Exam 2 Flashcards
All products and services are sold to customers from physical stores. Example: McDonald’s
Brick and Mortar
All products and services are sold to customers through an online website. Example: Amazon.com
Online or E-tailing
Products can be bought from a physical store or from an online system. Example: Barnes and Noble and BN.com
Bricks and clicks
In addition to taking orders via the company website, some companies will also offer sales via the phone. Examples: Lands’ End and L.L. Bean
• Clicks and calls
Retailers that are fully committed to engaging customers via catalogs, phone calls, websites, email, internet chatrooms, social media sites or mobile apps, and of course also in stores.
Omni-Channel Retailing
These are the companies that actually create the finished goods. Retailers then buy the goods and that retailer is responsible for distribution and storage.
Manufacturers
These organizations purchase goods from manufacturers. Typicallythey purchase an assortment of goods from many manufacturers, thus a retail company could purchase all of their electronics from a single _____ versus having to purchase from each individual manufacturer.
• Wholesalers
This one is not really a source of supply, but rather an organization that ties manufacturers and/or wholesalers directly to consumers.
These organizations never actually possess the product they simply take orders which are fulfilled by another party.
Drop Shippers
These are effectively penalties charged by retail organizations to their suppliers/vendors for any number of minor and major supply chain offenses. The goal here is to motivate vendor compliance
Penalties:
on-time shipments, shipment accuracy, product quality, incorrect packaging, label errors, etc.
Chargebacks
CPFR
Collaborative, Planning, Forecasting and rescheduling
A formalized effort by supply chain partners to share data and collectively develop forecasts in an effort to reduce supply chain costs through better planning
Collaborative, Planning, Forecasting and rescheduling
CPFR
An arrangement where retailers allow vendors to monitor in-store inventories, initiate orders/shipments to the store when inventories are low and also bring the items into the store and onto the shelf
Vendor Managed inventory
VMI stands for ??
Vendor Managed Inventory
Refers to the portion of the supply chain between the final inventory holding facility and the end consumer/ is not always necessarily home
Last mile
- Miles rom Amazon ceneter to you
- End consumer could be a office, mechanic, factory
- Variation in size, location and consumer expectations
One store, one owner,usually they are trying to satisfy a very specialized market or locale.
eX: family owned corner store. boutiques
Retailer Ownership
Independents
– Multiple stores/facilities, one owner/company. Example: Home Depot, Wal-Mart, Costco, Gap, Macy’s, Safeway (Amazon.com probably best fits this category)
Retailer Ownership
chains
–Retailer that is owned by its customer members. These organizations typically try and fit the very special needs of the consumers that organized the cooperative. Examples: REI (Recreational Equipment Inc.)
Retailor Ownership:
Cooperatives
owns the rights to a company and the name. A franchisee is allowed to open an outlet under that name. The franchisee must abide by the rules and processes of the franchise. Examples: Jiffy Lube, McDonald’s, 7-eleven, Buffalo Wild Wings, Massage Envy
Retailer Ownership
Franchises
A series of stores that have common design, construction and layout.
- Can help companies have a standardized plan
- Develop efficiencies across all stores
Prototype stores
This retail strategy has retail chains develop rigid control structures to develop and manage processes such that all the retail outlets are managed in the same way.
EX: a store manager or employee would easily be able to work at almost any store since everything is done the same way.
Rationalized Retailing
.
A map of where every product goes on a retail store shelf.
Planogram
- Hiring good and reliable people • Hiring enough people
- Training employees to do their job well – includes processes, product information, using equipment/technology
- Scheduling employees for when they are needed most • Taking care of your employees – Pay, benefits, schedule flexibility, etc.
- Creating a friendly work environment
Store Personnel
Stores are responsible for protecting:
Types of store secuirity issues
Employees
Store assets
Costumers and their assets
Data
Consistency in retail operations depends on the development and management of excellent in-store processes. This aids the organization in training new employees, developing competencies, and also in sharing the benefits of best practices from other stores in the organization.
Retail Processes
- The process of opening and closing the store
- Cleaning bathrooms
- Processing a customer’s returned items
- Stocking items on the shelves
- Changing prices for sale items
ARE EXAMPLES OF:
Retail Processes
Balance the cost paid by the customers (time) with the cost paid by the company (money paid to maintain the system)
Goal of waiting line management
A waiting line system is made up of 3 parts:
- Input Source
- Waiting Line
- Service Facility
– This is the population of people that might want service
Input Source
The area in which customers wait for service
Waiting Line
The area in which customers actually receive service
Service Facility`
When a potential customer sees the line, but never joins the line because they think it looks too long and/or too slow
Balking
When a customer joins the line, gets frustrated and leaves the line.
