocery store
According to the eNotes, which manufacturing strategy or layout would be most appropriate if the product needed to be produced without interruption?
continuous flow
o is the Efficient Integration of suppliers, transporters, manufacturers, warehouses, retailers and all other parties associated with the delivery of the final product.
Supply Chain Management
The branch of an organization responsible for acquiring materials, equipment, products, and services
Procurement
The branch of the supply chain responsible for making business processes effective and efficient
Operations
o The branch of the supply chain responsible for developing the transportation itinerary and finding the appropriate transportation and storage partners to successfully navigate the flow of materials from the point of origin to the final destination.
Logistics
The management of products and packaging that flow backward in the supply chain, away from the consumer and back in the direction of manufacturers.
Reverse Logistics
o When suppliers, manufacturers, transportation companies, warehouse and distribution centers, retailers, and other supply chain partners span across multiple countries and/or continents, those are considered global supply chains.
Global SCM
A company’s direct supplier. A firm that directly provides goods and/or services to a company.
1st-tier
A firm that provides goods and/or services to a company’s first-tier supplier.
2nd-tier suppliers
In a supply chain the direction from customers to suppliers.
Upstream
o In a supply chain the direction in which products flow towards an end consumer.
Downstream
3 SCM Flows
Materials
Money
Information
A company’s plan for how it will purchase items, transform them, deliver them, and sell them in an effort to produce a profit.
Business Model
The ability to see what is happening with inventory up and down a supply chain
Supply Chain visibility
Profit ROI’s relationship to SCM
o Supply chain managers seek to help companies maximize ROI. By controlling costs investment can decrease. By creating great products and delivering them quickly and in great condition, customers may be willing to pay more,”
ROI
Profit/ investment
Increase revenues
Provide value
Control Costs
Increases Profit
Competitive priorities
- Cost
- Speed
- Quality
- Flexibility
Types of Costs
Material Costs Production Costs Packing Costs Quality Costs Customer Service Other
Types of speeds
Delivery Time
• Lead time (pizza)
On- time delivery
• Airlines
Types of Quality
Design Material & Production Quality Level Consistent Quality Service Quality
Types of Flexibility
Design Materials/ Parts Facility Tools/Machinery Employee Service Product or Customization • Options offered Volume Flexibility • Timely Mass Customization
The primary advantage a company has over its competitors. Typically, a core competency would be difficult,
Core competencies
the ratio of “output purchased” divided by “inputs used to purchase” the product or service.
Value
From a manufacturing perspective companies seek to maximize the amount of outputs that can be produced and delivered to market while minimizing the required inputs.
Productivity
Primary Supply Chain Goals
o Effectiveness: Are we getting the job done?
o Efficient: Are we working too hard? Spending too much?
o Adaptable: Can we deal with Change?
Seven types of waste
- Defects
- Overproduction
- Unnecessary transportation
- Motion
- -Waiting
- Inventory
- Overprocessing
Keys to being a successful SC Manager
o Satisfy the needs of your customers
o Satisfy the needs of your company
o Be Prepared for the future
SC Strategy
o Understanding the product/service and market desires
o Developing a Business Model
Business to Consumer Company
Business to Business
Both B2B and B2C
o Organizing the right group of people of partners
Corporate Strategy
o Research and Planning
o Design
o Develop
o Getting Product to Customer
The items that are owned by a company for the purpose of present or future sale or for use in day-to-day operations.”
Inventory
The period of time between when an order is placed and when the order is received.”
Lead time
An accepted order size based on increments
Lot Size
Inventory Considerations
o Storage o Transport o Shrinkage o Other Inventory Needs o Money o Legal Considerations
Why Keep Inventory?
o Insurance- Manage Risk/ Uncertainty
o Customer Expectations- Support strategic plans ex. Walmart
o Managing Cost- Economies of scale
Inventory Classifications
o Long- term
o Seasonal
o Perishable
types of Inventory Risk
o Loss, Damage, Theft, Breakdown
o Human Resources
o Fluctuating demand
o Market Changes
o Other- environmental, political
o Company risks: Theft or damage to inventory, late shipments from supplier, employee sickness, employee strike, machine malfunctions, harsh weather
o Supplier risks: Employee sickness or strikes, sudden increases in demand for your company’s supplies, the risks posed by their suppliers
o Customer risks: Sudden increase in demand, damage to customer’s inventory”
A predictive analysis and/or estimation of consumer demand in a future period.”
o Qualitative
o Quantitative
Demand Forecasting
What does SKU stand for?
Stock Keeping Unit
A specific product or service’s identification code used to track inventory or catalog sales.”
SKU
An item for which demand levels is not directly impacted by the demand of another related item.”
Independent (cars)
An item for which demand levels are directly impacted by the demand of another related item.”