Reneging
What are the 4 retailing Options
Brick & Mortar
Online or E-tailing
Brick and clicks
Click and calls
What are the 3 sources of supply
Wholesalers
Manufacturers
Drop shippers
Line
Queue
– Line. Here it often refers to the number of lines available at each step.
Channel
A single step in a process.
Example: Phases in college enrollment might include: Application process, Registration,
Phase
Number of possible customers that may come in store is high or unlimited
Infinite
The number of customers is limited
Finite
Ingredients of a good sales environment
Needs and wants now and in the future. The customers: Product selection, availability, convenience, value, the 5 senses. The organization: Controlling costs, shrinkage, profits.
Challenges of VMI?
Goal alignment, everything discussed prior to arrangement, process related, schedule, performance and quality, people, IT compability
value of VMI
Learning opportunities
Vendor and Retailer learn about each other and their needs.
Vendor has more interactions with end customers in the retail environment.
Retailer - Fewer responsibilities, Decreases costs
Vendor - Better understanding of demand rates, Fewer retailer errors, Responsive
Retail Layout Considerations
- Flow - How do customers navigate through a store and why?
- Considering the entrance and exits points
- Product Location - Customer convenience, planograms, perimeter vs. central, where do you want things located? (high profit items, high theft items, high turnover items)
Grocery store layouts
- Produce(Fruits & Vegetables) Section - Usually first thing you see upon entering
- Meat, Fish, and Poultry at the Rear of the Store
- Long Aisles hold smaller per unit profit items
- Dairy and Bakery at farthest point from main entrance
Grocery store layout: Dairy and Bakery location
at farthest point from main entrance
Grocery store layout: Meat, Fish, and Poultry location ?
at the Rear of the Store
4 elements of a waiting line
- a customer population of potential customers
- a waiting line of customers
- the service facility with a crew or machine or both to assist customers
- a priority rule that selects the next customer to be serves
Importance of waiting lines in running a business
People demand equality in America (First come first serve). Waiting times are indiciative of overall service
Goals and Trade-offs for Queuing system
- Goal: To serve people efficiently.
- Trade offs - Having too many staff and underutilizing them OR having too long a line, and angry customers. Both lose money
What do managers have control over in a queuing system?
- Time in system
- time in queue
- Service utilization/service facility
- number of servers
- what people do while in the line, etc
Why do customers have some degree of control over service rates?
Some customers are unprepared, others are ready when they get to the counter.
Steady stream of customers? Busy and slow time periods? Busy and slow days of week? Seasonal trends
Arrival Rates
Lambda upside down Y;
Equation? What does Lambda mean?
arrival Rate
(# of customers arriving/Unit of time )
Are all servers equal? Are they motivated? Do they get tired/bored? Stressed?
What happens if we add more employees?
Full-time, part-time, seasonal? Experienced?
Type of customers - Prepared/unprepared customer, Big/small orders, high/low maintenance customers, Paying cash vs. check
Service Rates
reflects the percentage of time that they are busy. management’s goal is to maintain high utilization and profitability without adversely affecting the other operating characteristics
service facility utilization
FCFS, sense of fairness
= First come firsts serve
Single Line
Multiple Line Systems
Jockeying (Line Jumping)
Discipline/ Priority Rules
1st Come - 1st Served (Burger King)
Earliest Due Date or Shortest Processing Time (Homework?)
Reservations or Appointments Possible? (Restaurants, Homework)
Emergency Situations? (Emergency Rooms)
Preemptive Discipline - Special Rules (VIP lines, Frequent Fliers)
Customer groups arrive to the check in station at a rate of about 15 groups per hour
Lambda (y) = 15 groups Arrival rate: # of customers/unit of time 15/60 ----> (60/15) =4 on avg a costumer group joins the line every 4 minutes
Mu (U)
What does it mean?
Eqaution?
Service Rate # of customer helped/ Unit of time
Customer representatives can help about 24 groups in an hour
(mU)= 24 Service Rate # of cusotmers helped/ Unit of time 24/60 ---> (60/24) = 2.5 On avg the representative takes about 2.5 minutes to help one group
p (Rho)
Equation?
What does it mean?
Percentage of time worker is busy
Y/U
nL
Equation?
What does it mean?
Avg # of customers in line
p [ Y/ ( U - Y) ]
Round if there are decimals
tL
Equation?
What does it mean?
Avg amount of time a customer waits in line
p [ 1 / ( U - Y) ]
*Multiply answer by 60
nS
Equation?
What does it mean?
Avg # of costumers in the system Y / ( U - Y) *System represents -waiting line -Where customer get services
tS
Equation?
What does it mean?
Avg amount of time a customer spends in the system
1 / ( U / Y )
*Multiply answer by 60
Pn
Equation?
What does it mean?