Dependent Demand (tires)
All 8 Inventory Classifications
o Raw Materials o Work In Progress o Finished Goods o Maintenance, Repair and Operations o Market Inventory -o Safety Stock (buffer stock -o Anticipation Inventory -o Pipeline Inventory- inventory in transit
Inventory readily available on the shelf
Market Inventory
Protects against uncertainty in demand, lead time, supply
o Safety Stock (buffer stock)
used to absorb uneven rates of demand or supply. (seasonal demand, holidays, quantity discounts, economic)
Anticipation Inventory
inventory in transit
(dL)“Pipeline Inventory = Periodic demand * Lead time”
Pipeline Inventory
Pros of High Inventory Levels
o Higher levels of customer service - Having inventory will help a company address their immediate demand for product
o Quantity discounts may be possible - Lower per unit costs
o Fewer orders will need to be placed - Possibly lower ordering costs and transportation costs
o Greater security against unexpected demand variability”
Pros of Low Inventory Levels
o Less storage space required – Costs of holding inventory may be lower
o Lower chance of inventory obsolescence and shrinkage
o Less inventory typically means less materials handling requirements
o Less money invested in inventory means more money available for other investment opportunities”
- Inventory used to accommodate with normal demand or inventory that varies directly with lot size
Cycle Stock
Q/2
Cycle stock avg amount of inventory
TC = DC + (Q/2) H + (D/Q) S
Annual Cost inventory
TC
Total Annual Cost
D
Annual demand for Item
C
Cost per Unit
H
Annual holding cost per unit -Hold it
(Q/2)H
S
Cost to place single order (D/Q)S
D*C
Annual Cost to purchase Inventory -Buy it
____ will get the lowest TC for the given cost structure and demand forecast
EOQ
EOQ Formula
Sqreroot 2DS/H
D/Q
Number of orders per year
TBO
Time between orders
[(Q/D)52]
Time between orders
TC = DC +(Q/2) H + (D/Q) S
Total Cost
AHC
(Q/2)H
AOC
(D/Q)S
The costs associated with not having enough inventory on hand to meet customer demand.
Stockout Cost
Average demand over a number of periods
Simple Moving Avg
Average demand over a certain number of prior periods. Multiplied by perctanatge
o Weighted Moving Average
The act of a company taking on additional supply chain responsibilities that were formerly done by outside parties.
Vertical Integration
Taking over the role of companies closer to the customer. Example: We will no longer sell Coca-Cola through our distributors, from now on, we’ll only sell Coke out of Coca-Cola stores.
Forward Integration
Taking over the role of your supplier. Example: We’re not going to buy bread for our sandwiches, we’ll make the bread ourselves from now on.
Backward Integration
o An electronic procurement system that can aid in submitting requests for materials, making material orders, negotiating with suppliers, tracking shipments, and receiving shipments. The data collected in these systems can also help in analyzing procurement actions which can lead to better procurement decisions in the future
E-procurement system
A purchasing system where all corporate employees send material requisitions to a single purchasing department.
Centralized -
“A purchasing system where material requisitions are sent to a departmental purchasing department.”
• Decentralized purchasing
o An established group of suppliers from which a company makes most of its purchases.
• Supplier base
o A report card that can be used to communicate desires before a sales presentation or shipment. It can then also communicate performance outcomes after the sales presentation or shipment. The results can then be used to discuss changes that might be required in future interactions.
• Supplier scorecards
o Assessments that help ensure that a buyer’s suppliers all meet the minimum supplier standards. Some buyers may not even consider purchasing from a supplier unless that supplier first gets certified. Supplier certifications can be developed by the buyer themselves or they may be developed by an outside agency.
Supplier certifications
o Quantity discount opportunities – When buying in large quantities a buyer may have negotiating leverage and economies of scale may be easier to achieve. This goes for both the purchase price of the tires and the transportation costs.
o Lowest total cost – Perhaps this supplier’s product and service package cannot be matched by any other supplier. Good product, reliable supplier, fast delivery.
o Intellectual property advantages – Perhaps no other company can make a tire like the one offered by this company.
o Quality control – With a single tire supplier a buyer can be fairly certain that all the tires are very similar in design and quality, and that all business interactions will be similar.
o Relationship management is easier – Sharing and communicating with a single supplier can be easier than trying to maintain multiple relationships simultaneously.
• Single Supplier
o Competition can breed innovation – Multiple tire suppliers fighting for a larger percentage “of our tire purchases will work harder to set themselves apart in both product and service dimensions.
o Risk is spread out among multiple suppliers – If one tire supplier encounters difficu
Multiple suppliers
close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies
What is keiretsu?
What did American companies do to copy the Japanese partnering model? Despite the efforts of American car manufacturers, why did cost resurface as the key criterion?
- they attempted to find the best suppliers to partner with
- they jumped to the conclusion that the benefits of low-wage costs outweigh the long-term benefits of investing in relationships
o Represent the chain of organizations that help bring a product into the hands of the end user. This might include packaging companies, delivery companies, warehouses, distribution centers, perhaps even suppliers.
• Established channels of distribution
o A company’s supplier base is the collection of companies from which an organization presently purchases products and/or services. So, an established supplier base implies that an organization has a group of companies with which they have
• Established supplier base
o This can refer to an industry, or more specifically an industry that is concentrated in a particular region, where the companies compete fiercely. This intense and concentrated competition may result in rapid innovation but short cycles of competitive advantage.
Hypercompetitive markets
o Marketing identifies a target market. Designers and engineers work to develop products that satisfy the needs of the target market. Supply chain must then buy parts, manufacture hundreds or thousands of those end items, and then deliver them into the hands of the customer.
Relationship…Marketing, Design, SCM
Decisions made at the highest levels of the organization. These decisions provide direction for the company by identifying target markets, business models, and potentially product or service categories in which the company would like to compete. These decisions typically provide the organization and its primary functional areas long-range goals
Strategic
Decisions that seek to satisfy a target market in a particular product or service category. Decisions that provide a more specific roadmap to satisfying strategic goals.”
Design
Decisions that impact the organization in the short-term. Typically they relate to the daily operations that are performed in a company on a routine basis
Operating Decisions
– These line flow systems can typically be stopped at any time without compromising the inventory flowing through the system. In other words, stopping the line during the employees’ lunchtime will not cause the work-in-process items on the line to spoil. (Cars, trucks, digital devices would all likely utilize an assembly line system)
Line Flow Strategy
o These line flow systems must run to completion once the process has been started.
Continuous Flow System