Probability there are N customers in the system
Lowercase p = Rho
( 1 - p )p ^n
Ex:
p(rho)= .625
P0 = (1-.625).625^0 = .375 or 37.5 P1 = (1-.625).625^1 = .234 or 23.4% P2 = (1-.625).625^2 = .146 or 14.6% P3 = (1-.625).625^3 = .92 or 9.2 %
There is a 9.2% chance that when you arrive at the airport there will be 1 person getting helped and two other groups in the line waiting for service.
P0
Equation?
What does it mean?
Probability system is empty
1-P
(1 - .625)
.375 or 37.5%
Probability Customer gets served immediately on 2 servers?
P0+P1
NUMBER OF SERVERS
1 2
P0 0.400 0.523
P1 0.240 0.327
.327+.523
On average, how much time does the average customer spend in the SYSTEM when there is ONE SERVER in the SYSTEM?
Ts
number was given on graph
refer to study guide 05
What percentage of the time would a server be busy in a FIVE-server model?
Divide p (rho) by 5
What percentage of new arrivals are served immediately in a TWO-server model?
Add P0+P1 under server 2
If one server can help 35 customers per hour and a new customer arrives every 4 minutes, then what percentage of the time would the server be busy?
(U) 60/35 = 1.714 (Y) 60/4 = 15 Y/U = 8.7514
Recap of supply chain basics
- Focus on People – Good supply chain decisions positively impact customers, employees, and investors.
- Competitive Priorities – Good supply chains deliver the right mix of cost, quality, speed, and flexibility to their target market.
- Measuring success – The best supply chains are effective, efficient, and adaptable. Effective - Creating and delivering great products and services customers want. Efficient – Using minimal resources and eliminating waste. Adaptable – Ready for change, constantly evolving.
- Maximize Value – Provide customers the best possible product and service bundle at the lowest possible cost and in the most convenient way possible.
- Productivity – Maximize a company’s high quality output using the fewest resources possible.”
In a 2004 who identified eight critical supply chain processes.
Dr. Douglas Lamber
What are the 8 processess
- Product development and commercialization: What does the customer want? When? Can we organize the right suppliers, manufacturers, distributors, and retail organizations to get the job done right?
- Supplier Relationship Management: Finding suppliers. Developing relationships. Managing present and future purchases from the suppliers. Working together to improve quality.
- Manufacturing Flow Management: Making the right items to meet customer expectations. Doing this using the least amount of resources possible.
- Demand Management: Utilize forecasting to understand likely demand. Once a forecast is available manage the firm’s facilities and resources to meet expected demand.
- Order Fulfillment: If proper demand management has taken place, then it will be time to fulfill orders. This might include picking, packing, and shipping items to the customer.
- Customer Relationship Management: Utilizing information to better understand the needs and desires of your customers today and into the future.
- Customer Service Management: Communication between customers and the supply chain. Providing customers with product availability details and tracking information. Providing customers with product assistance and maintenance opportunities.
- Returns Management: Dealing with reverse logistics issues such as damaged and unwanted products, product recalls, the return of pallets to the distribution center, etc. Understanding problems[…]”
The following calculation can help a supply chain manager estimate the number of products that are needed at each stage of the supply chain to account for problems such as defects, theft, damage, and other forms of loss. This formula calculates the total number of inventory that will be input at each stage of the supply chain to account for the rate of loss.
Shrinkage Calculations
Order Size Required = (Actual Demand) / (Proportion of Acceptable Product per Order)
Shrinkage Calculation
Consumers demand 300 units from a retail store. The supply chain must account for 2% theft from the retail store, 1% damage rates from the distributor, 3% defects at the manufacturer. How many units of inventory must be planned at the manufacturing facility in order to secure 300 units are available for the consumers?
Shrinkage calculation
Order Size Required= Actual demand / Proportion of acceptable product per order
Retailer Distributer Manufacturer ------Retailor---- Order size = (300) / (100% - 2%) Order Size required= (300)/ (.98) Order size required = 306.12 *Always round up in order to avoid shortages --> 307 units This number will be used for next stage
———Distributor ——
Order Size Required = (307) / (100% - 1%)
Order Size Required = (307) / (0.99)
Order Size Required = 310.1
Always round up in order to avoid shortages – 311 units Use this number for the demand at the next stage
—–Manufacturer—-
Order Size Required = (311) / (100% - 3%)
Order Size Required = (311) / (0.97)
Order Size Required = 320.6
Always round up in order to avoid shortages – 321 units
Therefore, 321 units must be planned at the manufacturing stage in order to bring 300 units to the consumer.
The following formula calculates the amount of total inventory required when a supply chain decides to change the number of storage facilities it utilizes.
Square root Rule
Risk Pooling
Inv Future = Inv Present [ (SqRt WH future) / (SqRt WH Present) ]
